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LAW OF TURKMENISTAN

of November 23, 1999 No. 400-I

About joint-stock companies

(as amended on 23-05-2015)

This Law determines the legal basis of creation, functioning, reorganization and liquidation of joint-stock companies, the rights and obligations of their participants (shareholders).

Section I. General provisions

Article 1. Concept of joint-stock company

Joint-stock company (further - society) is the company in which deposits of physical and (or) legal entities unite in the authorized fund divided into certain number of the shares certifying liability laws of members of society (shareholders) in relation to joint-stock company.

Article 2. Legislation of Turkmenistan on joint-stock companies

1. The legislation of Turkmenistan on joint-stock companies is based on the Constitution of Turkmenistan and consists of this Law and other regulatory legal acts of Turkmenistan.

2. If the international treaty of Turkmenistan establishes other rules than provided by this Law, then rules of the international treaty are applied.

Article 3. Basic provisions about joint-stock company

1. Society is legal entity, has the isolated property in property and has the right to acquire and perform on its own behalf the property and personal non-property rights, to perform duties, to be claimant and the defendant in court.

2. Society bears responsibility according to the obligations all property belonging to it on which collection according to the current legislation of Turkmenistan can be turned. The state does not bear responsibility according to obligations of society, as well as society does not answer for obligations the state. Society does not bear responsibility according to obligations of its shareholders, as well as shareholders do not answer for obligations society and bear risk of the losses connected with its activities, only within cost owned by them stocks.

3. Society is established without restriction of term of activities if other is not established by its constituent document. Society is recognized created from the moment of its state registration in the procedure established by the law.

Article 4. Name and location of joint-stock company.

1. The joint-stock company has own name in the Turkmen and Russian languages including reduced in which the type of society is specified.

The joint-stock company also has the right to have the full and abbreviated name in foreign language.

2. The joint-stock company which name is registered in the procedure established by the legislation of Turkmenistan has exclusive right of its use.

3. The joint-stock company has seal of the established sample and has the right to have own emblem, the corporate trademark registered in accordance with the established procedure, stamps and forms with the name which shall not contain the state symbolics of Turkmenistan.

4. The society location - its legal address is the place in which governing bodies of society are located.

Article 5. Joint-stock companies of the opened and closed type

1. Society can be open or closed that is reflected in its constituent document.

2. Open society has the right to carry out open subscription to the shares issued by it and to perform their free sale according to requirements of this Law and other legal acts of Turkmenistan. Shareholders of open society can alienate the stocks owned by them without the consent of other shareholders of this society.

Open society has the right to carry out the closed subscription to the shares issued by it if it is provided by the charter of society.

3. Society in which shares are distributed only among his founders or other, in advance determined group of people are the closed society. Such society has no right to carry out open subscription to the shares issued by it.

Shareholders of the closed society have the privilege of share acquisition of society or the shares sold by other shareholders of this society.

4. The number of shareholders of open society is not limited. The number of shareholders of the closed society cannot exceed fifty. Society cannot have other company consisting of one person as the single founder (shareholder).

Article 6. Affiliated enterprises, branches and representative offices of joint-stock company

1. Society has the right to establish in the territory of Turkmenistan and foreign states affiliated enterprises, branches and representations.

2. The affiliated enterprise of society has rights of the legal entity and independently bears responsibility according to the obligations. The affiliated enterprise does not answer on debts of the society which founded it, and society does not answer on debts of affiliated enterprise.

3. The branch and representative office of society are not legal entities. The branch and representation are allocated with property of the society which founded them and perform the activities based on regulations on them approved by society.

Administration of branch and representation is performed by the head (managing director) appointed by society based on the power of attorney issued to it by society.

The head (managing director) performing business management of branch and representation bears stipulated by the legislation social responsibility of Turkmenistan.

Section II. Procedure for establishment of a joint-stock company

Article 7. Formation of joint-stock company

1. Both physical, and legal entities of Turkmenistan and foreign states, and also stateless persons can be founders (participants) of society. The number of founders (participants) of society cannot be less than two.

2. Founders (participants) sign among themselves the written agreement determining procedure for their joint activities for creation of society, type of society, the size of authorized fund, category and types of the issued shares, the size and procedure for their payment, the right and obligation of participants (shareholders) of society. The agreement on creation of society is not its constituent document.

Article 8. Constituent assembly of joint-stock company

1. The decision on creation of society is made by the constituent assembly which is competent with the assistance of all founders or their plenipotentiaries.

2. The constituent assembly makes decisions:

- unanimously - concerning creation of society, approval of the foundation agreement and the charter, money value of the contributions made by founders in natural form;

- the qualified majority in two thirds of voices - concerning election of executive and regulatory authorities of society, and also concerning creation of the supervisory board;

- by a simple majority vote - concerning election of the chairman of the constituent assembly, to other questions.

3. Founders of society bear joint liability according to the obligations connected with its creation and arising before state registration of society.

Society bears responsibility according to obligations of the founders connected with its creation in case of the subsequent approval of their actions and expenses by general shareholder meeting.

Article 9. Charter of joint-stock company.

1. The constituent document of society is its charter.

2. In addition to the data established by the legislation of Turkmenistan, the charter of society shall contain the following data:

- full and abbreviated name of society;

- legal address;

- type of society (opened or closed);

- subject and purposes of activities;

- list of founders;

- size of authorized fund and condition of its payment;

- procedure for stock subscription;

- quantity, categories (simple, exclusive) both types of the issued shares and their ratio, share par values;

- number of shares;

- obligation fulfillment on share issue and their redemption;

- procedure for profit distribution;

- education method, quantitative structure, competence and term of office of members of executive (managing) and control bodies of society;

- rights of shareholders owners of various categories and types of shares;

- method of convocation of general shareholder meeting, his legal capacity and the procedure on case of not legal capacity, condition and method of implementation of voting power;

- data on affiliated enterprises of society, its branches and representations.

3. In need of the charter of society following provisions can be stipulated:

- about conditions of introduction of the non-cash deposits and other benefits provided for founders of society;

- about the rights connected with release of different categories and types of shares, their quantity and nominal value;

- about the rules relating to bond issue;

- about opportunity and the procedure of withdrawal of shares of society from turnover;

- about conditions and powers conferred to executive (managing) body of society in case of increase in authorized fund;

Restrictions for the number of the shares belonging to one shareholder can be set by charter of joint-stock company and the privilege of society to share acquisition, sold by its shareholders is provided if other shareholders of this society did not use the privilege to their acquisition.

4. The charter of society is signed by founders.

5. Each change or addition made to the charter of society can be performed only based on the decision of general shareholder meeting. The decision on change or amendment of the charter of society is accepted by a majority vote the shareholders having in total at least two thirds of authorized fund.

Changes and amendments of the charter shall be registered in body of state registration of society.

Article 10. Rights and obligations of shareholders.

1. All shareholders have rights and obligations following from this Law and the charter of society.

2. Shareholders have the right:

- participate in the administration of society determined by the charter of society;

- receive part of profit (dividends) from activities of society;

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