LAW OF THE REPUBLIC OF MOLDOVA

of April 12, 2001 No. 73-XV

About entrepreneurial cooperatives

The parliament adopts this organic law.

Chapter I General provisions

Article 1. Purpose and subject of the law

(1) the Purpose of this law is determination of the legal framework of development of system of entrepreneurial cooperatives (further - cooperatives).

(2) the Subject of this law are the relations connected with creation, activities, reorganization and liquidation of cooperatives, and also their associations and unions (further - merging of cooperatives).

(3) Operation of this law does not extend to production cooperatives.

Article 2. Legislation on cooperatives

(2) Features of creation, activities, reorganization and liquidation of savings and loan cooperatives are established according to the legislation.

Article 3. State and cooperatives

Intervention of bodies of the public power and their officials in activities of cooperatives is not allowed, except as specified, provided by legal acts.

Article 4. Basic concepts

In this law the following basic concepts are used:

a) the member of cooperative - the legal entity or physical person performing business activity and owning simple share and, on circumstances, preferential share;

b) the associated member of cooperative - the legal entity or physical person owning only preferential share;

c) participation in the economic relations with cooperative - acquisition (obtaining) by the member of cooperative of products (services) of cooperative and/or delivery (rendering) by the member of cooperative of the products (the services) to cooperative;

d) regulations about the economic relations with cooperative - the provision determining the economic relations between cooperative and its members, and also between members of cooperative in the part which is not settled by legal acts and the charter of cooperative;

e) financial precaution - the measures determined by this law, the charter and the corresponding regulations of cooperative, undertaken by cooperative in the operating, investing and financial activities for the purpose of prevention of obvious financial losses;

f) the authorized capital - the main part of equity of cooperative which is completely consisting of shares - simple and preferential;

g) simple share - the share providing to the member of cooperative in its relations with cooperative the property and related personal non-property rights, including voting power, consisting of initial share, additional shares and bonus shares;

h) bonus share - the part of simple share added to each member from net profit of cooperative it is pro rata to the actual amount of participation of this member in the economic relations with cooperative;

i) preferential share - the share which is granting to its owner exclusive right on receipt of dividends and the privilege to receipt of property, free from debts, in case of liquidation of cooperative, but not granting voting power;

j) cooperative discounts (allowances) - discounts from prices for products, delivered by cooperative to the members, or from rates for the services rendered by cooperative to the members (allowances to prices for products, delivered to cooperative by his members, or to rates for the services rendered to cooperative by his members), received by cooperative as advance payment and compensated by it to the members after the termination of financial year;

k) dividends - the payments from net profit of cooperative performed only to owners of preferential shares.

Chapter II Cooperative

Article 5. Legal status of cooperative

(1) the Cooperative is the commercial organization (company) with the status of the legal entity which members are the legal entities and/or physical persons performing business activity.

(2) the Purpose of cooperative consists in assistance to profit earning by his members.

(3) the Cooperative performs the activities based on this law, the charter and regulations.

(4) the Cooperative can be created on initial basis (in the absence of right predecessors) or by reorganization of other companies or their associations (in the presence of right predecessors).

(5) the Cooperative shall consist at least of five legal entities and/or physical persons.

(6) If the number of members of cooperative is reduced and there will be less number, determined by part (5), the cooperative in three-months time from the date of such reducing shall:

a) increase number of members to the limit determined by part (5); or

b) be reorganized into the company of other form of business or in merging of the companies; or

c) be liquidated according to the decision of general meeting.

(7) If requirements of part (6) are not executed, cooperative:

a) loses privileges, stipulated in Item a) parts (2) Articles 62, Article 63 and part (6) Article 87; and

b) is subject to liquidation according to the decision of degree of jurisdiction passed based on the statement of any member of cooperative, the State Tax Administration or relevant organ of local public authority.

Article 6. Basic principles of activities of cooperative

(1) the Cooperative performs the activities on basis:

a) voluntariness of the introduction in it and exit from it of members and associated members;

b) participations of his members in general meetings on democratic principles;

c) cooperation of the business activity with business activity of the members;

d) forming of the variable authorized capital;

e) ensuring transparency of the activities.

(The Cooperative shall deliver 2) (to render) at least 50 percent of total amount of the products (services) to the members and/or to acquire (to receive) at least 50 percent of total amount of products (the services received by it) acquired by it at the members.

(3) If for the three-months period of the requirement of part (2) were not executed, provisions of Items b are effective) and c) parts (6) and parts (7) Article 5.

Article 7. Types of cooperatives

(1) Cooperatives can be effective in all industries of national economy and have the right to be engaged in any kind of activities, except prohibited by legal acts.

(2) Depending on type of activity the following types of cooperatives differentiate:

a) processing;

b) on rendering services, including consulting;

c) savings and loan;

d) the performing other types of activity.

Article 8. Property of cooperative

(1) the Cooperative has own property isolated from property of his members, has bank accounts and separate balance.

(2) the Property of cooperative is created of money and the non-cash property transferred to its equity, the gained income, subventions, grants, donations, the sponsor's amounts, the credits, loans, and also of other property acquired according to the legislation.

(3) the Property of cooperative is created with observance of the restrictions determined by legal acts, the charter and regulations of financial precaution of cooperative.

Article 9. Rights of cooperative

(1) Cooperative has the right:

a) establish the prices and rates for the products and services or on acquired products and the received services, and also discount (allowance) for these prices and rates;

b) perform commercial transactions from name and for the benefit of the members;

c) open representations, create branches, be member of commercial societies, the member of other cooperatives and associations of the companies;

d) obtain loans from the members and associated members and grant them loans according to the procedure, determined by the legislation, the charter, the corresponding regulations of cooperative, and also contracts with specified persons;

e) place bonds and other debt securities according to the legislation on the capital market, the charter of cooperative and the decision of its general meeting;

f) perform other powers which are not contradicting the legislation and the charter of cooperative.

(2) the Cooperative has no right to place shares.

(3) the Cooperative can have registered trade marks (service marks) and other means of visual identification of the products (services).

Article 10. Obligations and responsibility of cooperative

(1) the Cooperative shall:

a) fulfill the obligations to the members and associated members determined by this law, the charter and the corresponding regulations of cooperative, and also contracts with specified persons;

b) perform, if necessary, training of the members;

c) provide to the members and associated members information on the activities provided by this law and the charter of cooperative;

d) submit to authorized state bodies reports according to the legislation;

e) fulfill other duties provided by legal acts, the charter and agreements of cooperative.

(2) the Cooperative bears responsibility according to the obligations all property belonging to it on the property right.

(3) the Cooperative does not answer for obligations the members and associated members and bears risk according to such obligations within the cost of shares of the members and associated members in the cases provided by this law and other legal acts.

Article 11. Name of cooperative

(1) Full name of cooperative shall contain the phrase "entrepreneurial cooperative", and reduced - abbreviation of "C.I".

(2) the Organizations which do not meet the requirements of this law having no right to use the phrase "entrepreneurial cooperative" in the name.

Article 12. Cooperative location

(1) the location of its executive body is considered the Location of cooperative.

(2) the location (residence) of one of members of cooperative can be the Location of cooperative.

(3) in case of change of the location the cooperative shall bring in writing it to the attention of members of cooperative, body of state registration of the companies, the State Tax Administration, creditors and other interested persons and bodies in the terms determined by the legislation and also to include corresponding changes in the charter and, if necessary, in seal of cooperative.

Article 13. Bodies of cooperative

(1) Bodies of cooperative are:

a) general meeting of members of cooperative (further - general meeting);

b) administrative board of cooperative (further - council of cooperative) if it is created according to part (1) Article 54 or according to the charter of cooperative;

c) chairman of cooperative;

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