Commercial Code Book I. Traders and Businesses Title I. General Provisions Applicable To Traders

COMMERCIAL CODE 259
TABLE OF CONTENTS
Commercial Code
TABLE OF CONTENTS
BOOK I. TRADERS AND BUSINESSES
TITLE I. GENERAL PROVISIONS APPLICABLE TO TRADERS
Page
Chapter 1. Provisions applying to persons carrying on a trade 1
Chapter 2. Traders 1
Chapter 3. Persons capable of carrying on a trade 3
Chapter 4. Carrying on a trade by married persons .. 4
Chapter 5. Right to act as a trader .. 5
TITLE II. AUXILIARIES AND AGENTS

Chapter 1. Commercial Employees .. 6
Chapter 2. Managers 7
Chapter 3. Commercial travellers and representatives 8
Cha}llter 4. Commercial agents 9
Chapter 5. Commercial brokers 12
Ohapter 6. Commissian agents 13
TITLE III. ACCOUNTS

Chapter 1. Keeping of accounts compulsory 13
Chapter 2. Books and accounts to be kept .. 13
Chap.ter 3. Books and accounts admissible eviJence .. 14
Chapter 4. Keeping of accounts .... 14
TITLE IV. THE COMMERCIAL REGISTER

Chapter 1. Organisation of the Commercial Register 17
Chapter 2. Entries in the Commercial Register 18
Section 1. General provisions .. 18
Section 2. Registration 19
Section 3. Alteration of entries and additional entries .. 22
Section 4. Cancellation of entries 23
Chapter 3. Sanctians 23
Section 1. Penal provisions 23
260 COMMERCIAL CODE
TABLE' OF CONTENTS
Page
Section 2. Civil sanctions 23
Chapter 4. Final provisions 25
TITLE V. BUSINESSES
Chapter 1. General Provisions 25
Ohapter 2. Elements of a business .. 26
Section I. Constituent elements of a husiness .. 26
Section 2. Goodwill and un,fair commeroial competition .. 26
Section 3. Trade-names . .,./ ... 27
Section 4. Distinguishing marks 28
Section 5. Right to the lease of the premises 28
Section 6. Patents and literary or artistic copyright 29
Chapter 3. Sale ~/ a business 30
Section 1. General provision o •• 30
Secmon 2. Formalities 30
Seetion 3. Dulj"s of the seller. : 31
Section 4. Duties of the huyer . . 32
Section 5. Publication of the sale and rights of the seller's
creditors 32
Chapter 4. Mortgage of a business .. 34
Section 1. General provisions .. 34
Section 2. Mortgage ot the Seller and aCtJion for the cruncellation
of the contract of sale 34
Section 3. C, 'ltractual mortgage 35
Section 4. 'Ie ner of registering mprtgages 36
Section 5. ;:, .;hts of secured crreditors 37
Chapter 5. Hire of a business 39
Chapter 6. Contribution of a business to, a business organisation 41
BOOK II. BUSINESS ORGANISATIONS

TITLE 1. GENERAL PROVISIONS
TITLE II. ORDINARY PARTNERSHIP
Chapter 1. General provisions 45
Chapter 2. Contribntions 45
Chapter 3. Management of the partnership .. 46
Chapter 4. Rights and duties of partners .... 47
COMMEIICIAL CODE 261
TABLE OF CONTENTS
Page
Ohapter 5. Relations of the partnership with, third parts 49
Chapter 6. Dissolution and winding-up of partnership 50
TITLE III. JOINT VENTURE 53
TITLE IV. GENERAL PARTNERSHIP 55
TITLE V. LIMITED PARTNERSHIP 58
TITLE VI. COMPANIES LIMITED BY SHARES

Chapter 2. Formation of the company 61
Chapter 3. Shares and the rights and duties of shareholders .. 66
Chapter 4. Directors, au";itnrs and shareholders meetings 72
Sedion 1. Management 72
Section 2. Auditors 79
Section 3. Shareholders' meetings 83
Paragraph 1. General provisions .. 83
Paragraph 2. Ordinary meetings .. 89
Paragraph 3. Extraordinary meetings 90
Paragraph 4. Special meetings 91
Chapter 5. Debentures 91
Chapter 6. Accounts of companies .. 96
Chapter 7. Amendments to the memorandum or articles of association 100
Chapter 8. Dissolution and winding-up .... 107
TITLE VII. PRIVATE LIMITED COMPANIES

C,hapter 1. Formation and general provisions 111
Chapter 2. Shares 113
Chapter 3. Organisation of the company 114
Chapter 4. Accounts 117
ChapLer 5. Dissolution 117
TITLE VIII
CONVERSION AND AMALGAMATION
TITLE IX
BUSINESS ORGANISATIONS INCORPORATED ABROAD
OR OPERATING ABROAD 121
262 COMMERCIAL CODE
TABLE OF CONTENTS
BOOK m. CARRIAGE AND INSURANCE

TITLE I. CARRIAGE BY LAND
Page
Chapter 1. General Provisions 122
Chapter 2. Transport titles 123
Section 1. Passenger's ticket " 123
Section 2. Luggage ticket 123
Section 3. Transport titles in respect of goods .. 123
Chapter 3. Rights and duties of parties to a rontract of carriage 125
Section 1. Rights and duties of sender and addressee ... . 125
Section 2. Duties of carrier of goods or registered baggage 126
Section 3. Duties of parties to a contract of carriage of persons 127
Chapter 4. Liability of the carrier .. 127
Chapter 5. Legal proceedings 129
TITLE II. CARRIAGE BY Am
Chapter 1. General prov/,Swns 130

Chapter 2. Transport titles .. 130
Section 1. Passenger's ticket 130
Seotion 2. Luggage-ticket 130
Section 3. Bill of lading 131
Chapter 3. Rights and duties of sender and addressee 133
Chapter 4. Liability of the corrier .. 135
Chapter 5. Provisions applicable to certain forms of transport 139
TITLE ITI. INSURANCE

Chapter 2. Provisions applicable to all forms of insurance 140
Section 1. Insurance policy .... 140
Section 2. Rights and duties of the parties 142
Section 3. Limi,tation .. 144
Chapter 3. Insurance against damages 145
Section 1. Insurance of objects 145
Section 2. Insurance of liability for damages 146
Chapter 4. Insurance of persons . ... 147
section 1. General provisions .. 147
Section 2. Life insurance 147
COMMERCIAL CODE 263
TABLE Of CONTENTS
Page
TITLE IV. GAMES AND GAMBLING 151
BOOK IV
NEGOTIABLE INSTRUMENTS AND BANKING TRANSACTIONS
TITLE I. GENERAL PROVISIONS
TITLE II. COMMERCIAL INSTRUMENTS

Chapter 2. Bill 0/ exchanse 156
Section 1. Establishment and form of bills of exchange· 156
Section 2. Negoution of bills of exchange 158
Section 3. Acceptance 161
Section 4. Acceptance for honour 163
Section 5. Maturity .• 164
Section 6. Payment 165
Section 7. Recourse for non-acceptance or non-payment " 167
Section 8. Intervention for honour .... 174
Section 9. Parts of a set and copies .... 177
Section 10. Alterations 178
Section 11. Limttation of actions 178
Section 12. GeneI'll1. provisions 179
Chapter 3. Promissory notes 179
Chapter 4. Cheques 181
Section 1. Drawing and form of a
clteqhe '.... 181
Section 2. Negotiation 184 .
Seotion 3. Acceptance for honour (Aval) 186
Section 4. Presentment and paI)'Dlent .. 186
SeoIIion 5. Crossed \lheques and cheques payable in accouilt 188
Section 6. Recourse for non-payment .. 189
Section 7. Parts of a s e t · 192
Section 8. Altera.tions 193
Section 9. Limitation of actions 193
Section 10. General provisions 194
Chapter 5. Traveller. cheques 195
Chapter 6. Publicity 0/ protest 195
261 COMMERCIAL CODE
TABLE OF CONTENTS
TITLE m. BANKING TRANSACTIONS
J '
Page
Chapter 1. Bank deposits .. 196
Section 1. »eposit .oUunds 196
Section 2. ~ traaifers .' ... 197
Section 3.' Depoak :of securities;· 199
Chapter 2. Hiring of safes 200
Chapter 3. Contracts for current accounts ., 201
Section 1. Definition, oonditions and duration of current accounts "201
Section 2. Effeetsof current accounts .• .... 203
Section 3. Effects' of bankruptcy of remitter where commercial
instrwnents are discounted and entered in current
account 204
Claapter 4. Discount 205
Chapter 5. ·Credit transactions 206
Section 1. Open credits .206
Section 2. Advance on securities 207
Section 3. Pledge of securities 207
Section 4. Documentary credits ...... 208
BOOK V. BANKRUPTCY AND SCHEMES OF

ARRANGEMENT
TITLE I1•.)JANKRPETCY ,
Ohapter 1. Judgment in bankruptcy 211
Chapter 2. Persons responsible for .
bankruptcy
, pro-
ceedinss 215
Secliion 1. The court .. 215
Section 2. Commissioner in bankruptcy 215
SecIiion 3. Trustees 216
Section 4. Creditor's committee 218
a..pter 3. Provisional and. conservatory measures .. 219
Section 1. Conservatory measures ~19
Section 2. Seals .... 220
'.
Section 3. Inventory ". 221
t
I. COMMERCIAL CODE 265
TABLE OF CONTENTS
Page
Chapter 4. Effect 01 adjudication in bankruptcy 222
Section 1. Effect as regards the debtor 222
Section 2. Management of debtor's property 225
Chapter 5. Proving lor debts 226
Section 1. Procedure for proving 226
Section 2. Parties jointly and severally liable and guarantors 229
Section 3. Rights of creditors secured by a guarantee on movables
other than businesses 230
Section 4. Rights of mortagees and creditors secured by im-
movables 231
Section 5. Rights of creditors secured by a mortgage on the
business .... 232
Section 6. Recovery 233
Chapter 6. Settlement 01 the bankruptcy 235
Section 1. Composition 235
Section 2. Compulsory winding-up 240
Chapter 7. Bankruptcy proceedings closed .. 242
TITLE III. SCHEMES OF ARRANGEMENT 243

TITLE IV. SPECIAL RULES CONCERNING BANKRUPTCY
AND SCHEMES OF ARRANGEMENT WITH RESPECT
TO BUSINESS ORGANISATIONS
TITLE V. SUMMARY PROCEDURE
BOOK VI. TRANSITORY PROVISIONS
Chapter 2. Traders. Businesses. Business organisations 256
Chapter 3. Negotiable instruments and banking transactions 257
Chapter 4. Bankruptcy .... 257
,
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Addis Ababa 5th May 1960
NEGARIT GAZETA
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n"ll: ih"l II
COMMERCIAL CODE OF THE EMPIRE OF ETlUOPIA

PROCLAMATION No. 166 OF 1960
The fir~t edition of this book was published during the 30th year of reign
of His Imperial Majesty Haile Selassie I, Emperor of Ethiopia.
Berhanena Selam P.inting Press of H.I.M. Haile Selassie I - 17-9-52 - No. 2071-52 - 5000
n
PROCLAMA TION No. 166 of 1960
THE COMMERCIAL CODE PROCLAMATION OF 1960
CONQUERING LION OF THE TRIBE OF JUDAH

HAILE SELASSIE I
ELECT OF GOD, EMPEROR OF ETHIOPIA
WHEREAS the progress of Ol.l,r Empire in the field of commerce requires

the codlification of Our commercial laws; and
WHEREAS a Commercial Code has been prepared under Our supervisioll

and has received the approval of Our Sena'te and Chamber of Deputies;
NOW, THEREFORE, in accordance with Articles 34 and 88 of Ou,r Revis-

pd Constitution, We approve the, resolutions of Our Senate and Charr.twr 0f
Deputies and W c hereby proclaim as follows:
1. This Proclamation may be c~ted as the "Commercial Code Proclamation,

1960." .
2. The Commercial Code of 1960, as published in a separate volume ap-

p.earing as Extraordinary Issue No.3 of 1960 of the Negarit Gazeta, shall come
into force on the 11th day of September, 1960.
3. The Bankruptcy Law and the Company law of 12th July, 1933, are
herehy repealed as from't,he 11th day of September, 1960.
Done at Addis Ababa this 5th day of May, 1960.
TSAHAFE TAEZAZ AKLILU HABTE WOLD

Deputy Prime Minister and Minister of Pen
III
.
"
•
PREFACE
CONQUERING UON OF THE TRIBE OF JUDAH
HAaE SELASSIE I
ELECT OF GOD, EMPEROR OF ETlUOPIA
In the modem world, IW nati6n can hope to expand iA CO.JReJ'Cial and
e(!olWmic life unless there exists a firm legal basis which will cwure the
neceaary elemenf$ of stability and security in business transacti6,., wmu at
til. I/J1Be tiae providing a sufficiently articulated yet flexible framework within
which tnule and commerce may flouris.h and grow. Today, in EthWpiD, the
developaent 'of commerce has out grown the provisio,., of thie laws rel4tting to
busines. orga.n.isati6ns and bankruptcy which were promulgated during the first
y.,.. 01 Our Reign and which were o.:lapted to the commerce and industry of
thOse _ly day•• The commercial life of EthWpia has expanded, increosing
RUmber. 0/. EthWpiDn and foreign compa. have been for1Mll and registered,
ahd mOTe comple% met'*xls of transacting business h4ve been detlf!loped in reo
etmJ y.n.
RecognUins the impetus whick a modern Code regulating the constitution
tm,d -~ of all business organisations could give to the furth.r KrGwth
01 thlde4lUl commerce, We directed the Codific6ti6n Commissi6n created by US
to pF'eptJre " moMrR Commercial Code which would sertHJ for the praent day
aa vell as provide a solid foundation for the further refinement of laws Creating of
these subjecta.We have directed that in the expami6n and consolidati6n of
Our commerciGl, u.w.. great attenrion should be given to til. control of all trad.
J
ing, and in pU/.ticular to the control of the carriage of [KUsengers and goods, an
aspect of commercial activity which has increased greatly in the last decade.
Similarly, in view of the further expansion of both foreign and internal com-
merce, it has been necessary to elaborate laws governing negotiable instruments
and banking transactions.
The Commercial Code which is today being promulgated fulfils these
requirements. It is grounded in Ethiopia's ancient laws and customs and has
.been further extended by reference to the laws of other great commercial powers.
We are confident that this Code will fulfil the aspirations of Our Beloved People
and will assist in the swift and orderly development of Ethiopia's eC01wmic life.
Our Parliament has studied with care and patience the detailed provisions of
this Code and what has been approved by it is well suited to the needs of Our
Own Country and to those persons and enterprises from other lands who are
participating and sharing in the benefits of the commercial life of Our Empire.
We are ever mindful that in the all-important task of the codification of Our laws
TV e have been g,uided by Almighty God, and that the fruits of this work will
underline the principle oj international justice without which no nation can
survive or prosper.
Given in the 30th year of Our Reign, this 5th day of May, 1960
HAILE SELASSIE I
Emperor
VII
/
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BOOK I. TRADERS AND BUSINESSES
TITLE I. GENERAL PROVISIONS APPLICABLE TO TRADERS
Chapter 1. Provisions Applying to Persons
Carrying on a Trade
Art. 1. - Scope of application of the Civil Code.
Unless otherwise provided in this Code, lIhe pro"isioD8 of the Givil Code
shall apply to the status and acmvillies of pt11"SOJI8 and business OIl"ganisations
carryting on a trade.
Art. 2. - Scope of applicati{)n of the Maritime Code.
The relevant provisions of the MariltIime Code shall app~y 10 persons and
business organisations carrying on maritime trade.
Art. 3. - Persons and business organisations.
The provisions of 1ihiis Code applicable to persons other t.haIn those provisions
applIicable to physical persons only shlBll apply tJo bualnees organisations.
Nothing shall affect the speci:al prov,mons of Book II and Book V Title IV
of this Code app1icahle tJo business organisaJtions only.
Art. 4. - Bodies corporate under Public Law.
(1) Unless othel"\"ise e~y WOvided by law, bodies 00l'}I0I'6te under
public law, such as adminishlllUve or religious irurtitUJtiOlllS OIl" 81lyother
public undertakings, shall not be deemed to be muJers even where they
carry on acl1iiV1i.ties under Art. 5.
( 2) 1lhe prov,isioD8 of sub-art. (1) shall mot apply to undertakdngs in
which bodies oorpol'llte under public law only pamcipate.
Chapter 2. Traders
Art. 5 .. - Persons to be regarded as, traders.
Persons who professionally and for gaim carry on 8Illy of tiIre following
acl1iv,ities shall be deemed ,to be traders:
( 1) Purchase of movables or immovables with a view Ito re.selling them
either as they are or aEter aIt_tion ~ adaptaJW:m;
(2) Purchase of movables with a view to letting them for hire;
(3) Wa,rehousing atCtivi:1Iies as defined in Art. 2806 of 1lhe Givil Code:
( 4) Exploi,tation of mines, including prospectIing for and working of
mineral oils;
5) Exploitation of quarries nat by han~sm.en;
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2 COMMERCIAL CODE
( 6) Exploitation of swt pans;

(7) Conversion and adaptation of cihalltels, such as foodstuffs, raw materials
or semi.finished products not hy handicraftsmen;
(8) Building, repairing, maintaining, cleaning, painting or dyeing mov-
ables not hy handicraftsmen;
(9) Emhankliing, levelling, trenching or dmining carried out for a third
pal'ty not by handiCl'aftsmen;
(10) Carnage. of goods or persons 110t by handicra£tsmen;
(11) Printing and engraving and works connected with photography or
cinematography not hy Jmndicra:£tsmen;
(12) Capturing, distributing and supplying water;
( 13) Producing, distributing and supplying elect;ticity, gas, compressed air
inclu~ heating and cooling;
(14) Operating pmces of entertainment or radio or television startJions;
(15) Operating hotels, restaurants, bars, cafes, inns, hairdressing establish-
menrts not operated hy handicraftsmen and public baths;
'(16) Publishing m wlOOtever form, and in particular hy means of printing,
engreving, photography or recording;
(17) Operating news and information services;
(18) Open.ting travel and p.ublicitJyagencies;
(19) Operating husiness as an agent, broker, stock broker or commercial
~;
(20rOperating a ba.nkMtg and money changing business;
(2~' Operamng an instmmce business.
Art. 6. - AgriClJ.ltural or Forestry undertakings.

(1) Persons WM carryon activities relatilllg to agri,culture, forestry, breed-
~ C8iIIrl.e or maintaining pastureland, shall not be deemed to be traders
'W1here they sell the products of the land they exploit or use, or anim:lls
or ,1Jhie products of animals bred mainly from the resourees of the bnd
IWIhieh 1Ilre said persons exploit or use.
(2) Such per!lQJlS shall not be deemed to be traders whether the exploitation
is lindividullil. or ooHective, such as an agricultural community or a
cooperative Wldertaking.
\ 3) Nureerymen WIho sell plants which grow on the land they exploit or use
.shJaJl )Jet he deemed to be traders.
Art. 7 . - Agricultural Products How Dealt with.
(I) Persons (who carry on actirvities under Al't. 6 (1) shall not he deemed
to be ,traders where they deal with their woducts in accordance with
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2 COMMERCIAL CODE
(6) Exploitation of 8Mt pans;

(7) Conversion and adaptaltion of chattels, such as foodstuffs, raw materials
or semi.finished products not hy handicrWtsmen;
(8) Building, repairing, maintaining, cleaning, painting or dyeing mov-
ables not hy handicraftsmen;
(9) EmhankUing, levelling, trenching or draining carried out for a third
pal"ty not hy handiCl'aftsmen;
(10) Carriage. of goods or persons 110t by handicraftsmen;
(11) Printing and engraving and works connected with photography or
cinemato~raphy not hy Jmndicra:£tsmen;
(12) CaptW'ing, distributing and supplying water;
(13) Producing, distributing and supplying eleel;ticity, gas, compressed air
inclu~ heating and cooling;
(14) Operating places of entertainment or radio or television statlions;
(15) Operating ihotels,restaurants, bars, cafes, inns, hairdressing establish-
menrts not operated hy handicraftsmen and public baths;
'( 16) Publishing dn wlhatever form, and in particular hy means of printing,
engmving, photography or recording;
(17) Operating news and information services;
(18) Opemtimg travel and p.uhlicirfiy agencies;
(19) Operating husiness as an agent, broker, stock broker or commercial
~;
(20 t Operating a ba.nk.ing and money changing husiness;
(2~' Operalling an i.nsuMnce business.
Art. 6. - AgriClJ.ltural or Forestry undertakings.
(1) Persons who carryon activities retatilllg to agri,culture, forestry, breed-
~ calit'le or maintaining pastureland, shall not be deemed to be traders
'W1here they sell the products of the land they exploit or use, or animals
or ,1Jhe products of animals bred mainly from the resonrces of the l~nd
IWIhieh 1!1re said persons exploit or use.
(2) Such per!QIlS shall not be deemed to be traders whether the exploitation
is individua:l or coHeetive, such as an agriculturaJ. community or a
cooperative undertaking.
\ 3) Nurserymen WIho sell plants which grow on the land they exploit or use
sbJaJl )Jet he deemed 110 be traders.
Arl. 7. - Agricultural Products How Dealt with.
(1) Persons rwho carry on acti¥ities under Art. 6 (I) shall not be deemed
to be 'traders where they deal with their woducts in accordance with
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COMMERCIAL CODE 3
the usual practice of their business, so long as such dealing relates only
to products of the land which they exploit or use, or to animals or
products of animals bred mainly from the resources of the land which
they exploit or use.
( :2) Such persons shall nN be deemed to be traders whether the undertak-
ing is individual or collecbive such as an agricultural community or
a cooperative undertaking.
Art. 8. - Fishermen and persons breeding fish, shell-fish or shells.
Fishermen and persons who breed fish or shell-fish or shells shall not be
deemed to he traders where they sell the products of their fishing or breed-
ing.
Art. 9. - Handicraftsmen.
(1) The provisions of this Code relating to traders shall not apply to handi-
craftsmen.
(2) Handicraftsmen are persons who carryon an ,independent activity, who
live mainly on their own manual work, who may carry on their activity
;with the assistance of members of their family and of not more than
three employees or apprentices and who buy such material only as is
necessary for ()arryi~g out their activillil'..5, without setting up stocks.
(3) Handicraftsmen mlllY use mechanical power.
( 4 ) Handicraftsmen are subject to the provision of any special law relating
to their activities.
AN. 10. - Business Organisations.

( 1 ) Business organisations shall be deemed to be of a commercial nature
where their objects under the memorandum of association or in fact
a,re to carryon any of the activities specified in Art. S of this Code.
(2) Share oompaines and private limited companies shall always be deemed
to be of a commercial nature whatever their objects.
Chapter 3. Persons Capable of Carrying on a Trade

Art. 11. - Persons incapable under the Civil Code.
(1) Persons incapable under the Civil Code may not carry on any trade.
(2) Where incapable persons carryon a trade, they shall not, subject to
the provisions of Art. 14 andIS, acquire the status of traders and their
acts may be invalidated in accordance witlh the relevant provisions
of the Civil Code. .
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" COMMERCIAL CODE
Art. 12. - Tutors.

Tutors may not carryon a trade in the name and on bebalf of a minor
except in the cases provided in Art. 288 of the Civil Code.The same pro·
visions shall apply to thp tutor of an interdictf'd person.
Art. 13. - Emancipated Minors.

( 1) Notwithstanding the provisions of Art. 333 of the Civil Code. eman·
cipated minors may not carryon a trade unless authorised in -writing
by the family council.
(2) In default of au~horisalion under sub·art. (1), emancipated minors
slJall not be deemed to be of age.
Art. 14. - Effect of }J.1inoril)" in relation to thin' J.Hlrties.

NotwHhstanding the provisions of Art. 3]8 of the Civil Code, where a minor
who carries on a trade has caused himself to he entered in the commercial
register as though he were of age. his being a minor shall not affect third
parties, in accordance with Art. 121 of this Code.
Art. 15. - Publication of incap<,,.ity.

Where a person has been declared ineupable, such incapac~ty sJIall not affect
third parties unless notice of such incapacity has been entered in the com·
mercial regi~ter (Art. 121).
Chapter 4. Carrying on a Trade by Married Persons

Art. 16. - Mah'iedpersonsmay carry on trade.
Any married person may carryon a trade as though he were unmarried

unless his spouse objects thereto as provided in Art. 645 of the Civil Code.
Art. 17. - Notification of object;{)n.
(1) As between spouse, an objection L1lldn Art. 16 ma\ he notified to lht'

trading spouse in any manner.
(2) An objection under Art. 16 shall not affect third parties, in accordance
I\ith Art. 121 of this Code, unless noliee of such objection has heen
entered in the commercial register.
Art. 18.- Setting aside of objection.
( 1) Where the trading spouse is of the oplIlIon ~hat the objection is not
justified, having regard to the interest of the family, he may app.l~- to
the family arbitrators to set aside the objection.
(2) Where the objection is sct aside by the arhitralors, a notice to this
effect shall be entered in t'he eommercial register.
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COMMERCIAL CoDE s
Art. 19. - Debts contracted by the trading spouse.
Debts contracted by the trading spouse shall be deemed to be debt. of the
marriage within the meaning of Art. 659 of the Civil Code and may be
recovered on the personal estate of each spouse and on common property.
Art. 20.- Effect of objection.
Where an objection under Art. 16 has been eIlJtered in the conuneroial
register, debts contracted by the trading spouse may be recovered on his
personal estate only.
Art. 21.- CooMration of spouses.
Where spouses together carry on a trade, they shall both be deemed to be
traders, unless it is shown that one of them is the employee of the other.
Chapter 5. Right to Act as a Trader

Art. 22. -:- Freedom to l"J,rry on trade.
Subject to such prohibitions or lawful restrictioDs regarding unfair OOIIlpe.
tition as may he prescribed, any person or busine!!8 organization has the
right to carryon any trade in accordance with the p:rvvisions regulating
such trade.
Art. 23. - Legal prohibitions or restrictions.
( 1) Paritcular persons may be restricted or prevented from acting as traders
or from carrying on a particular trade by legal provisions setting up
prohibitions or incompatibilities.
( 2) Specific requirements as to age, qualifications, sex, nationality or li.
cence may be imposed by law in respect of partieular trades.
Art. 24.- Effect of prohibitions and restrictions.
( 1) Persons who carry on a trade subject to prohibition or :restriction or
without having the prescribed qualifications shall be liable to the pe-
nalties provided by law.
(2) Persons who carry on a trade subject to prohibition or restriction may
J;IPt Ptvoke the said prohibition or restriction to free thenuelves from
liabilities incurred in carrying on a trade subject to prohibition or re-
striction. They may not hold tlhemselves out to be traders to thUd
parties but they shall be liable as though they were traders.
Art. 25. - Associations.
(1) Associations may not carry on any trade.
f2)- An-yviolation-of-the provisions-of-sub-art. (1) shall CODItitute a growad
for dissolution under Art. 461 of tbe Civil Code.
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.Art. 26. - Bruiness orsanisationll camns on tracie.

No' busineeeorgiu:t.isation shall carry on a trade which it is not permitted
to carTy on or Wlhich is subject to specific requirements with which the
IIIi4 buaineee organisation has not complied.
Art. 27.- Bodies corporate under Public Law.
The. Cl8II1lS where a trade may be carrie(! on by administrative or religious
iDatitutions or any other public undertaking and the conditions and effect
of euch trade shall be prescribed.
TITLE II. AUX1LIARIES AND AGENTS

Chapter 1. Commercial Employees
Art. 28. - Definition.

1) Commercial employees are persons who are hound to a trader by a con-
tract of employment and who 8'1Sist the trader by doing work of a non-
manual IlAture as a salesmdll, secretary, accountant, guardian, inspec-
tor or director.
2) Commercial :.mployees are not traders.
Art. 29. - Civil Code applicable.
Without prejudice to the provisions of this Code, the provisions of the Civil
Code relating to contracts of employment shall apply to commercial
EmpJoyees.
Art. 30. - Prohibition from carryins on private trade.
1) A commercial employce may not carry on, on his own behalf or on
behalf of a third party, a trade similar to the trade carried on by his
;employer. Where an employee infring~this prohibition, his tlmployer
may c1aim damages and may cancel or refuse to renew ,the contract of
employment in accordance with Art. 2591 of the Civil Code.
2) A contract of employment may only contain a prohibition from carry-
ing on private trade upon the expiry of the contract of employment
on the conditions specified in Art. 2589. 2590 and 2592 of the Civil
Code.
Art. 31. - Asents.
1) Commercial employees may ,act as agents by express or tacit agreement.
2) The revocation of the power of agency shall not result in the cancella-
tion of the contract of employment.
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COMMERCIAL CODE 7
Art. 32.- Powers of Employee in charge of sales.

1) The employee in charge of the sales in a store shall be deemed. to have
a power of agency for the purpose of selling or receiving goods which
come within the normal business activities of stores of such nature.
2) He may demand that goods sold by him be paid to him, unless pay-
ment is to be made to a special account.
3) The employee may not demand paymMI outside the store unless so
expressly authorised or unless he produces a Tet'.Alipt signed by the tra-
der.
Chapter 2. Managers

1) A manager is a person who has been authori~~d, expressly or tacitly, to
carry out acts of management and to sign in the name of the trader.
2) A manager is not a trader.
Art. 34. - Publicity.
1) Where a manager has been appointed, the trader shall cause an entry
to be made in the commercial register.
2) The manager shall have power to act by virtue of his appointment, not-
withstanding that the provisions of sub-art. (1) have not been com-
plied with.
Art. 35. - POwe1'S of Manager.
1) In his relations witih third parties, the manager shall be deemed to
have full power to carry out all acts of management connected. with
the exercise of the trade, including the power to sign a negotiable in-
strument.
2) Unless ~pressly authorised to do so, he may not sell or pledge immov-
able property, nor may he sell, hire or pledge a business.
Art. 36. - Restriction on powers.
1) The powers of a manager may be limited to the management of a
branch. Such a restriction shall not affect third parties in accordance
with Art. 121 of this Code unless notice of such restriction has been
entered in the commercial register.
2) Any other restriction shall not affect third parties.
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8 COMMERCIAL CODE
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Chapter 3. Commercial Travellers and Representatives
Art. 37. - Commercial travellers.
(1) A commercial traveller is a person, domiciled at the place where the
head office of the business is situate and. bound to a trader by a con-
tract of employment, who is entrusted by the trader with viaiting
clients and offering to them goods or services in the name and on
behalf of the trader.
(2) Unless otherwise agreed, contracts entered into by a commercial tra-
veller shall be of no effect unless confirmed by trader.
( 3) Commercial travellers are not traders.
Art. 38. - Commercial representatives.
(1) A commercial representative is a person, not domiciled at the place
where the head office of the business is situate and hound to a trader
by a contract of employment, who is entrusted by the trader with
visiting clients in a specified area and offering to them goods or ser-
vices in the name and on behalf of the trader.
(2) Unless otherwise agreed, contracts entered into by a commercial re-
presentatives shall become effective without confirmation by the trader.
(3) Commercial representatives are not traders.
Art. 39. - Private Business.
(1) Unless otherwise provided in the contract of employment, commercial
travellers and representatives may not carry on private business.
Wihere they carryon private business, they shall lose their compen-
sation as provided in Art. 42 and 43.
(2) The provisions of Art. 30 (2) shall apply where commercial travellers
and representatives have been authorised to carry on private business.
Art. 40. - Acting on behalf of other traders.
( 1 ) Unless otherwise agreed, commercial travellers and representatives
may not act on behalf of traders other than the trader to whom they
are hound. Where they act on behalf of other traders, they shall lose
their compensation as provided in Art. 42 and 43.
( 2 ) In no case may they act on behalf of a trader selling goods or offer-
ing services similar to the goods sold or the services offered by the
trader to whom they are hound.
Art. 41. - Remuneration.
(1) Commercial travellers and representatives shall be paid by salary or
on commission or both.
(2) The remuneration shall be fixed by the contract of employment or,
where not fixed, by custom.
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COMMERCIAL CODE 9
Art. 42. - Compensation in case of termination of contract.

Where the trader terminates the contract without good cause, (''Ommercial
travellers and representatives who are bound by a contract entered into
for an undefined period of time shall be entitled to fair compensation fix-
ed in accordance with Art. 2583 of the Civil Code.
Art. 43. - Compensation on account of clients introduced.
Where a contract entered into for an undefined pel1iod of time is termina-
ted by the trader or where a contract entered into for a specified period of
time is not renewed by the trader, no fault being attributable to the com-
mercial traveller or representative, the commercial traveller or represen-
tative shall be entitled to compensation equal -to the profit derived from
the customers introduced or goodwill created or extended by him.
Chapter 4. Commercial Agents

(1) A commercial agent IS a person or business organisation, not bound
to a trader by a contract of employment and carrying out independent
activities, who is entrusted by a trader with representing him perma-
nently in a specified area and dealing or making agreements in the
name and on behalf of the trader.
(2) Unless otherwise provided in the agency agreemeht, contracts entered
into by a commercial agent shall become effective without confirma-
tion by the trader.
(3) A commercial agent normally acts as agent and may act as broker.
He is a trader.
Art. 45. - Commercial agent exclusive agen~.
Unless otherwise provided in the agency agreement, a commercial agent
shall be the exclusive agent of the principal in the area specified in the
agreement.
'.
"
Art. 46. - Duties of commercial agent. ,

(1) A commercial agent shall safeguard the principal's interests with the
care due by a good trader.
(2) He shall:
(a) carry out all instructions of the principal;
(b) inform the principal of all contracts negotiated or entered into
by him;
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10 COMMERCIAL CODE
(c) send to the principal periodical reports on his activities and all
such information as may be required on the state of affairs with-
in the area where he acts.
( 3) Where the agency agreement comes to an end, a commercial agent
may not ,take advantage of or disclose trade secrets revealed to him
• by the principal or of which he learned in the course of his duties
as an ,agent.
Art. 47. - Prohibition from carrying on private trade.

(1) A commercial agent may carry on any private trade which is not
similar to 1Ihe trade carried on by the principal. The agency agree-
ment may be cancelled and damages may he due where the agent
carries on trade similar to the trade carried on by the principal.
(2) Unless otherwise provided in the agency agreement, a commercial
agent may not act in the area specified in the agreement on behalf
of traders other than the principal.
( 3) In no cue may a commercial agent act, in the area specified in the
agency agreement, on behalf of traders who carry on a trade similar
to the trade carried on by the principal. T'he agency agreement may
be cancelled and damages may he due where the agent disregards this
prohibition.
Art. 48. - Duties 01 principal.
The principal shall, to the best of his ability, enable his agent to carry
out successfully his duties under the agency agreement, in particular by
making all necessary information and samples available to him. "
Art. 49. - R~payment of expenses.

Unl_ otherwise agreed, current costs and expenses of the agency shall
be borne by the commercial agent and are not subject to repayment by
the principal. The agent' shall only he entitled to the repayment of expen-
ses occasioned by dealings made on behalf of the principal and of such
special expenses as were made by him on the order of the principal.
Art. 5'0. - Remuneration.

( 1) A commercial agent shall ""Ceive remuneration for all d~ nego-
tiatedor made by him. Unless otherwise provided, he shall receive
remuneration for all dealings made, in the area where he acts, either
by the principaJ. himself or by another agent of the principal.
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COMMERCIAL CODE 11
(2) A commercial agent shall receive remuneration even where dealings

made by him are hot carried out by the principal.
(3) The remuneration shan be fixed in the agency agreement or, where
not fixed, by custom.
Art. 51. - Agent personally to carry out his duties.

A commercial agent may not assign the agency agreement and may not
substitute a third party for himself, as an agency agreement is made on
the basis of the personal qualifications of the agent.
Art. 52. - Termination of agency agreement.

(1) An agency agreement shall terminate:
(a) where the period of time for which it was entered into expires;
(b) where the agent, being a person, dies, becomes incapable or is

declared bankrupt;
(c) where the business organisation acting as agent is wound.up.
( 2) Either party to an agency agreement made for an undefined period

of time may terminate it on notice. Notice need not be given where
there is good cause for termination.
(3) The period of notice shall be fixed in the agency agreement or, where
not fixed, by custom. It shall not be less than one month during the
first year of service and not less than two months after the first year.
Art. 53. - Compensation due in case of termination.

Where the principal terminates without good cause an agency agreement
entered into for an undefined period of time, the agent shall receive fair
compensation which shall be fixed having regard in particular to the time
for whidh he aeied on behalf of the principal and to the customers intro.
duced or goodwill created or extendetl by him.
Art. 54. - Uncom pleted business upon termination.

(1) Whenever an agency agreement terminates, the agent or his heirs or
the business organisation having acted as agent shall receive remune-
ration for all contracts negotiated or entered into prior to the termina-
tion of the agreement.
(2) Upon termination of the agreement, all remunerations and expenses
due shall be paid forthwith by the principal.
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12 COMMERCIAL CODE
Art. 55. Prohibi~ion from carrying on similar private trade 011 termination
of the agreement.
( 1) The agency agreement may provide that, upon termination of the
agreement, the commercial agent shall not carry on the same trade
as thc principal or act as commercial agent or representative for a
trader carrying on the same trade as the principal.
(2) Notwithstaillding any provision w tihe contrary, any such prohibition
shall not he effective for more than five years.
Chapter 5. Commercial Brokers

( 1) A commercial broker is a person or business organisation who, inde.
pendently, professionally and for gain, brings parties together for the
purpose of their entering into an agreement such as a contract of sale,
lease, insurance or carriage.
( 2) A commercial broker is a trader, regardless of the parties he brings
t()gether and of the nature and object of the contract for the comple-
tion of which_he_acts as an intermediary.
Art . 57. - Notice to parties.
(1) Unless customary or otherwise agreed, a commercial broker shall, where
the parties have agreed to enter into a contract, inform both parties of
the terms of the proposed contract.
(2) Unless customary or otherwise agreed, the proposed contract shall not
become effective unless it is confirmed by both parties.
Art. 58. - Liability of broker.
A commercial broker shall he liable for any damage he causes to either
party.
(1) A commercial broker shall receive remuneration when the contract for
the completion of which he acted as an intermediary is entered into,
whether such contract is performed or not.
(2) Unless customary or otherwise agreed, the remuneration shall be paid
only by the party having required the services of the broker.
(3) The remuneration shall he fixed in the agreement or, where not fixed,
by custom. The court may reduce the agreed remuneration where it
appears excessive and disproportionate to the services rendered by the
broker.
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COMMERCIAL CODE 13
Chapter 6. Commission Agents

(1) A commission agent is a person or husiness organisation who, inde-
pendently, professionally and for gain. undertakes to huy or to sell in
his name, hut on behalf of the principal, ~oods, movables or any other
thing of a similar nature, or to enter in his name hut on behalf of the
principal into a contract of carriage of goods.
(2) A commission agent is a trader. regardless of the parties and of the
nature and object of the contract.

The provisions of Art. 2234-2252 of the Civil Code shall apply to contracts
of commission.
Art. 62. - Stock brokers.

(1) Stock bJ'Okers are commission agents.
(2) Unless otherwise provided by law. they shall be subject to the provi-
sions relating to contracts of commission.
TITLE III. ACCOUNTS

Chapter 1. Keeping of Accounts Compulsory
Art. 63. Traders and Business Organisations.
(1) Any person or business organisation carrying on trade shall keep such
books and accounts as are required in accordance with husiness practice
and regulations. havin~ regard to the nature and importance of the
trade carried on.
(2) The provisions of Art. 66-70 of this Code shall apply.
Art. 64. - Petty traders.
Petty traders may bc exempted from keeping accounts on such conditions
as may be prescribed.
Art. 65. -- Special I'lIlcs applicable to business organisations.

Nothing in this Title shall affect the s!:,ecial provisions of Book II of this
Code applicable to business organisations.
Chapter 2. Books and Accounts to be kept

Art. 66. - Elllry of dealings.
(I) Every tratln shall keep a journal where hc shall make daily entries
of all his dt>alings regardless of thc nature of slH'h dealings or of the
manner in whi"'l they were carried out.
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14 COMMERCIAL CODE
(2) He may at least once a month balance the proceeds of such dealings
and shall in such a case preserve all documents necessary fAx- check-
ing these dealings day by day_
Art. 67. - Inventory and balance sheet.
(1) When beginning to carryon his trade, every trader shall prepare an
inventory and a lnilance sheet.
(2) A trader shall also, at the end of each financial year, prepare an in-
ventory of his assets and liabilities and balance his accounts for. the
purpose of preparing the final balance sheet and the.-cptofit· and loss
account. The balance sheet and the profit and loss account shaIl.be
entered in special books.
Art. 68. - Keeping of books.
(1) The hooks required under Art. 66 and 67 shall be kept in chl'Onolo-
~~-. -
gical order without any blanks or alterations.
(2) They shall be given a serial number and initialled by the Jf~
authority. The number 0:£ pages of which the books ooni~t shall be
specified by the prescribed authority on the last page of each book.·
Art. 69. - Preservation of books.
All books and accounting documents shall be preserved for ten years from
the date of the last entry in such books or from the date of such documents.
Art. 70. - Correspondence.
Originals of all letters, messages or telegrams received and copies of all
letters, messages or telegrams sent shall be filed and preserved for ten years.
Chapter 3. Books and Accounts Admissible Evidence

Art. 71. - Evidence in favour of party keeping books.
Where a dispute arises between tt'aders as to their commeroial activities, the
court may, notwithstanding the provisions of Art. 2016 of the Civil Code,
admit as evidence in favour of a party hooks and accounts which have been
kept by such party according to the provisions of the preceding Articles.
Art. 72. - Evidence against party keeping books.
( 1) Books shall prove against the party prodncing them.
( 2) A party who avails himself of hooks may not conceal any part of such
books that may contradict his claim.
Chapter 4. Keeping of Accounts
Art. 73. - Scope of application of this Chapter.
(1) The provisions of this Chapter shall apply to all commercial business
organisations and to all persons carrying 011 a trade on such conditions
as may be prescribed.
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COMMERCIAL CODE 15
(2) Special requirements may be prescribed in respect of certain kinds of

traders or business organisations. These requirements may differ ac-
croding to the nature and importance of the trade carried on.
Art. 74. - Assets in the balance sheet.
(1) The balance. sheet shall show, as assets, all the debit balances and, as
liabilities, all the credit balances.
(2) The assets shall appear in the following order:
(a) Establishment expenses;
(b) Fixed assets;
(c) Stocks;
(d)Sliort term or liquid assets;
(e) The results (Debit balance of the Profit and Loss Account).
Art. 75. - Liabilities in ihe Balance Sheet.
-'flrellabilities shall appear in the following order:
(1) The proper capital account and reserves;
(2) Profits brought forward and renewal funds;
(3) Provisions and long term debts; personnel pension funds, if any;
( 4) Short term debts;
(5) The results (Credit balance of the Profit and Loss Account).
Art. 76. - Amortisations, provisions, adjustment aCcounts.
( 1) Amortisations and provisions for depreciation shall appear under the
respective headings of the assets in the balance sheet.
(2) The adjustment accounts shall appear in the assets or liabilities side of
the balance sheet following the accounts to which they relate.
Art. 77. - Establishment expenses.
Establishment expenses are expenses made on the formation of the under.
taking or on the undertaking acquiring its permanent means of working.
Art. 78. - Fixed assets.
(1) Fixed assets consist of assets used for working, assets not so used, assets
completely amortised, and assets in course of being amortised.
(2) Assets used in working are any assets acquired or manufactured by the
undertaking not for'sale or for transformation but to be used in a last-
ing manner as instruments of work.
(3) Assets not used for working. are any aS8ets acquired or manufactured
by the undertaking by virtue of the employment of capital and not
for use as instruments of work.
( 4) Assets completely amortised are those still in lise but whose value is
entirely written off.
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16 COMMERCIAL CODE
(5) Assets in course of being amortised are those whioh are still not writ.
ten off at the end of the financial year.
Art. 79. - Stocks.

Stocks are goods, materials, supplies, semi·finished and finished products,
works in progress and packing materials.
Art. 80. - Capital and reserves.

(1) The capital is the original value of the elements put at the disposal
of the undertaking by the owner or partners by way of contributions
in cash or in kind.
(2) All profits preserved for the undertaking and not forming part of the
capital shall constitute a reserve.
Art. 81. - Balance carried forward.

The balance carried forward is made up of previous years' profits which
have not been distributed or transferred to reserves, or of previous years
losses which have not been covered by subsequent profits.
Art. 82. - Amortisations and provisions.
(I) Amortisation is the accounting measurement of the loss sustained by
the fixed assets that necessarily depreciate with time.
(2) The provisions for risks are intended to provide for definite risks, na-
mely clear precise losses, which are foreseen at the end of the financial
year.
(3) The provisions for depreciation are intended to provide for the reduc·
tion in the value of some of the assets which can reasonably be expect·
ed.
Art. 83. - Adjustment accounts.
The adjustment accounts are intended to correct debts and amounts owing
not written in ordinary accounts so that only those effective debts and mo·
nies owing appear at any particular financial year.
Art. 84. - Valuation.
(I) Fixed assets shall appear in the balance sheet at their value of origin
or if they have been revalued at their revaluation.
(2) Merchandise, materials, supplies, packing materials in stock art the date
of inventory shall be valued at their cost price.
(3) Immovable assets shall appear in the balance sheet at their purchase
price.
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COMMERCIAL CODE 17
( 4 ) Wastes (remains of rna terials and refuse proceeding from manufacture)

shall be valued at the ruling price at the date of the inventory or in the
absence of a ruling price at their probable value of realisation.
( 5) Products or works in progress shall appear at their COSt on the day
of the inventory ~
Art. 85. - Provisions for depreciation.
If the real value of merchandise, materials, semi-finished products, finished
products and packing materials in stock on the day of the inventory is less
than the cost price, the trader or commercial business organisation shall
constitute equivalent provisions for depreciation.
TITLE IV. THE COMMERCIAL REGISTER

Chapter 1. Organisation of the Commercial Register
Art. 86. - Local and central registers.
The commrecial register shall consist of:
( 1) local registers kept in each Taklay Guezat, and
(2) a central register kept at the Ministry of Commerce and Industry.
Art. 87. - Official commercial gazette.
( 1) All principal or subsidiary entries and all complementary entries, alte-
rations or deletions sent to the central register shall be published in
the official Commercial Gazette.
( 2) Regulations may permit of the publication of e:x;tracts only.
(1) Publicity through the commercial register shall be effected, with regard
to persons, by the entry of declarations made by such persons before
the authol1ities responsible for keeping local registers. Entries in the
cmnmercial register shall ibJave effect as from the lWorking day follow-
ing the day when rlihe entl1Y was made.
( 2) The provisions of Book II of this Code shall apply to entries of decla-
rations made by business organisations.
Art. 89. - Keeping of local registers.
Local registers shall be kept in each Taklay Guezat by a person appointed
by the Ministry of Commerce and Industry.
Arl. 90. - Central Register.
( 1) The central register shall be kept in Addis Ababa by a special depart-
ment of the Ministry of Commerce and Industry which shall be known
as the Department of the Central Commercial Register.
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18 COMMERCIAL CODE
(2) The Department shall:

(a> collect from all local registers all information relating to any
registered person;
(b) ensure that 1Ihe provisions of the law regarding commercial regis.
ters are complied with;
(c) ensure that publications under Art. 87 are effected;
( d) receive and preserve such acts, documents and notices regarding
business organisations as are provided in Book II of this Code.
Art. 91. - LiabUiay.
Officials in charge of commercial registers shall be personally liable for any
damage caused by them or by employees appointed by them.
Art. 92. - Communication 01 entries to third parties. ~
Any person on payment of the prescribed fee may require the of1icid,~
charge of a local or the central register to deliver to him a copy of any ex·
tract from the register or, where there is no entry for which he is searching,
a certificate to the effect that there is no entry.
Art. 93. - Particulars on business papers.
All registered traders shall specify on all papers used in their business the
Taklay Guezat in which they are registered and their ~tion number.
Chapter 2. Enmes in the Commercial Register

Section 1. General Provisions
Art. 94. - EnIrie8.
Entries in the commercial register shall consist of all pri,ncipal, subsidiary
or complementary registrations, and of all alterations and 'deletions.
Art. 9S. - Man1U!f' 01 making entries.
( 1) Entries shall be made upon a written statement made by the person
seeking registration.
(2) Entries may be cancelled as of right as provided in Art. 114.
Art. 96. - Form 01 statement.
(1) A statement under Art. 95. (1) shall be in writing and in three copies
signed by the person seeking registration or his representative, and
shall be handed to the official in charge of the iocal register.
(2) All necessary documents, if any, shall be annexed to the statement.
( 3) The statement shall be made within two months from the occurrence
of the fact to be registered.
, \
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COMMERCIAL CODE 19
Art. 97. - Accuracy of statements.

( 1) The official in charge of the register shall verify the accuracy of the
statement made by the person applying for registration. Where a perIOD
applies to be registered as a trader, the official shall ucer.tain !W'hetiher
the applicant fulfils the legal requdtrements for carryiIDg on the tmde
in respect of wlhdch registration is sought.
( 2) The official shall check all documentary evidence supporting ,the .tate-
ment and the con,formity of the statemen.t to such evidence.
( 3) The official may require the applicant to produce suoh fUl'ther docu-
ments or information as may be necessary.
Art. 98. - Application how dealt with.
( 1) The official in charge of the register shall make an eDJtry of all state-
ments which appeal" to be correct and shall return a copy of the state-
ment to the applicant. The date of registration and the registration
number, if any, shall be specified on such copy.
(2) Two different types of numbers shall be used according to whether
registration is sought by a person or a business organisation.
( 3) The official shall k~ a cop.y of the sl!atement and sball file it.
( 4) The third copy shall be sent to the Department of the central c0m-
mercial register.
Art. 99. - Disputes between applicant and official.
Any dispute arising between the applicant anq. the official in charge of the
register shall be decided on by the Mimster of Commerce and Industry.
Section 2. Registration
Art. 100. - Persons to be registered.
( 1) Any Ethiopian or foreign person or business organisation carrying out
commeroial activities within the
Empire of Ethiopia shall be registered.
( 2) The p.rovisions of sub-art. (1) shall appl'Y in pa;rtioular:
( a) to any Ethiopian or foreign person who is a trader wiIt6itn the
meaning of Art. 5 of this Code;
(b) to any Ethiopian or foreign business organisation which is a com-
mercial business organisation within the meaning of Art. 10 of this
Code;
( c) to any foreign public undertaking carrying out commercial acti-
vities and to any commercial representa1li.ves or agents of foreign
States, public institutions or undertakings.
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COMMERCIAL CODE
( 3) Special regulations applicable to undertakings under suh-art. ( 2) ,

( c) shan he prescribed.
Art. 101. - Application for registration compulsory.

(1) A person shall not he registered as a trader unless an application to
Ilhis effect is made by the said person or his attorney.
(2) The application shall he made <within two months from the day on
whioh .the trader began to carry on his trade.
(3) The power of attorney shall be annexed to an application made by an
attorney.
Art. 102. - Cancell4tion of registration of former trader.

Wlhere an existing business is sold or let out for hire, the pu,rohaser or
lessee shall not he registered for so long as the registration of the former
trader has not been cancelled in the register.
Art. 103. - Place of registrdtion.

( 1) The application for registration shall he made at the registry of the
Taklay Guezat within whose jurisdiction the person seeking registra1ion
carries on his tmde. Whcre the ap.plicant carries on several trades,
,he shall make the application at the registry in the Taklay Guezat
within whose jurisdiction the principal place of business is si1uate.
(2) Where the head office of the business is abroad, the trader shall make
the application at the registry in the Taklay Guezat within whose
jurisdiction the principal branch or agency is situate.
Art. 104. - Summary registration.

(1) No trader shall he principally registered in more than one local register
nor shall he he registered under more than one registration number
in one register.
( 2) Where a trader carries on a trade or is in charge of branches or agen-
cies at plcaes other than the place where he is principally registered,
he sha1I make an application to be summarily registered in those places
and a reference shall he made to the principal place of registration.
A:rt. 105. - ParticuWrs in respect of principal registration.

Where a trader makes an application for principal r~,istration, he shall
Slate:
(a) his name;
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COMMBRCIAL CODB 21
(b) his date and place of birth;

( c) hill nationality;
(d) bis private address;
( e) WIhue he is a mialor, the date on which he was authorised to carry on
trade by the family council;
(f) where Ihe is Dla1'l'iied, the place and date of the marriage and lWhe1lher
or not a marriage settlement was made and the date and the place
where or person with whom such settlement was deposited, if any;
(g) the objects of 1Ihe trade;
(h) whether he created t1he business or acquired or leased it and in the
latttf oases, the name of the former trade and all neceseary information
regarding dte r~S1iration of the former trader;
(i) the trade·name;
(j) the special designation under which he trades, if my;
(k) the address of the business;
(I) the address of other businesses, branches or agencies, if any, which
the trader operates either IIJt the place of regiatration or in any other
places;
(m) the names of the managers, if any, and whether tlh. powers are limit.
ed to tbe m.anagement of a branch;
(n) the date on which the licence for carrying on the trade was granted,
if any.
Art. 106. - Particulm-s in respect of summary registration.

Where a trader makes an application for summary registration, he shall
Btate:
(a) bia DIIQJe;
(b) his Jl8liona,lity;
( c) hie privlate addrees;
(d) '\!he trade name of the business, branch or agency;
( e) <!!he address of the bnsineu, branch or agency;
(f) dte objects of the trade;
(g) lIhe name of tihe manager and whether his powers are limited to lIhe
JD8iIl8gement of a branch;
(h) ,the date on rwlhiclI the licence for carryJ.ng on the trade WO$ granted,
if any;
(i) the reference to the principal registration, the place where it was made
and the registration number.
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22 COMMERCIAL CODE
Art. 107. - Commercial business organisations.

The relevant provisions of Book II of this Code shall apply to registration
of commercial business organisatiQIls.
Section 3. Alteration of Entries and Additional Entries

Art. loa. - Alteration of entries.
( 1) Any registe;red person shall, withlntwo months from the occurrence
of a fact making necessary an alteration in the pamicUlars of . .
tration, apply for the entry ,to be altered.
( 2) An application under sub-art. (1) may be made by any lep1ly inte-
rested perSQIl.
( 3) In particular, the dismissal of the manager shall be entered.
Art. 109. - Additional entries in respect of pe1'lOns.

(I) Any registered person shall apply for the following addi,1Jioual entries
to be made where necessa;ry:
(a) the marri.age of the ,tradq, 1Ihe place and date of the marriage
and whether or not a marriage settlemem was made, :the date and
the place where or the person with whom the settlement was
deposited, if any;
-(b) the dissolution of the marri~ QIlthe decision of the famlly
. .arhitrators or hy the court;
( c) the judgment declaring the trader incapable;
(d) an objeellion of the spouse, if any;
(e) the setting aside of an objectiOll\ under Art. 18 of this Code;
(f) the appointmen,t of new managers;
(g) the opening of new branches or agencies. Where a DfIW Jmmch
or agency is opened, it shall be lUDlDlarily registered in the register
of the Taklay Guezat where such branch or agency is situate.
(2) An application under sub-art. (1) may he made by any legally interest-
ed person.
Art. llO. - Additional entries in respect of bwiMss org~.
The relevant proV1isions of Book II of this Code shall apply .to additional
entri.es in respect of oommercial business organisations.
Art. Ill. - Judgments in bankruptcy.
" The rele\'allt provisioll8 of Book V of oIIhis Code shall apply to additional
entries of judgments l'f'lating to bankruptcy or schemes of an.ngement.
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Section 4. Cancellation of Entries

Art. 112. - Cessation of trade.
Any registered person shall apply for iIlhe registration to be cancelled <within
two months from his ceasing to carry on his trade or where he letB his
business out for hire.
Art. 113. - Death of trader.
( 1) ~he heirs of a deceased trader shall apply for the registration to he
cancelled within two montihs from the dearth.
( 2) Where the heirs carry OIl the trade under joint owner9h!ip, they shall
apply for a new registmtion to be erutered.
(3) Where the joint ownership is dissolved, the entry made under sub-art.
(2) shall he oancelled and the person to whom the business is assigned
shall apply for a new registration to be erutered.
Art. 114. - Entries cancelled as of right.
( 1 ) Cancellation may be ordered as of right by the Minister of Commerce
and Indus~ in particular /Where he knows that a business has ceased
to operate or that a trader has been declared incapeible to trade or to
carry on the registered trade.
(2) The order of oancellation shell he notified by the Minister of Com·
merce and Industry ItO the trader coxwemed and to 1!he official in charge
of the ~istry where the cancellation is to he entrered.
Chapter 3. Sanctions
Section 1. Penal Provisions
Art. 115. - Failure to register.
Whosoever fails to register or to cause an entry to be made in the register
in accordaxwe with the provisions of this Code shall he guitty of an offence
and shall on conviction he liable to .the penalties provided in Art. 428 of
the PeIll81 Code.
Art. 116. - Inaccurate statements.
Wihosoever intentionally makes inaccurate statements in relation to regis-
tration shall he guilty of an offence and shall on conVliotion he liable to tihe
the penalities provided in ~t. 387 of the Penal Code.
Section 2. Civil Sanctions

Art. 117. - Effect of registration.
( 1) All registered persons or business organisations shall he deemed to he
traders, unless the contrary is proved.
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24 COMMBRCIAL CODE
( 2) Registered persons qr busi!o.ess organisaliions shall not he permitted

lID prove that they are not traders and shall incllt all liabilities <whiCh.
the status of trader entails.
Al'It. 118. - Effect of failure to regU1ter.

(1) Any person who ,ails
to register in accordance with the p.rovisions of
this Code may not hold himseH out to be a trader to third parties,
but he shall be liahle as tbouglh he were a trader.
(2) The relevant provisions of Book II of this Code shaH apply to business
organisations.
Art. 119. - Effect of failure to cancel entries.
Any tregistered person who assigns his business or lets it out for hire shall,
until his ;registration is cancelled, be jointly and severallr liable for all
debts mcurred by the assignee or lessee.
Art. 120. - Effect of entries.

( 1) Any person who caused an entry to he made in the register shall not
be permitted to show that suoh entry is inaccu:rate unless an applicatiol!.
is made for sU(ili entry to he altered.
(2) Tlilid parties shall not he permitted to prove thm they did not know
of a fact enrtered in Itlhe oommereial register.
Art. 121. - Facts relating to persons not to affect rights of third parties.
The follOWlilng facts shall not affect 1!he rights of ~hird pM'ties in good
faith where they have not been entered in the commercial register:
(a) the minority of the trader;
(b) the marriage of the 'tlrader;
(c) the marriage settlement of the trader;
(d) ,the dissolution of t>he marriage of the ¥"ader;
( e) UIe judgment declaring the trader incapable;
(f) an objection under AN. 16 of this Code;
(g) the limitation of ~ powers of a manager to the management of a
branch or agency;
(ih) the dismissal of a manaser.
Art. 122. - Facts relating to business organisations not to affect rights of third
parties.
Facts relating to business organisations whioh do Dot affect the rights to
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COMMERCIAL CODE 2S
third parties where they have not been entered in the lO~cial register
ue prescribed by Book II of this Code.
Chapter 4. Final Provisions

Art. 123.- Matters to be prescribed.
Regulations shall he IIUlde by the Ministry of. Commerce and Industry for
the purpose of carl'ying i'nto effect the provisions of 1ihis Title relating to:
(a) foreign public undertakings under Art. 100 (2) (e);
(b) the manner of keeping local registers and tbe central register;
(c) the manner of numbering reg,istrations;
(d) documentary evidence to he produced;
(e) forms for making applications;
(f) fees to be paid on registration and on delivery of copies or extracts
from registers;
(g) publication of the official commercial gazette, notices to be pub-
lished therein and costs of such publiioation;
(.b) any other matters which IIUly or shall he prescribed.
TITLE V. BUSINESSES
Chapter 1. General Provisions
Art. 124. - Definirion.
A business is an inoorporea1 movable consisting of all mova\»141 property

m.-ou,ht tog~her and organised for the p.urpoee of oarry~ng out any of the
commercial ac1livities specified in Art. 5 of this Code.
Art. 125. - Traders and businesses.
(1) Every trader operates a business.
(2) A ,trader may operate several busin~ for the purpose of carrying
out vatrious commercial _\'lines.
( 3) A vader may operate a business in the ~paciby of owner, usufruc-
tuary or 'lessee. Only the person who operates the businese .shall be
deemed to he a trader and t.be owner or lessor of the business shall not
he rregarded as a trader.
Art. 126. - Principallnuiness and branches.
( 1) A business IIUly consist of one ]¥'incipal bWliIl.eiS or of a prinoipal
business wi1!h! branches or agencies which shall be deemed to be part
of the business.
(2) The head office of t!hIe business ~ be at the place where l\he trader
opeJIIl'tes his prinoiip,eJ business.
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26 COMMERCIAL CODE
(a} Where a branch or agenoy is sold or let out for hire without the
principal being sold or let out for IMre, such sale or lease shall be
deemed to be a sale or lease of a businees and the head office of suclJ.
business shall be at the place where the assignee or lessee operates the
branch ~ agency.
Chapter 2. Elements of a business

Section l. Consistency of a Business
Art. 127. - Goodwill and mcorporeoi elements.
( 1) A business consists mainLy c4 a lJOOdwill.
(2) A business ~ consist of other i!ncorporeal elements such as:
(a) the ,trade.name;
(b) the special designation WIder whiclh the trade is carried on;
(c) the right rto lease the premises in which the trade is canied on;
(d) patents or copyri~;
( e) such special rights as attach to the business itself and not to rthe
trader.
Art. 128. - Corporeal elements.
A business may consist of ~real elements such as equipment or goods.
Art. 129. - Assets and lwbilities.
( 1) A business shall normally not include the assets and debts of the
trader, with the exception of the right to the lease of the premises.
(2) Nothing in this Article shall aft'ect the special rules provided in
Art. 2587 of the Giivil Code and in Art. 159 and 673 of dJ.~s Code.
Section 2. Goodwill and Unfair Commercial Competition

Art. 130. - Definition 0/ goodwill.
The goodwill results from the creation and operation of a business and is
of a value whiCih may vary according to the probable or possible rela<tions
between a trader and third parties who may require from him goods or
services.
Art. 131. - Preservation 0/ goodwill.
A trader may p~serve his goodwill by instituting proceedi.njgs for unfair
competition or by setting up the legal or contractual prohibitions provided
in Art. 30,40,47, 55,144,158,159,204 and 205 of this Code.
Art. 132. - Un/air commercwl competUion.
A trader may claim damages nnder Art. 2057 of the Civil Code from any
person who commits an act of competition whioh amounts to a fault.
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Art. 133. - Cases of unfair competition.

( 1) Any aot of competillion eontrary to honest commercial practice shall
conetitute a fault.
(2) The following shall be deemed to he acts of unfair com}¥'lliltion:
(a) any acts likely to mislead customers regudiDg the Undertaking.
products or commercial activities of a competitor;
(b) any false statements made in the course of businees !With a view
to discrediting the undertaking, productS or commercial activitiea
of a competitor.
Art. 134. - Effect of unfair competition.
( 1) ~he court may, in cases of unfair competWtion:
( a) cmler that damages he paikl. by the unfair compellitlor; and
(b) make sudh: orders as are necess8l!y to put an end to the unfair
competition.
(2) 'I1he court may in particular:
<a) order tihe publication, at the costs of the unfair competitor, of
notices designed to remove the effect of the mjsJeadins acta or
statements o,f the unfair competitor, in accordance with Art. 2120
of the Civil Code;
(b) order the unfair competitor to cease ibis unlawful acts in accor-
dance with Arl. 2122 of the Givil Code.
Section 3. Trade-Names
( 1) A trade-name is the name underwhioh a ~n operatee hie busiDese
and 'Which clearly desi&nMes ·the business.
( 2) The relevant prov.isions of Book 11 of this Code ahaU apply to firm·
names used by business organisations.
Art. 136. - Family Name of trader or assumed nome.
The trad.e-name' may he the trader's family name, 'With w·~ IUs
surname, or an assumed name, but all business papers IIhall be signed by
the trader in his own name.
Art. 137. - Trader's Name.

<1) Every trader may carry 011 his trade under his family name, wilh or
without his patronym.is:

Provided that Art. 45 of the GiNn Code IIhall apply where .uch ....,
or patronymic is likely to Cl-ea1e eonfusion in a manner pnjudWal
to the interests of another 1nder.
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(2) Where proceedings for unfairoompetition lire inmtuted by reuon of

~ ete8ted by the use of the trader's name,tihe COUl"t may o,rder
that cbmages be paid by the trader who created confiu.tion and may,
.ba addition,. WeI' such trader to include his surname or patronymic
iu.hit tracle-aQle aD as to obviate confusion.
Art. 138. - Auumea Mme.
(1) '~~irader may carry on his trade under an assumed nam.e provided
.\iol1<Di*me is not likely to create confusion in a manner prejudiaial to
(2) Wi.
the iDterests of another trader.
proceedings for unfair competition are in&~ by resson of
confusion created by the use of an assumed name, lIhe oourt may order
'lIhat dam!lge8 be P,aid by the ,trader who created confusion and may,
in adcliiion.• prohibit such trader from using the assum'ld name.
Art. 139. - A8&ignment of trade-Mme.
(1) 'I1be trade-JI8lDe may not be assigned except together with the business
... WIlich it !efen.
(., fti·lftcfe..namemay not he 1lI!Ied by tllhe new trader unless it is foll.ow-
'ed';hy the name of suCh trader and by the words "S\WCe&80r" or
"lfl8ll8e". The new trader may only use his own name in signing com-
m.em..l' 'J'Mpers.
Section 4. D~tinguishing Marks
Art. 1400. - DefinitWn.
(1) A distinglMhingmark is the name, design8Jl1i.on, sign or emblem.
~ ea abe ~wthere tIhe trade is carried on and 'WthiCh cleax:-
ly designates the businlllNt.
(2) Ttl» ~ ill a ~ilng DI,ill'k is not compulsory.
Art. 141. - Clwiee of distinguishing mark.

( 1) A ,trader may choGae any distinguishing mark.
~)~~ ·may JJe claimed on the ground of unfair. competition where
~!~ mark it likely to create confusion in a mtUlDer
prejudicial to anotihler trader having used an identical or similar
dDtinguishing mark.
Section 5. Right to the lease of the premises

Art. 142. - Civil Code GPplicable.
WitbQv.t, pj:JlcUce to 'll4e provisions of 1Ihis Section,.the p!OYUions of the
~iJ .~. lIhall.apply to the ftcbt to the lease of the premises in which
the trade is carried on.
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Art. 143. - Nature of the trade carried on.

Where the contract of lease specifies the nature of the trade to he carried
on hy the lessee, the contract may be cancelled where the lessee carries
on a different trade.
Art. 144. - Prohibition of trade by the lessor.
( 1) After the contract of lease has been entered into, the lessor may not
carry on in the same huilding a trade similar to the trade carried on
hy the lessee.
( 2) Where the lessor disregards the prohihition provided in suh-art. (1) ,
he shall he liable for damages and his business may be closed.
Art. 145. - Pro.hibition from assigning or sub-letting.
(1) Notwithstanding the provisions of Art. 2959 of the Civil Code, any
provision in the contract of lease which prevents the lessee from
assigning the contract of lease or from sub·letting tIhe premises to the
person who buys his husiness, or which makes such assignment or sub·
lease dependent on the lessor's consent, shall be of no effect.
(2) Any provision which p,revenfs or restricts a trustee in bankruptcy from
exercising his rights under Art. 1062 of this Code shall he of no effect.
Art. 146. - Termination of contract o/lease.
( 1) Where a husiness is mortgaged, 'the lessor shall inform the creditors
when he terminates the lease or he illJtends amicably to terminate the
lease or to enforce a provision for teNIlination made in the contract.
The lease shall terminate not earlier than one month following such
notice to the creditors.
(2) Where notice is not given,tJhe termination of the contract of lease
shall not affect creditors having secured rights on the business.
Art. 147. - Lessee declared bankrupt.
(1) Any clause in the contraot of lease providJing that tihe contract shall
terminate as of right where the lessee is declared bankrupt shall be
of no effect.
( 2) Wilrere the lessee as declared bankrupt, ,the trustee may e~ise his
rights under Art. 1040 and 1062 of thds Code and the lessor may
exercise his rights under Art. 1060 IIiIld 1061 of this Code.
Section 6. Patents and Literary or Artistic Copyright
Art. 148. - Patents.
(1) A husiness may consist of patents relating to regiMered inventions,
trade-marks, designs and models.
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(2) Patents shall be subject to the provisions of special laws.

Art. 149. - Literary and artistic copyright.
( I) A business may consist of literary or artistic copyright.
(2) The provisions of Art. 1647·1674 of the Civil Code shall apply to
literary or artistic copyright.
Chapter 3. Sale of a business

Art. 150 - Civil Code applicable.
Without prejudice to the provisions of this Chapter, the provisions of Art.
2266-2367 of t,11(' Civil Code shall apply to the sale of a business.
Art. 151. - Scope of application of thi~ Chapter.
( 1) The provisions of this Chapter regarding the sale of a business shall
apply:
(a) to any sale or assignment, evcn under a disguised form;
(b) to any sale by auction at the request of joint owners.
( c) to any distribution accompanied by compensation,
where such sal,e, assignment or distribution relates to a business
or its goodwill or to a branch or agency ass~$l1ed wi1Jhout the prin-
cipal business being assigned or the goodwill of such branch or
agency.
( 2) The provisions of this Chapter shall not apply to the sale of individual
parts of a business other than the goodwill, unless such sale entai~s or
conceals the sale of the blL~iness or of the goodwill of a business.
Sections 2. Fonnalities
Art. 152. - Sale to be in writing.
The sale of a business shall be null and void unless evidenced in writing.
Art. 153. - Particulars in the contract of sale.
Tlhe contract of sale shall specify:
( 1) the turnover and profi·ts made during the last three financial years
or since the business was created or acquired by the seller, where
such creation or acquisition took place less rtlhan till'I'OO years before
the sale;
( 2) Wlhere the business is carried on in premises let out for lti.t6, the date
on which the contract of lease was made and is to expire and the same
and address of the lessor;
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COMMEJlCIAL CODE 31
( 3) the mortagages on the business, Wf any.

Art. 154. - Cancelkawn of the contract.
( 1) 11he COUrt lImy cancel 1Ilhe contract of sale on the appticatit1n Of die
buyer where it is of opinion that ,the buyer was injured bY the 'failure
to comply with any of the requirements p,rovided in Art. 153.
(2) Tlhe court may cancel the contract of sale or reduce the price of ,the
sale on the application of tlhe buyerwbere it is of opimoD that· ....
buyer was injured by any inaccurate statemeot made unclei Art. 153.
( 3) Proceedings under sub-art. ( 1 ) and (2) shall i be iDstituted.:' duriDs
the year fWiJthin which the contract 'W8B made.
Section 3. Duties of the Seller

Art. 155. - Duty to hand over.
( 1) The seller shall ,h.a!nd over tlhe busiiness to llhe buiyer.
(2) Unless otherwise agreed, the sale of a business impiiea the .,. of"aU
the conhtituent parts of such business.
(3) The seller shall enable the buyer to take over the ~ by bend·
ing to ihim all necesS8J.'Y documents and information.
( 4) The provisions of the Civil Code and of special laws sliall apply to
the assignment of patents and copyrigIhts.
Art. 156 - Books and accounts,
( 1) On the day of the sale, the seller and the buyer shell check all at>
counts and prepa,re an inventory of all accounting docUmettttl and
books.
(2) The seller shall retain all his books and accou.DtiDg dooumeots and
the correspondence scot or ;received by him, but he i.han, notwith-
standing any provision to the contrary, keep them. available {or in·
spection by 1Ihe buyer for a period of two years.
Art. 157. - Commereial corresporn;lence.
The seller shall hand to the buyer all correspondence relating to the
business which ihe may receive after the sale of the business.
Art. 158. - Seller prohibited from competi!'g.
( 1) During five years from rJJhe sale, the seller shall re(rain from doiDg
~ act of competition likely to injure the buyer. He may not carry
on, in the vicinity of the business he sold, a trade siInia:t to the
trade <lIU'riOO. on by the buyer.
(2) 11he contract of II8le may specify <lihe extent of sudb ~n which
shall in no ease exceed five 'Years.
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Art. 159. - RisM. of .ubsequmt buyer.

A prohibition under Art. 158 sball be deemed to be an element of the
~ uad may ~ enforced by the buyer and bia heirs end by any eubse-
~buyer.
Section 4. Duties of the Buyer

AlIt. H6•.- Duty to pay til. price.
TIle lnayer aIWl paytbe price in the manner provided in the contract or,
wIItmt'''-.peoiIil provision is made, in cub. Notwithstanding any agreement
to the ecmtruy, tlbepnmsions of Art. 162 of this ~e shall apply.
Art. 161. - Publicati4~f)f the ,,",.

The buyer ahaIl ensure that notice of sale is published in acoordanee with
the provisions of Art. 164-170 of this Code.
An~ .l6t. __- ~ from dispoBiliB of proceeds ofltlle.
(1) Afttrr the sale, the price of the sale shall DOt be paid to the seDer until
file ~- of time lor making applications to set aside expires or, where
any mcb. application has been made, 1lDtH the ~ts of the creditors
haft been settled by agreement or by the court and such creditors
have been paid.
(2) Until that time, no pa}'Dlent or assignment of the claim shall affect
the l'ijbta of the ..ner'. creditors.
{3)Tbe·CODtZIIct of sale may provide that the buyer shall depoBit the price
of the sale :with a third party. Any sUdh deposit shall discharge the
·~1er ~ his liabilities to the seHer hut the buoyer shall remain
liaWe.te!&be seller's creditors.
Alt. 165'. --- Grutrluttt!e' of the seller.

Until be is fully paid, the seller .hall be secured by a legal mortgage and
aballibave 1Jhe right to cancel the contraot as provided in Art. 173-176 of
tldIr CIiCIt.
Section 5. Publication of the Sale and Rights

of the Seller'~ Cl'editors
Arl. 1M. - PUblication of· the sale.
( 1) ......".. busin_is IOld, the buyer shall ensure .that a notice to this
eft'ectis published in tile official commercial gazette and in a news-
.... ma,owered te pillilillh IfJ8al notiees ci,rculating in the Taklay
Guezat where ~e ihead office of the business is llituate.
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COMMERCIAL· CODE 33
(2) Where the business sold comprises branches or agencies situate in

d.iJferent places, the notice under sub·art. (1) shall be published in a
newspaper empowered to publish legal notices circulatblg in the
Taklay Guezat where each branch or agency is situate.
Art. 165. - Particulars to be published.

Notice under Art. 164 shall show:
( a) the names and addre&&es of the &elIer and buyer;
(b) the objects and addreS& of the businesa;
( c) the objects and addresa of any branch or agency which may have
been sold !With the busineS&;
(d) the date and nature of the contract of sale;
(e) illhe price of tlhe &ale;
(f) the address for aervice &t the place where the business ia muate.
Art. 166. - Time within whic.h to publish notices.

(1) Notices under .Art. 164 sha1l be published during the month within
'WIhiah the sale took place.
(2) Late notice shall be valid, but the buyer lDa!y be liable for any damage
caused to the seller or to the seller's creditors by reason of the delay.
Art. 167. - Application to set aside.

(1) Within one month from the publication of the last notice, any creditor
of the seller may, even where his claim is not due, move 1Ihe court
to set aside the proceeds of the salt'l and shall notify the buyer at his
address for service.
(2) The application shall show the name and address of illhe creditor and
the amount and basis of the claim.
(3) Where notices under Art. 164 have not been published or did not
contain all the particulars required under Art. 165, an application to
act aside may be made at any time.
( 4) Until the application is decided on, the buryer or 1lhird party wi11h
whom the proceeds of the sale have been deposited may not dispose
thereof and the provisions of Art. 162 shall apply.
Art. 168. - Application rejected.

The buyer may move the COUl't to r~jeot an application whiah is not cor·
rect in form, or which is late or made without good cause.
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Art. 169. - Distribution of the proceeds of the sale.

( 1) The proceeds of the sale shall he distributed by agreement or by order
of the court between the creditors having a claim secured by the
business and the creditors having made an application to set aside.
(2) The surplus, if any, shall he handed to the seller.
A lit. 170. - Overbid by creditors.
(1) Creditors under Art. 169 (1) may move the court to order that the
business be sold by auction where the price of I1he sale is insufficient
,to meet their claims.
(2) The court shall order the sale by auction and the price of tthe sale
shall be higher by one tenth than the price specifi~ in the contract
of sale.
( 3) Where no third party presents himself at the sale, the business "hall be
sold to the creditor making the highest bid.
Chapter 4. Mortgage of a business

Art. 171. - Mortgage possibl~.
( 1) A business may he mOl'tgaged.

(2) MOl'tgage of a business flows from the law or a contract.
( 3) Any mortgage, whether legal or contractual, shall be· registered.
Art. 172. - Mortgage under the law.
( 1) The following persons shall have their claims secured by a legal mortg-
age on the business:
( a) the seller of a business, for so long as the price of 'the sale has
not heen fuHy paid to him;
(b) 1he creditors of bankrupt trader.
(2) The relevant provisions of Book V of this Code shall apply ,to a
mortgage under suh-art. (1) (b).
Section 2. Mortgage of the seller and

action for the cancellation of the contract of sale
Art. 173. - Legal mortgage.
( 1) WIlere a person sells a business and the price of the sale is uot fully
r' ••
paid to him, the payment of ,the price or such part thereof as is still
due shall be secured by a legal mortgage on the business sold.
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COMMBRCIAL Coos 85
( 2 ) TIhe provulOI1S of sub-a,rt. ( 1 ) shall not app1Jy unless the sale- was
made in writing and ,the mortgage has been ~ in the manner
provided hy law during the month wi1hin Wibioh the aaie took place.
Art. 174. - Action for the conceUation of the contract.

The seller who lis not fWly paid may cancel the contraot of eale. The
cancellation of the contract shall not aft'ect thi.rd parties unless tthe
mortgage has been registered as provided hy law and ~e possibility of
bringing an action f~r cancellation has been entered in the register in
which the mor1g~e was registered.
Art. 175: - Registration of legal mortgage.

( 1) 'Dire entry of the legal m01"tgage in the register shaH Iihow:
( a) the names and addresses of the seller and buyer;
(h ) the date and na'ture of Ibhe contr8icl of sale and the pirce of the
sale;
( c) the amount of the purehase price paid;
( d) the conditions for demanding payment and the rate of interest:
(e) the possibility of bringing an action under Art. 174;
(f) the objects and address of Ibhe business;
(g) the scope of the mortgage;
(h) the address of any branch or agency morlpged with 1Jhe prin-
cipal business, if any.
(2) The mortgage. shall apply to suell parts only of the buSn. . as are a-
pressly specified in the entry.
Art. 176. - Bringing of action for cancellation.
( 1) The seller who cancels the contract on the ground that be ... ~
been fully paid (Art.174) ahall, whatever the pm of the price 8lilI
due, take back: the whole business in its condition on the day of Can-
cellation, but not i.Dcluding new parts a~ oter the 00Dtra0t of
sale .was made.
( 2) The increase or reductiDn in the 'NIue of the parta IOld abaiJ. he tabu
into account in settling ,the rights of the aeller uuI buyer.
Section 3. Contractual Mortgage

Art. 177. - Conditions of conuactual morfBGB8.
( 1) Any person who is capable under civil law uuI who OWDI a buain..
may mortgage such business notwilibatanding tbIIt be doeI DOt operate
it himseH.
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36 COMMERCIAL CODE
(2) T,he mortgage shall be in writing and shall be registered during the
month within which the mortgage deed is drawn up.
Art. 178. - Registration.
(1) The entry of the mortgage in the register shall show:
( a) the names and address of the mortgagor and mortgagee;
(b) the date and nature of the mortgage deed;
(e) the claim secured by mortgage, the conditions on which it may
become due and the rate of interest;
(d) the objects and address of the business;
( e) the scope of the mortgage;
(f) the address of any branch or agency mortgaged with the principal
business, if any.
(2) The mortgage shall apply to such parts only of the business as are
expressly specified in the entry.
Section 4. Manner of Registering Mortgages

Art. 179. - Place of registration.
( 1) 'I1he mOl:tgage shall be registered by the official entrusted by ..he
Ministry of Commerce and Industry with keeping in each Taklay
Guezat the register of mortgages of businesses.
(2) 1'he mortgage shall be entered in the register kept in the Taklay
Guezat within whose jurisdiction the business is si,tuate.
( 3) Where the business comprises branches or agencies situate outside the
jurisdiction of the Taklay Guezat, -the mortgage shan be entered in
the register kept in each Taklay Guezat within whose jurisdiction eaoh
branch or agency is situate.
Art. 180. - Removal of the business.
( 1) A debtor who wishes to remove his business shell inform the secured
creditors. The debt shall become due immediately where such notice
is not given or removal is effected earlier than one month from such
notice.
(2) Creditors may exercise their rights under Art. 188 where they are
of opinion that the removal would reduce the value of the business.
(3) Where creditors agree to the removal and the business removed remains
within the same area of jurisdiction, the creditors shan apply for the
entry in the register to be varied accordingly. Where the business is
removed ,to another place, the creditors shall ensure that a new entry
is made in the register kept in the Taklay Guezat within whose juris-
diction the new head office is situate.
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COMMERCIAL CODE 87
(4) Where an entry is varied or a new entry is made under .u.b-art. (8).
such varied or new entry shall have effect as from the day of the
original entry.
Art. 181. - Principal claim and interest.
Reg~str/ltion shall have the. effect of securing two years inte;reat in the same
rank as the principal claim.
Art. 182. - Duration of registration.
Registration shall Secure the claim for five years from the date of resistra-
tion and shall cease to have effect where not renewed before the expiry of
five years.
Art 183. - Cancellation. of registration.
Registration shall be cancelled either where all interested parties 80 agree in
writing or following a final judgment by the court.
Art. 184. - Communication of entries to third parties.
Any person on payment of the prescribed fee may req'l!ire the offi~ in
charge of the register of mortgages to deliver to him a copy of any extract
from the register or. where there is no entry for ~hich he is searching, a
certificate to the effect that there is no entry.
Art. 185. - Liability.
The official in charge of the register of mortgages shall be liable for fall-
ing to make the entries he is required to make and for any error or 0mis-
sion committed in delivering a copy or a certificate under Art. 184.
Art .• 186. - Regulations.
(1) Regulations shpll specify:
(a) the manner of keeping registers of mortgages;
(b) the manner of making or cancelling entries.
( 2) The fees to be paid on registration and on delivery of extracts or certi-
ficates under Art. 184 shall be prescribed by law.
Section 5. Rights of Secured Creditors

Art. 187. - Business assigned or let out for hire.
(1) Notwithstanding any provision to the contrary. the debtor may assign
his business or let it out for hire.
(2) It may be provided that the mortgage shall become due on the busi-
ness being assigned or let out for hire. Such provision shall be of no
effect unless it is entered in the register.
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38 COMMERCIAL CODE
Art. 188. - Reduction of the guarantee.

Where the debtor reduces or is likely to reduce the value of the business
in particular by removing it, by failing to pay the rent of the premises
in which the trade is carried on or by reducing the stocks, any secured
creditor may demand that new sureties be produced and, where not pro-
duced, may move the court to order that his claim be paid forthwith.
Art. 189. - Attachment of business.
( 1) A secured creditor whose claim is not paid on becoming due may
move the court to order attachment of the business with a view to caus-
ing it to be sold by auction. Attachment may not be effected earlier
than One month from the creditor having demanded payment and not
having been paid.
(2) Any provision to the effect that a credit may, failing payment, attach
the business or cause it to be sold without complying with the require.
ments of the law, shall be of no effect.
Art. 190. - Right to follow the business.
(1) A secured creditor may claim the business from a third party, as the
mortgage follows the business into whatever hands it may fall.
(2) The third party may avoid attachment by paying fully all secured
creditors.
Art. 191. - Scope of mortgage.
(1) The mortgage charges the business in its condition at the time of at·
tachment, whatever the importance or value of its parts at that time.
(2) The mortgage shall apply to such parts only of the business as are
expressly specified in the entry.
Art. 192. - Preferred rights.
( 1) Secured creditors shall have a preferred right on the proceeds of the
sale of a business.
(2) As between secured creditors, rights shall rank. in accordance with the
date on which such rights have been registered. Mortgages registered
on the same day shall rank concurrently.
(3) The legal mortgage of the seller shall rank before contractual mort.
gages.
Art. 193. - Mortgages may be set up against the creditors of a bankrupt person.
The relevant provisions of Book V of this Code shall apply where regis-
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COMMERCIAL CODE 39
tered mortgages on a business are set up against the creditors of a hauk·

rupt person.
Chapter 5. Hire of a Business

( 1) A business may he let out for hire.
(2) Without prejudice to Art. 195·2()5 of this Code, the proVlSlOUS of
Art. 2'896·2974 of the Civil Code shall apply where a business is let
out for hire.
Art. 195. - PublicatWn 0/ the contract o/lease.
( 1) A contract of lease shall not affect the rights of third parties unless it
is in writing and it is published, on the application of either party,
in the official commercial gazette and in a newspaper empowered to
publish legal notices circulating at the place where the head office of
the business is situate.
( 2) Notices published under suh-art. (1) shall show:
( a) the names and addresses of the lessor and lessee;
(b) the date and nature of the contract;
( c) the objects and address of the business;
( d) the period of time for which the contract ill entered into.
The owner of the business let out for hire shall cause his name to he struck
off and the lessee shall cause his name to he entered in the commercial
register in accordance with the provisions of Title IV of this Book.
Art. 197. - Liability 0/ the lessor.
Until the provisions of Art. 195 and 196 have been complied with and
within one month from such formalities having been completed, the
owner shall be jointly and severally liable with the lessee for an:y debt
inCUl'l'i!d. by the lessee i,n operating the business.
Art. 198. - Particulars on business papers.
The contract of lease may he cancelled where the lessee fails to add the
word "lessee" on all hi.s business papers.
Art. 199. - Duties 0/ lessee.
The contract of lease may he cancelled where the lessee fails to pay the
agreed rent on the agreed day or does not operate the husiness with the
care due. by a good trader and in accordance with the objects of such
business.
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40 COMMERCIAL CODE
Art. 200 - Guarantee.

( 1 ) In addition to the rent, the contract of lease may provide that the
lessee shall produce sureties to guarantee the fulfilment of his obli-
gations towards the lessor or third parties.
(2) Notwithstanding any provision to the contrary, the sureties shall be
fully returned to the lessee upon the termination of the lease, where
the lessee has fulfilled his obligations and no application is made by
the creditors within the period of time specified in Art. 202 (3).
Art. 201. - Lessee personally to carry out his duties.

The lessee may not assign the contract of lease without the written consent
of the lessor, as a contract of lease is made on the basis of the personal
qualificiations of the lessee.
Art. 202. - Termination of co~tract 01 loose to be published.

( 1) Where the contract of lease terminates, notices to this effect shall
be published as provided in Art. 195 (1).
(2) Notices published under sub-art (1) shall show:
( a) the names and addresses of the lessor and lessee;
(b) the objects and address of the business;
(c) the date of termination of the contract;
(d) the amount of the guarantee under Art. 200, if any.
( 3) The owner of the business shall be liable to third parties where the
sureties under Art. 200 are returned to the lessee earlier than one
month from the publication of the last notice.
Art. 203. - Debts 01 lessee shall become due.

Any claim which a creditor may have against the lessee shall become
due on the termination of the contract of lease.
Art. 2'04. - Prohibition 01 trade by the lessor.
(1) During the currency of the contract of lease, the owner of the business
may not compete with the lessee by creating or acquiring a business
having similar objects.
(2) Where the owner disregards the prohibition provided in sub-art. (1),
he shall be liable for damages and his business may be closed.
Art. 205. - Prohibition 01 trade by the lessee.
( 1) The parties may agree that, upon the termination of the contract of
lease, the lessee shall not compete with the owner of the business by
carrying on a trade similar to the trade carried on by the owner.
(2) Any such prohibition shall not be effective for more than five years.
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Chapter 6. Contribution of a Business

to a business organisation
Art. 206. - Contribution to be published.
Where a business is contributed to a business organisation being formed
or in operation, notices to this effect shall be published as provided in
Art. 195 (1).
Art. 20,7. - Particulars to be published.
Notices published under Art. 206 shall show:
( 1) the name and address of the contributor;
(2) the objects and address of the buisiness contributed;
( 3) the firm-name, nature and head office of the business organisation to
which the contribution is made;
( 4) the date of the memorandum of association.
Art. 208. - Objection to contrib"tion.
(1) During the month within which the last publication under Art. 206
was made any creditor of the contributor may, even where his claim
is not due, send a notice to the head office of the business organisa.
tion to which the contribution was made to th~ effect that he objects
to the contribution.
( 2) Where no publication was made or it is invalid, a creditor may mak"
his objection at any time.
Art. 209. - Steps taken by partners.
( 1) Within one month from an application under Art. 208 being made.
any partner may move the court to dissolve the business organisation
under formation or to cancel the contribution made to the business
organisation in operation.
(2) Where an application under sub-art. ( 1) is not made, the business
organisation shall be jointly and severally liable with the contributor
where the contribution is cancelled.
BOOK II. BUSINESS ORGANISATIONS

Art. 210. - Business organisation defined.
(1) A business organisation is any association arising out of a partner-
ship agreement.
(2) Any business organisation other than a joint venture shall be deemed
to be a legal pel'llOn.
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42 COMMERCIAL CODE
Art. 211. - Pro.lnership agreement.

A partnership agreement is a contract whereby two or more penoDl who
intend to join together and to cooperate undertake to bring topther
contributiol18 for the purpose of carrying out activities of an econo_c
nature and of participating in the profits and losse. ariaing out thereof.
if any.
Art. 212. - Different business organisations.

( 1) There are six forms of business organisations under this Code:
( a) ordinary partnership;
(b) joint venture;
(c) generat"mnenmp;-
(d) limited Partnership;
( e) share compary;
(f) private limited coinpany;
(2) Special provisions applicable to cooperative organisations may he
pNIOrihed.
Art. 213. - Commercial business organisations.
( 1) Any bwtiness organisation other than an ordinary partnership may be
a commercial business organisation within the meaning of Art. 10 (1)
of this Code.
(2) Where a commercial business organisation is created in the form
of an ordinary partnership or where the form of the organisation
is not specified, the commercial business organisation shall be deemed
to be a general partnership.
Art. 214. - Formation to be in writing.
The formation of any business organisation other than a joint venture
shall be of no effect unless it is made in writing.
Art. 215;- ~oiil propisions.

( 1) Any provision giving all the profits to one partner shall be of no
effect.
(2) Any provision relieving one 01' more of the partners of his share
in the losses shall be of no effect.
,
Arti 21/6. - Agents.
(1) A business organisation shall acquire rights and incur liabilities by
. its agents in accordance with the provisions relating to agency.
(2) A business organisation shall act in legal proceedinlLby its aaents .
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(.3) AllY 81IJDDlOJU to be Berved on a buain_ orpaiation ..... tw.

served at the head4fice.
Art. 217. - Diaolution under the law or by agreement.

Any businesa organisation ehall be diuolved:
( a) where its purpose has been achieved or cannot be achieved;
(b) where the partneR agree to diuolutioB prior to the espiry of the term
for w'hich the busin_ organisation was formed;
( c) where the term for which the huainesa organisation was formed spirea,
nnIeII the partners agree to continue the busineee orgaaisation.
Art. 218. - Dissolution by the court.

(1) Notwithstanding any provision to the contrary. a bu.Ib1e&a organiation
may be diseolved for good cauae by the court on the app1icatiaa of.
partner.
(2) There shall be good cauae in particular where a ~ seriouIiy f6
in his duties or becomes throop infnmity or permanent m- or , .
any other reason incapable of carrying out his duties or where _ _
disagreement exists between the partneD.

( 1) Any business organisation other than a joint venture shall be made
known to third parties.
(2) Such publicity shall be made:
(a) by a notice published in a newspaper empowered- to publiah lepl
notices; and
(b) by the deposit of two copies of the documents provided: in Art. 221
with the official in charge of the commercial register; and
( c) by registration in the commercial register.
Art. 22(). - Publication 0/ notice.

A notice under Art. 219 (2) (a) shall be published hl. a newspaper empow-
ered to publish legal notices circulating at the place where tbe heecl-office
is situate.
Art. 221. -lJeprniniriIocument8~·

(1) A deposit under Art. 219 (2 (b) shall be made wi'"
the al&clal in
charge of -the COblmercial register at the place where the head.office is
lituate.
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44 COMMBBCIAL CoDB
(2) Two copies of the memorandum and all complementary documents,

if any, shall be deposited.
( 3) The official shall keep one copy of the documents deposited and shall
send the second copy to the Department of the central commercial re-
gister provided in Art. 90 of this Code.
(4) Any person may, on payment of the prescribed fee, require the offic-
ial in charge of a local or of the central commercial register to deliver
to him a copy of all entries relating to a business organisation.

( 1) The application for registration in the commercial register shall be
deposited with the documents specified in Art. 221-
(2) The provisions of Art. 95-99 of this Code shall apply. The official in
charge of the register shall examine whether the legal conditions re-
lating to the formation of the business organisation have been fulfilled.
Art. 223. - Effect 0/ publicity.

A business organization shall have no legal existence nor personality until
all the provisions of this Code relating to publicity have been complied with
and registration is published in accordance with Art. 87 of this Code.
Art. 224. - Modifications.

( 1) Any modification in the memorandum of association shall be deposited.
( 2) Any modification of a fact published and registered, shall be publish-
ed and the entry shall be corrected in accordance with Art. 108 of this
Code.
Art. 225. - Branches.

( 1) Where a business organization comprises branches or agencies situate
in places other than the place where the head-office is situate, the
provisions of this Code relating to publicity shall be complied with in
each place where a branch or agency is situate.
(2) Registration in the commercial register shall be made by way of sum·
, mary registration and shall refer to the principal registration.
(3) A summary registration shall contain the same particulars as a prin-
. cipal registration and shall show the address of the branch and the
name of the manager of the branch.
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Art. 226. - Cancellation of registration.

Where a business organisation is dissolved and wound-up, the liquidators
shall apply for the registration of the business organisation in the com-
mercial register to be cancelled. The business organisation shall have no
legal personality after cancellation has been published in the Official Com-
mercial Gazeite.
TITLE II. ORDINARY PARTNERSlDP

A ·partnership is an ordinary partnership within the meaning of this Title
where it does DOt have chll1'8cteristics which make it a business organisa-
tion covered by another Title of this Code.
Art. 228. - Joint ownership.

(1) The provisions of this Title shall not apply to joint ownership, where
property is held by several persons for reasons outside their control.
(2) Joint owners may agree to create a partnership for the management of
the property jointly owned.
Chapter 2. Contributions
Art. 229. - Nature and amount.

(1) Each partner shall make a contriblltion, which may be in money, debts,
other property or skill.
( 2) Property or the use of property may form a contribution.
(3) Unless otherwise agreed, contributions shall be equal and of the Dature
and extent required for carrying out the purposes of the partnership.
Art. 230. - Guarantee.

(I) Where property is contributed, the contributing partner shall carry out
the duties of a seller.
( 2) Where the use of property is co~~uted, the contributing partner shan
carry out the duties of a lessor. '
( 3) Where a partner corttributes a debt, he guarantees only the existence
of the debt and not the solvency of the debtor, unless otherwise agreed.
Art. 231. - Risks.

( 1) Where property is contributed, the risks shall pass to the partnership
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46 COMMERCIAL CODE
in accordance with the provisions relating to sale.

( 2) Where the use of property is contributed, the risks shall remain with
the contributing partner.
Art. 232. - Interest.

Where money is contributed, the contributing partner shall be liable to
the partnership for interest thereon where payment is made after the due
date.
. Chapter 3. Management of the Partnership

Art. 233. - Modification of the agreement.
( 1) The partnership agreement may be varied only with the CODBeDt of all
the partners.
(2) The partnership agreement may contain a clause providing for the
variation of n particular clause with the consent of the majority of the
partners.
Art. 234. - Majority.

(1) Where the law or the partnership agreement provides that a decision
may be taken by a majority of the partners, the majority means a
majority of the individual partners.
( 2) The partnership agreement may provide that the majority shall be
calculated on a majority holding ,in the partnership.
Art. 235. - Special acts.

The consent of an the partners shall be required for the appointment of
an attorney or the carrying out of any act which goes beyond normal part-
nership practice.
Art. 236. - Appointment of managers.

All the partners shall have a right to act as managers, unless the partner-
ship agreement or a decision of the partnership has appointed one or more
of the partners or a third party to be the manager.
Art. 237. - More than one manager.
( 1) Where several persons have been appointed managers and their duties
have not been specified or where it has not been specified that they
act jointly, they may each carry out acts of management.
( 2) Each manager may object to dealings contemplated by other managers.
( 3) The objection shall be decided on by a majority vote of all the partners.
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Art. 238. - loint m4JUJgement.

( 1) Where joint managers have been appointed, decisions shall be taken
jointly.
(2) Where an act of management is of an urgent nature and the other
joint managers cannot be consulted, one joint manager may act alone.
Art. 239. - MaJUJger appointed under partnership agreement.

A partner appointed as manager under the partnership agreement may car-
ry out all acts of management in disagreement with the other partners in
the absence of fraud.
Art. 2400. - Revocation 01 the statutory maJUJger.

(1) The appointment of a manager appointed under Art. 239 may not be
revoked or his powers restricted by the other partners, save for good
cause.
(2) Where there is good cause, the appointment may be revoked notwith-
standing any provision to the contrary in the partnership agreement.
(3) Gross breach of duty or unfitness to exercise powers of management
shall constitute good cause under this Article.
Art. 241. - Rights and duties 01 mlUlagers.

(1) The provisions relating to agency shall apply to the rights and duties
of managers.
(2) Managers shall be jointly and severally liable to the partners for fai-
lure to carry out their duties according to law or under the partner-
ship agreement.
( 3) Where liability has been incurred and such liability is not due to
the fault of a manager, the manager shall have a right of action against
the person through whose fault the liability was occasioned.
Art. 242. - UJUJutharised agency.

Where a person holds himself out to be a manager of a partnership or
where a manager exceeds his powers, the rules relating to unauthoriled
agency shall apply.
Chapter 4. Rights and Duties of Partners

Art. 243. - Duties 01 the partners.
( 1) Every partner shall, in conducting partnership business, use the dili-
gence and skill thich he uses in conducting his private affairs.
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48 COMMERCIAL CODE
(2) Every partner shaH be liable to the other partners in respect pf any
damage which he has caused by his default. Any benefit which he
has procured for the partnership in handling other business may not
be set off against such damage.
Art. 244. - Duty to obtain.
No partner may handle, either for his own benefit or for a third person,
any business which would be contrary or yrejudicial to the partnership.
Art. 245. - Use 0/ partnership property.
Froperty, debts and rights brought into or acquired by the partner-
ship shall belong to the partners in common under the terms of the
partnership agreement.
(2) Every partner may use partnership property in accordance with usual
partnership practice.
(3) No partner may use partnership property against the interests of the
partnership or so as to prevent his co-partners from using such pro-
perty in.accordance with their rights.
Art. 246. - Necessary expe~.ses.

Every partner. may require his partners to share such expenses as may be
necessary to preserve the partnership property.
Art. 247. - Advances or loans.

( 1) A partner who makes an advance of funds to the partnership shall be
entitled to interest.
(2) A partner who borrows funds from the partnership shall pay interest.
(3) He may, where appropriate, be liable to pay damages in addition
to interest.
Art. 248. - Right to check books and papers.
Every partner shall, notwithstanding any prOVIsIon to the contrary in the
partnership agreement, have the right to check the state of the firm's
business, to consult the books and papers of the partnership and to draw
up a statement of the financial position.
Art. 249. - Reports.
(1) Where a partnership continues for more than one year, the partners
may require a report on the management to be prepared at the end
of each year.
(2) Any provision in a partnership agreement for reports to be submitted
at intervals exceeding twelve months shall be of no effect.
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Art. 250. - Association with third parties.

( 1) No partner may introduce a third party as a partner without the consent
of the other partners.
(2) Where a partner gives an interest in his partnership share to a third
party or assigns his share to him, the third party does not become
a partner and has no right under Art. 248.
Art. 251. - Profit sharing.

(1) The partners shall share all profits which, by their nature, are part-
nership profits.
(2) Unless otherwise agreed, every partner may require that the profits
be distributed immediately after approval of the management report.
Art. 252. - Manner of distributing profits and losses.
(1) UnleSs otherwise agreed, every partner shall have an equal share in
the profits and losses, irrespective of his.contribution.
( 2) If the agreement specifies either the share in the profits or the share
in the losses, this provision shall apply equally to the share of profits
and losses.
Art. 253. - Distribution by a third party.

( 1) Where the partners agree to refer the distribution of profits to one
of them or to a third party, such distribution may only be challenged
as being inequitable.
(2) No claim shall be entertained where the partner who considers him-
self to be aggrived by the distribution has not challenged luch
disribution within three months of his becoming aware thereof, or
where such partner has initiated the execution of the distribution.
Art. 254. - Contribution of skill.

Notwithstanding the provisions of Art. 215, provisions may be made to the
effect that a partner who contributes skill only shall share in the profits
and not in the losses.
Chapter 5. Relations of the partnership

with third parties
Art. 255. - Creditors of the partnership.
(1) The creditors of the partnership may claim against partnership assets.
( 2) They may also claim against the personal property of the partners
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Who shall, unless otherwise agreed, be jointly and severally liable to

them for the obligations of the partnership. A partner who is sued
on his penonal property may require, as though he were a guarantor,
that the creditor first distrain the property of the partnership.
(3) Any pzoviaion relieving the partners or some of them of joint and
aeveral liability DUty not be set up against third parties unless it is
shown tIlat such parties were aware o!Jl'U~h_pmvisieJr.NOt~ithstand.
ing any provision to the contrary, the partners who acted in the name
of the partnership shaH always be jointly and severally liable.
Art. 256. - Personal creditors.
(1) Penooal creditors of the partners may attach the share in the profits
due to their debtor.
(2) They may take all steps necessary to protect the share due to their
debtor upon the winding.up of the partnership.
(3) U the personal property of their debtor is not sufficient to indem·
nify them, ,they may require that, within three months from the date
of their demand, the debtor's share in the partnership be disposed of.
Art. 251. - &HI/.
A person who is a debtor of the partnership may not set off a debt
apiut one of. the partners.
~pter 6. Dissolution and winding-up of ~ership

Art. 258. - PtI11IUJr,hip for undefined period.
lin
(1) 1VheJe a partnership is entered Jnto for an undefined period or for

the life of one of the partners, or where the power to, dissolve on
DOtioe is pzovided in the agreement, every partner may bring about
ita disIolution by giving six months notice.
(2) NCItice to diseoIve shall be gi.wm in good fai,th and not be unseasonable.
(3) Notice to diseoIve shall be lamed to be unseasonable where the situa·
tion is not determined and the dissolution of ,the partnership" should
he poetponed.
Art. .259. - lVit1ulrGwal of II partner.
1Vhent a partner bas given notice to dissolve under~.-~ti8, his part·
Den IIIa7 pNVeDt dissolution by paying out his share, and the p~rtner.
aIiip Ihall continue u between the other partners.
/ '
Art. 260. - DfIIIIIa, iIu:tJpaeiIy or bankruptcy.
(1) A put:neaIaip Ihall be diseolved where one of the partners dies or is
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COMMERCIAL Com: 11
DO longer able, under the law, to he • partner.

(2) A· partnership shell be -dissolved where a partner 18 deelared IlaDbapt
or where one of his personal creditors causes his abue to he clisp..t
of under Art. 256 (3).
( a) The partnership may by agreement continue 88 hetweeD the ....wn.
ing- partners, or with the heir& or repl'ellfJlltativee of the • • •ell.
incapable or bankrupt _par!ner.
Art. 261. ~ Expr.tl8ion of a partner.

The court may order the expulsion of a partner for good C8W1e and the
partnership shall continue as between the """,aining partners.
Art. 262. - Paying out partner leaving.
(1) Where a partner leaves a partnership and the ~ ~
as between the. other partners, the rights of the ~ .~.. I ~. Wt
shall be aettled in cash, on the basis of the value of hie .... '.the
day when he leaves the partnership.
( 2) A partner who leaves the partnerShip shall share in the JDUIiIlt aDd
losses arisbtg from dealings. completoo. or outatand:iDs OIl the d8y , . .
he leaves. .
( 3) He shall he liable to third partiee for all deeliugs made prior tu bU
leaving.
Art. 263 - Powers of managers after disMution.

( 1) The managers shall retain on diuolution their powen untll daey haft
made arrangements for the diuolution.
(2) During dissolution, they may onlt exercise such powers .. 8Je neoee-
sary to complete the dissolution.
Art. 264. - Appointment of liquidators.

( 1) Mter dissolution, the winding-up &hall he carried out by one or more
liquidators, appointed under the partn~ agreement or braU
the
partners.
( 2) Failing the agreement of the parmers, the court shall .~
liquidators. / /
Art. 265. - Duties and responsjJJiiities of liquidators.

//
(1) Unless otherwise ~vided in the partnership agreement or by law,
the liquidat~ll haye the same duties and respcmaihilitiea ..
- - ----~ -tJlllDap1'!v
/
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(2) The appointment of liquidators may he revoked by the decision 0'

all the partners, or by the court at the request of one partner.
Art. 266. - Inventory .

• 1
,
•
.'
.,
~f·
( 1) The managers shall hand over to the liquidators the property of, and
documents relating to, the partnership and render an account of their
management upto the date of handing over.
, , (2) The liquidators shall draw up an inventory of the assets and liabilitiea
of the partnership
Art. 267. - Powers 01 tM liquidators.

( 1) The liquidators shall take all steps necessary to complete the wind-
ing-up of the partnership.
(2) The liquidators may sell the property of the partnership, represent
the partnership in legal proceedings and may compromise or refer
to arbitration any matters in issue.
( 3) The liquidators may not undertake new business in the name of
partnership but may complete business already started.
Art. 268. - Settlem.ent with creditors.

(1) The liquidators shall pay the creditors of the partnership, where ne-
cessary calling upon the partners for contributions.
(2) They ahall settle with the partners debts which they hold against the
partnership and restore to partners property whose use only was
contributed to the partnership.
Art. 269. - Restitution 01 contributions.

(1) A partner who has contributed property may not claim it back in
kind.
(2) He shall have a claim to the value of his contribution as accepted in
the partnership's accounts.
(3) If the value has 'lot heen so fixed, restitution shall. he made on the
basis of the actual value at the time the contribution was made.
Art. 270. - Distribution 01 proli(s and losses.

(1) Where there is a surplus after all claims have heen met and contri·
butions returned, the surplus shall he distributed among the partners.
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(2) Where the assets are insufficient to repay contributions after pay-
ment of debts, expenses and advances, the loss shall be distributed
among the partners.
(3) The distribution of profits and losses is to be made among the part-
ners in equal shares, where no other proportion has been specified in
the partnership 'agreement.
TITLE fiI. JOINT VENTURE

A joint venture is an agreement between partners on terms mutually
agreed and is subject to the general principles of law relating to part-
nerships.
Art. 272. - Absence of divulgation.
(I) A joint venture is not made known to third parties.
(2) A joint venture agreement need not be in writing and is not subject
. to registration aIld other forms of publication required in respect of
other business organisations .. : ".
(3) A joint venture does not have legal·personality.
( 4) Where a joint venture is made known to third parties, it shall be
.deemed, insofar as such' parties M"e concerned, to be an actual part-
nership.
Art. 273. - Contributions.
Unless otherwise provided, every partner owns his contribution.
Art. 274. - Shares.
( I) A joint venture may not issue negotiable securities.
(2) Unless othewise provided, shares may be assigned only with the
. a~eement of all the part~ers.
Art. 275. - Management.
(1) A joint venture shall be managed by one or more managers, who
need not be partners.
(2) Where no ma~ger is appointed, all the partners shall have the status
of managers.
( 3) The appointment of a partner as manager may not be revoked with-
out good Ca1lse.
( 4) The powers of the manager shall be specified in the memorandum of
association. The provisions relating to these powers may not be set
up against third parties.
Art. 276. - Partners who are not managers.
( 1) The manager is known to third parties. He shall be fully responsible
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for the HabUitiea of the joint venture.

(:I) P8Z'tIMI:II who are not managers shall meet liabilities only to the
alent fixed in the memorandum of association.
( 3) The pu-toe.rs may supervise the work of the manage~.
( 4) In a commercial joint ven~, partners who are not managers and
'who tale part in the management shall he jointly and severally liable
as between themselv~ and with the manager.
( 5) E'gel'Y partner shall deal with third parties in his own name.
Art. 277. - Duty to ClCOOunt.

A manager shall account to the partners. Any provision relieving him
from this duty shall he of no effect.
Art. 278. - Grounds for dissolution.

(1) A joint venture may he dissolved on one of the following grounds:
(a) the expiry of the term fixed by the memorandum of association,
uni_ there is provision for its extension;
(b) the completion of the venture;
( c) failure of the purpose or impossibility of performance;
(d) a decision of all the partners for dissolution taken at any time;
(e) a request for dissolution by one partner, where no fixed term has
been epecified;
(f) dissolution by the court for good cause at the request of one
partner;
(g) the acquisition by one partner of all the shares;
(h) death, bankruptcy or incapacity of a partner, unless otherwise
lawfully agreed; .
( i) a decision of, the manager, if such power is conferred upon him in
the memorandum of association.
(2) The provisions of this Article' shall apply notwithstanding any pro-
vision to the contrary in the memorandum of association.
Art. 279. - Expulsion of a partner.

(1) Where dissolution is requested for reasons attributable to one partner,
the court may, on the application, of1he--other partners, order the
expulsion of the partner at faulHnlieu of dissolution.
(2) The memorandum of association may provide for expulsion.
( 3) A partner who is expelled shall he paid what is due to him on the
day of expulsion.
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TITLE IV. GENERAL PARTNERSmp
Art. 280. - Nature of general partnership.

(l)A general partnership consists of partners who are personally, joint-
ly, severally and fully liable as between themselves and to the part-
nership for the partnership firm's undertakings. Any provision to -the
contrary in the partnership agreement shall be of no effect with re-
gard to third parties.
(2) Where the partnership is a commercial partnership, each partner shall
have the status of a trader.
(3) The partnership shall have a firm-name.
( 4) The provisions of Aff.' 282 shall apply where partnership shares are
assigned or transferred.
Art. 281. - Firm-name.

(I) The firm-name shall consist of the names of at least two of the part-
ners followed by the words "General partnership," and may not oon-
tain names of persons who are not partners.
( 2) Where a partner who is mentioned in the firm-name ceases to be a
partner, the firm-name shall he changed accordingly.
( 3) Where a person not being a partner permits his name to be used
in the firm-name, he shall be liable as a full partner_
Art. 282. - Rules concerning shares.

( 1) A share may be assigned or transferred ~here all the partners agree.
(2) The memorandum of association may provide that approval shall be
given hy a majority of the partners.
(3) Unless the firm's creditors agree, a partner who has assigned his share
shall be liable for the firm's debts up to the date of assilpunent.
Art. 283. - Granting of beneficial interest in share to third party.

(I) A partner may without approval grant to a third party the beneficial
rights and interests in his share.
(2) Such grant shall not hind the partnership.
(3) The third party has none of the rights of a partner.
Art. 284. - Memorandum of association.

The memorandum of association shall he drawn up by the partners. It ahall
contain:
(1) the name, address and nationality of each partner;
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56 COMMERCIAL CODE
(2) the firm-name;

(3) the head office and branches, if any;
( 4) the business purposes of the firm;
( 5) the contributions of each partner •. their value and the method of valua-
tion;
( 6) the services required f:rom persons contributing skill;
(7) the share of each partner in the profits and in the losses and the agreed
procedure for allocation;
(8) the managers and agents of the firm;
( 9) the period of time for which the partnership has heen established_
Art. 285. - Publication of notice and registration.

(1) A notice published under Art. 219 (2) (a) and 220 shall contain the
particulars specified in Art. 284 (1) - (6), (8) and (9).
( 2 ) The same particulars shall appear on the application for registration
in the commereial register. The application shall be signed by the
manager or a person acting on his behalf.
Art. 286. - Undertakin/!s of partnership.

The partnership may acquire rights and liabilities and sue or be sued
UDder its firm-name.
Art. 287. - Administration of partnership.

(!.l~ The
partnership shaH be administered by one or more managers who
mayor may not he partners.
(2) Where no manager is appointed, each partner shall be a manager.
Art. 288. - More than one manager.

(1) Where all the partners are managers, or where several persons have
heen appointed managers and their duties have not heen specified,
or it has .~ been specified that they act jointly, they may each carry
out acts of management.
(2) Where the memorandum provides for the separation of duties of the
mangers, such separation shall only affect third parties' where it has
heen entered in the commercial register or if it is shown that the
third parties were aware of such separation.
( 3) Each. manage. may object to dealings contemplated by other managers.
Such objection shall be decided on by a majority vote of all
the partners.
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Art. 289. - Scope 0/ duties 0/ maTWgers.

( 1) Managers may, in 8ceordaaee with the law, act for and· bind their fim...
(2) Any provisions res,tricting the extent. of these powers shall only affeet
third parties .. where such proviaioll.!l have heen entered in the com-
mercial register or if it is sho).Vn that the third parties were aware
of such provisions.
Art. 290 - Manager's exercise 0/ powers.

( 1) Where a manager acts in the firm-name for his own profit, the part.
nership. shall be liable to third }lllrties in good faith. Where it is
shown by the firm that the third party wlIf aware of the improper
use of the firm-name by the manager, the manager alone shall be
liable.
(2) Where a mana,ger dealt. with a ~ party witlwut using W. firm·
name, he shall be ~med to. have 1lC1~ on his own behal(. The firm
shall be liable where the third party can show that the manager Willi
transacting business for the firm.
( 3) A manager who Mar outside the scope of 'his employment aball uone
be liable.
Art. 291. - Dealings with the partnership.

Except with the speeiaJ. approval of the partners, a manager may not haft
dealings with the firm on his own behalf.
Art. 292. - Restrictions on private trade.
(1) Unless otherwise agreed, no partner may carry out transactions on behalf
of a tlfud partt or on his own behalf which relate to businCIII carried
on by his firm, nor may he be a partner with joint and several liability
in the management of a firm carrying 011 similar businCIII.
(2) All unlimited agreement under sub-article (1) shall be valid for 0118
year only.
Art. 293. - Dismissal of manager.

(1)A manager appointed. in the memorandum of auoeiation or following
an amendment of the memorandum may only be dismissed by the
court for good cause.
(2) A manager not appointed as provided in sub-art. (1) may be freely
dismissed by the partners.
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Art. 294. - Liability of partners.

No action may he taken against individual partners for debts due by the
partnership until after payment has been demanded from the partnership:
Provided that au action for the repayment of fictitious dividends may
he brought directly against individual partners.
Art. 295. - Other provisions applicable.

The provisions of Art. 227-23'2, 233 (1), 235, 248, 249, 258, 260, 267·270
of this Code shall apply to general partnerships.
TITLE V. LIMITED PARTNERSHIP
Art. 296. - Nature of limited partnership.

A limited partnership comprises two types of partners: general partners
in full liable personally, jointly and severally and limited partners who
are only liable to the extent of their contributions.
Art. 297. - Firm-name.

( 1) A limited partnership shall have a firm-name.
(2) This name shall consist of the names of the general partners, with
the words "Limited Partnership" added.
( 3) Where a limited partner allows his name to he included in the firm-
n~l.l, he shall he liable to third parties in good faith as though he
were a general partner.

The memorandum of association shall contain the particulars required by
, Art. 284 and particulars showing who are general or limited partners.
Art. 299. - Publication of notice and registration.

(1) A notice published under Art. 219 (2) (a) and 220 shall contain the
particulars specified in Art. 284 (1) - (6), (8) and (9) and 298.
(2) The same particulars shall appear on the application for registration
in the commercial register. The application> shall be signed by the
manager or a person acting on his behalf.
Art. 300. - General partners.
The general partners in a limited partnership shall have the same rights
and obligations as partners in a general partnership and only they may be
appointed managers.
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Art. 3I().I. - Limited partners.

(1) Action may be taken by a firm's creditor to compel limited partners
to subscribe their contribution.
( 2) Limited partners need not repay dividends received by them in good
faith after approval of the firm 'shalanoe sheet.
(8) Limited partners may not aot as managers even under a power of
attorney. A limited partner who contravenes this rule Ihan be fully
jointly and severally liable for any liabiliti.. ariling out of hi. aotivities.
Wher~ appropriate, he may be declared jointly and IIIverally liable in
~t of lOme or all the firm's undertakings.
(4) A limited partner shall not he deemed to act as manager when he:
(a) consults with other partners;
(b) deals with the firm;
(0) investigates managerial acts;
(d) gives advice and counsel to the firm;
( e) gives permission to do acta outBide the manager', powers.
(5) Limited partners may he employed in the firm and bind themselves
by contracts of employment.
(6) Limited partners may inspect the books of the firm and may call for
the accounts.
(7) Unless otherwise agreed, nothing affecting a limited partner shall be a
ground for dissolution.
Art. 302. -Assignment of shares.

Shares may not he assigned except with ,the agreement of the managers and
the majority of the limited partners.
Art. 303. - Other provisions applicable.

Without prejudice to the provisions of the preceding Articles, the provisions
of Art. 227·232, 233 (1),235,248,249,258,260,262.27'0,282,283,286.
291,293 and 294 shall apply to limietd partnershi.ps.
TITLE VI. COMPANmS I.IMITED BY SHARES

Art. 304. - Definition of share comprmy.
( 1) A share company is a company whose capitaJ. is fixed in advance and
divided into shares and whose liabilities are met only by the assets of
the company.
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(2) The members shall be liable only to the extent of their share holdiDg.
Art. 305. - Company name.

The company name shall be as agreed but shall not. offend public policy nor
the rights of third parties and shall include the words "Share company."
Art. 306. - Minimum amount of capital and a nominal value of shares.

(1) The capital shall not be less than 501000 Ethiopian dollars.
(2) The amount of the par value of each share shall not be less than 10
(ten) Ethiopian dollars.
Art. 307. - FounMrs.

( 1) A company may not be established by less than five members.
(2) Persons who sign the memorandum of association and subscribe the
whole of the capital shall have the legal status of founders.
(3) Where a company is to be formed by the issue of shares to the public,
persons who sign the prospectus, bring in contributions in kind or are
to be allocated a special share in the profits, shall have the status of
foundera.
( 4) Any person, even though outside the company, who has initiated plans
or facilitated the formation of the compa~y, shall have the status of a
founder. <,
Art. 308. - Commitments entered into by the founders of the comptmy.

(1) The founders shall be fully jointly and severally liable to third. parties
in respect of commitments entered into for the formation of the com-
pany. All persons who have acted in the name of the company before
its registration in the commercial register shall be similarly liable.
( 2) The company shan take over these commitments from the founders and
refund the founders with all th~ expe~ made by them insofar as such
commitments and expenses were necessary for the formation of the
company or approved by the general meeting of the subscribeJ'B.
(3) Where the company is not es~lished for whatever .reason, the sub-
scribers shall not be liable for the commitments or expenses made by
the founders.
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Art. 3{)9; - Liability of the founders.

(1) The founders shall be jointly and severally liable to the companY'" anel
third parties for any damage in connection with:
( a) the subscription of the capital and the payments ~ f.r the
formation of the company;
(b) contributions in kind as provided under Art. 315;
(c) the accuracy of statements made to the public in respect of the
formation of the co~pany.
(2) Claims for damages under this Article shall be barred after five. yean
from the date when the aggrieved party knew of the daruage and of the
person liable. There shall be absolute limitation after ten years froll'
the date when the act complained of took place.
( 3) Nothing in this Article shall affect cases where the liability of the
founders arises from the commission of a criminal offence.
/
Art. 310. - Limit of profits which may be allocated to the founders.
(I) The founders may, for a period not exceeding three years, ~rve per-
sonally to themselves in the memorandum of association and in addition
to their rights as shareholders, a share which shall not exceed one fifth
of the net profits in the balance sheet.
(2) No other advantatge to founders may he provided in the memora,adum
of association.
(3) T'he benefits provided by this Article are pel1!Onal to the founders but
no founder shares may be issued.
Art. 311.- Members rPtluced in number below the legal minimum.
(I) No company shall remain in business for more than six months after
the number of members is reduced to less than five. Every memller
aware of such reduction shall be personally liable for the debts. contrlle-
ted thereafter.
(2) Where the members are less than five in number or the compiaD.y does
not possess the prescribed organs, the court may order the winding-up
of 'SUch company on the application of a member or creditor. The court
may adjourn its decision upon such term as it thinks fit to permit of
the reorganisation of the company and order such conservatory measu-
res as may be necessary,
Chapter 2. Fonnation of the company

I\rt. 312. - General requirements in respect 0/ formation.
( 1) A share COJDp!UlY shall not he .fl)rmetl until:
(.) ,the capital hu heeD luDy .eubeeribed;
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62 COMMERClAL CODE
(b) one quarter at least of the par value of the shares has been paid
up and deposited in a bank, in the name and to the account of
the company.
(2) Sums deposited under sub-art. (1) shall not be paid over to the legal
representatives of the company until registration in the commercial
register has been effected.
(3) Where registration has not been effected within one year from deposit
..... -in a bllnk. the sums deposited shall be repaid -to the "uhscrWer&. Such
repayment shall be effected by the founders who shall be jointly and
severally liable. After one year such sums shall bear interest at the
legal rate.

The formation of a company shall be by public memorandum which shall
contain:
(1) the names, nationality and address of the members, the number of
shares which they have subscribed, provided that a member may not
subscribe less than one share;
(2) the name of the company;
(3) the head office, and the branches, if any;
( 4) the business purposes of the company;
(5) the amount of capital subscribed and paid up;
(6) the par value, number, form and classes of shares;
(7) the value of contributions in kind, their object, the price. at which
they are accepted, the designation of the shareholder and the number
of shares allocated to him by way of exohange;
(8) the manner of distributing profits;
(9) any share in the profits allocated to the founders and reasons for such
share;
(10) th" number of directors and their powers and the agents of the com-
pany;
(11) the auditors;
( 12) the period of time for which the company is to be established;
(13) the manner in which the company will publish its reports.
Art. 314. - Articles of association.

(1) The articles of association which govern the operation of the company
shall be drawn up by the founders in accordance with the law.
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(2) Articles of association may follow the model supplied by the Ministry of
Commerce and Industry with any necessary modifications.
( 3) Articles of association shall be deemed to form part of the memorandum
of association and shall be attached thereto.
Art. 815. - Valuation of contributioru in kind.
( 1) A member who makes a contribution in kind shall file a report made
and Iworn by experts appointed by the Ministry of Commeroe and In·
dustry.
(2) The report shall contain a detailed description of the property contri·
buted, the value given to each item and the method of valuation. It shall
be annexed to the memorandum of association.
(3) Within six months from the dale of formation of the company the di.
rectors and auditors shall verify and, where necessary, review the va·
luation given in the report. The shares representing contributions in
kind shall remain deposited with the company and may not be assign.
ed until the valuation has been verified.
( 4) Where verification under sub· art . (3) results in the value of the con·
tribution being lowered by one fifth, the value of the capital shall be
reduced accordingly: provided that the contributor may make good the
difference or shall withdraw from the company.
(5) The provisions of sub.art. (3) and (4) shall apply notwithstanding
approval having been given to the report undel:, sub·art. (1) by age·
neral meeting of the subscribers.
Art. 316. - Formation as between founders.
Where shares are not offered for public subscription, the founders shall
show in the memorandum of association:
(1) that all the shares have been allocated;
(2) that the sums have been deposited in the manner required by Art. 312
(1) (h);
(3) that the provisions of Art. 315 have been applied to contributions in
kind;
(4) that they have provided for the administrative organs of the company.
Art. 317. - Formation by public subscription.
Where a company is formed by public subscription, the provisions of Art.
318·322 shall apply.
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Art. 318. - Prospectus.

( 1) An offer to subscribers shall be made by a prospectus signed by all the
founders and shall contain:
(a) the text of the draft memorandum of association;
(b) a summary of the principal provisions of the articles of association;
(c) a summary of the expert report under Art. 315, if any;
(d) the date until when the subscribers may be required to discharge
their obligations;
( e) the price at which shares are to be issued;
(f) the amount to be paid up on the shares until the general meeting
of the subscribers;
(g) the place ~'here applications and payments shall be made.
(2) Copies of the prospectus and of the expert report shall be made avail·
able to all persons who may wish to subscribe.
Art. 319. - Application for shares.

(1) Applications for shares shall bc made on the form provided and de-
posited in the place of application.
(2) -The applicant for shares stIalldeclarc that he has read the prospectus
and the expert report, if any. He shall state on the form his name and
address, the number of shares applied for and the date of application.
Art. 320. - Meetiug of subscribers.
(1) When the time for milking applications has expired, the founders shall
call a meeting of the subscribers.
(2) The provisions relating to the calling and decisions of an extraordinary
general meeting shall apply to meetings of subscribers, without preju-
dice to the provisions of Art. 322.
Art. 321. - Purpose of the meeting.

The purpose of the meeting under Art. 320 shall be:
(1) to verify that the requirements relating to the formation of the com-
pany have been complied with;
"'-"-,
( 2) to draw up the final text of the memorandum and articles of association;

(3) to approve contributions in kind, if any, and the sha~. in the profits
allocated to the founders;
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( 4) to make all appointments required under the memorandum of 8!IIOcia-

-.
tUm
- /'
AN. 322. - Speci4l rules J'6sardilJ.g rudlutions .of the m.eetinS'
(1) ReIfOlutions of s~' meetings shall be drawn up and signed by
the founders and ali documents submitted to the meeting sball be an-
nexed thereto. -/
(2) Any _~ may take part in the discussions at the meeting and
may ex9Cfse his voting rights under the article.q of association.
(3) Fo1Qlders may not vote in their capacity of shm-eholders or proxies on
.the resolution approving their special share in the profits. The same
-shall apply to contributors in kind as regards the resolution approving
the valuation of their contributionS in kind.
( 4) Amendments of substance to the draft memorandum and articles of
association require the approval of all subscribers.
Provided that a majority vote shall be sufficient where the amen-
dments relate to approval of contributions in kind or approval of shares
allocared to the founders.
(5) The provisions of Art. 315 (4) shall apply where the meeting redu-
ces the number of shares allocated to contributors in kind.
Art. 3-23'
j
- Depo&t of the memorandum of association and resistration in the
com~ resister.
(1) The provisions of Art. 219-224 of tha Code lili.all apply regardless of the
manner in which the company was formed.
(2) The following documents shall be deposited:
( a) the memorandum of association;
(b) the articles of association, if any;
( c) the prospectus;
(d) the minutes of the subscribels' meeting and all complemen-
tary documents.
( 3) The notice to be published and the application for registration shall
contain the particulars speci1ied in An. 313 (1) - (7) and (1<0) • (12).
Art. 324. - Effect of publicity.
( 1) Where publication and registration have been made, the company
shall have a legal existence and personality notwithstanding that all
the legal requirements relating to the formation ~f the cOmpany have
not been complied with.
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66 COMMERCIAL CODE
(2) Where the interests of creditors or shareholders are endangered by the

legal or statutory requirements not having been complied with, the
court may. on the application of any such creditor or shareholder, or-
der the diMolution of. the company and such provisional measures as
may be neceeary.
( 8) An application not made within three montbt from the date of pu.
blication in the Offioial Commeroial Gaette .hall not be oontidered.
Chapter 3. Shares and the rights and duties of shareholders

Art. 825. - Form of .ha,..,.
(1) Sharel are either regiltered in the name Of the shareholder or to bearer,
I I required by the 8hareholder.
(2) Shares .hall be registered in the name of the shareholder where bearer
mares are prohibited by law, the memorandum or articles of lII8OCia~n.
( 3) Where bearer shares are not prohibited, any shareholder may notwith·
standing any provision to the contrary convert his bearer shares into re-
gistered shares and vice versa.
Art. 326. - Price at which shares t;,ued.

( 1) Shares may not be issued at a price lower than their par value.
(2) Shares may be issued at a price greater than their par value where
su.oh issue ia provided by the meJlIl(Jf1"8DJdium or 8Il'Iliicies of association or
decided by an extraordinary general meeting. The difference between
the par value and the price at which shares are issued shllll, ,be known
I I a premium. .
Art. 327. - Shmes issued before registration of the company in the commercial
register.
S~ issued before the registration of the company in the commercial re-
giSter shall be null and void, but liabilities arising th~unaer shall not be
affected.
Art. 328. - Indivisibility 01 shares.

(1) Shares are indivisible.
(2) Where several persons h~ld &bares jointly, they shall appoint a repro-
sen",tive to exezcise I!he shareholder's rights.
(3) Failing auch appointment, notices and declarations made "y the com·
pany to one joint owner shall be effective against all joint owners.
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COMMERCIAL CODE 67
( 4) Joint owners of a share s'h.all he jointly and severa1ily liable in respect of

any liabilities as shareholder.
Art. 329. - Pkdge or usufruct.

( 1) Where a share is pledged or subject to a usufruct, the right to vote at
meetings shall, unless otherwise agreed, he exercised by the pledgee or
usufructuary .
( 2) Where there is a preferential right subscription, such right shall he
retained by the shareholder. If the right is not exercised, it shall he sold
on behalf of the shareholder as provided in Art. 342.
( 3) The shareholder shall be liable for callij.. on shares which have been
pledged. If the calls are not met, the pledgee may sell the share under
Art. 342.
( 4) A usufructuary shall he liable for calls on shares but may claim for
repayment when the usufruct expires.
Art. 33=0. - Indications on shares.

Every share shall he signed by a director and shall show:
( a) the name, head office and period for which the company is established;
(b) the amount of capital and the par value of the share;
( c ) the date of the memorandum of association and of registration of the
company in the commercial register, and the place of registration;
(d) the serial number of the share, i~ series or class, whether it is ordinary
OT preferential and the kind of prefejreJlJCe share;
( e) the amount of part payments on shares not fully paid up. or a state-
ment that the share is fully paid up;
(f) a statement showing whether a share may he transferred to a foreigner.
Art. 331. - Register of sharehaldms.

(1) Every share company shall keep at its head office a register of share-
holders.
( 2) The register shall contain the names and addresses of shareholders, the
number and numeration of the shares, the amount paid up and the
date of entry of the shareholder in the register.
(3) The register may be inspected by any shareholder without charge; it
may also be inspected by any other person upon payment of the pres-
cribed fee.
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68 COMMERCIAL CODE
( 4) Any person may within one month obtain a copy of or an extract

from the register upon payment of the prescribed fee.
( 5) The Ministry of Commerce and Industry may, on the request of any
interested party or partner or of the company itself,' order the rectifi-
cation of the register, where an "rror has occurred.
Art. 332. - Purchase by the company of its own shares.
(1) A company may acquire its own shares where:
( a) the acquisition has been authorised by a meeting of the share-
holders; and
(b) the purchase price is made from the net profits of the company;
and
( c) the shares are lully paid.
(2) The directors may not dispose of shares thus purchased and the vot-
ing rights on such shares shall be suspended.
(3) The provisions of sub-art.. (1) shall not apply where tlle purchase
has been decided by an extraordinary general meeting to reduce the
capital.
(4) The provisions of this Article shall apply where a company receives
its own shares in pledge.
Art. 333. - Restriction on free transfer of shares.
(1) Provisions may be made in the articles of association or by resolution
of an extraordinary meeting restricting the free traI;lSfer of shares.
(2) Provisions may be made for the assignment of shares with the con-
sent of the board of directors. Such provisions shall be of no effect
unless:
( a) a right of pre-emption is reserved to the company or, the share-
holders; and
(b) the conditions relating to the exercise of the right of pre-emp-
tion are specified and the price of pre-emption is fixed.
(3) These provisions may not result in preventing assignment of shares
nor in causing serious damage to a shareholder who may wish to
assign his shares.
(4) Where the pre-emptive right is reserved to the company, the price
shall be paid from reserve funds.
Art. 334. - Company sWl not grant advances nor make loans on its shares.
A compant"shall not grant advances on its own shares, nor make loans
to enable thirdjNlrtie· to acquire shares.
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Art. 335. - Classes O/shares.

( 1) The memorandum of aaeociation or an lIDl8Ddment thereto by a ge-
neral meeting may providf/ for the setting-up of eeveral cIa.ea of
shares with different rights.
(2) All shares of the same claas shall have the same par value and the
same rights.
( 3) No change in the rights conferred to a class of shares may be made
unless a meeting of the class of shareholders has agreed under the
same conditions as the general meeting having recommeuded the
change.
Art. 336. - Preference shares.
( 1) A share company may create preference shares either in the meDJOoo
randum of association or by resolution of an extraordinary general
meeting. Such shares enjoy a preference over other shares, meb as a
preferred right of subscription in the event of future issues, or rights
of priority over profits, qr assets or both.
(~) The issue of shares wi~ a preference as to voting rights is ptohibited.
(3) Notwithstanding the provisions of Art. 345 (3), the memorandum of
association may provide that shareholders who have been given ripdII
of priority over profits and distribution of capital upon dissolution of
the company may vote only on matters which concern extraordinary
meetings.
( 4) The number of shares having restricted voting rightt under sub-art.
(3) may not exceed half the amount of capital.
Art. 337. - Dividend shores.
(1) A company may repay, from profits or reserve funds, without reduc-
ing the capital, to shareholders the par value of their shares.
(2) Shareholders whose shares are thWi. redeem.d. shall . receive dividend
shares (actions de jouiuance). Tiheee shares do not confer any right
to that part of the dividend representing the statutory interest, nor to
repayment of contributions upon the dissolution of the company. They
retain however a right of' vote, unless otherwise provided in the me-
morandum of 888OCiation, a right to that part of the dividend exceed-
ing the statutory interest and a right to distribution of a share of the
smp1us in the winding-up.
Art. 338. - Paying up 0/ cask shares.
~ 1) Shares subscribed in cash shaIIbe paid up upon subscription as to one
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70 COMMERCIAL CODE
fourth of their par value or a greater amount if so provided in the

memorandum of association and, where appropriate, as to the whole of
the premium. They may only be registered shares until they are fully
paid.
(2) Payment of the balance may be spread over a period of five years from
the date of registration of the company.
( 3) Where shares have heen issued by existing companies before the com-
ing into force of' this Code, the period of five years shall run from
the date of coming into force.
Art. 339. - Paying up of shares by way of contribution.
(1) Shares representing contributions in kind shall normally be fully paid
at. the time of formation of the company and not later than the day of
registration of the company.
(2) They may not be separated from the counterfoil and be negotiated be-
fore two years from registration.
Art. 340. - Assignment of shares.
(1) Beareil shares are assigned by delivery, without any other requireme!lt.
(2) Unless the country is proved, such shares shall be deemed to be the
property of the holder for the purpose of payment of dividends, redem-
ption and right of participation in general meetings.
(3) The provisions of Art. 7:n of this Code shall apply to bearer shares
which are lost or stolen.
Art. 341. - Conveyance of registered shares.
( 1) Ownership of registered shares shall be established by the relevant en-
try in the. register kept aethe head office.
(2) No transfer is complete until recorded in this register.
Art. 342. - Liability to meet calls.
(1) Holders, previous assignees and subseribers shall be jointly and seve-
rally liable for cills on shares.
(2) Any subscriber or shareholder who has assigned his share shall cease
to be liable for calls after two years from the date of the "assignment.
(3) Where a shareholder fails to pay the call at the due date, he shall be
liable to pay interest at the legal rate where no rate has been provided
in the articles of association.
( 4) The company may fifteen days after the receipt by the shareholder of
a registered lette' demanding payment offer the unpaid shares for we
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COMMERCIAL CODE 11
by auction. These shares shall he cancelled and new shares delivered

to the purchaser.
( 5) Where the sale of the shares cannot he effected, the directors may oroer
the forfeiture of the shares and retain the amounts paid up, without
prejudice to any other claim they may have.
( 6) Where unsold shares have not been put in circulation during the trad.
ing period in which forfeiture was ordered, they shall he cancelled
and the capital reduced accordingly.
(7) A member who fails to make payments on shares when they become
due shall lose his voting rights.
Art. 343. - Temporary warrants.
(1) Temporary bearer warrants shall only he issued in respect of bearer
shares which are fully Faid. Temporary warrants shall he of no effect
where they are issued before hearer shares are fully paid.
(2) Where temporary registered warrants are issued in respect of bearer
shares, they Iruly only he transferred under the provisions relating to
the assignment of debts.
(3) Temporary warrants in respect of registered shares shall he registered.
The provisions relating to registered shares shall apply to the transfer
of such warrants.
Art. 344. - Joint holdings.
(I) Where ten per cent or more of the capital of one oompanyis held by
a second company, the fil"8l: company may not hold shares in the second
company.
(2) Where two companies each have a capital holding in the other com·
pany and one of suclt ihoWin~ is ten per cent or more of the capital,
the companies shall declare their holdings to the Ministry of Commer.
ce and Industry which shall require the con;tpanies by agreement to
reduce their holdings so as to conform to the provisions of sulJ.art (1).
If the companies fail to agree, the Ministry of Commerce and Industry
shall order the company possessing the smaller holding to dispose of
that holding.
( 3) Where the respective holdings are equal, and failing one company dis·
posing of its shares in the other, each company shall reduce its hold.
ing to less than ten per cent of the capital of the other.
( 4 ) The companies shall furnish to the Ministry of Commerce and Indu.
stry a sworn statement that they have complied with either sub-art. (2)
or sub·art. (3) of this Article.
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Art. 345. - Rights arising out of shares.

(1) Every share shall confer a right to participation in the annual net pro-
fits and to a share in the net proceeds on a winding-up.
(2) Unless otherwise provided in the memorandum or articles of association,
the share in the profits or in the net proceedr on a winding-up shall be
calculated in proportion to the amount of capital held.
(3) Subject to the provisions of Art. 336, every share shall confer voting
rights.
( 4) Every shareholder has a preferred right, in proportion to his holding,
to allotment of cash shares issued on an increase of capital.
(5) The provisions of Art. 470 et seq shall apply to the exercise of this
right.
( 6) Similar rights may be reserved to holders of preference shares by an
express provision in the memorandum or articles of association.
Art. 346. - Liability of founders and directors.
Subject to the provisions of Art. 3'09, founders and directors shall be joint-
ly and severally liable to the company and to third parties for the observ-
ance of the provisions of this Chapter.
Chapter 4. Directors, Auditors and Shareholders' Meetings

Section 1. Management
Art. 347. - Directors.
(1) Only members of a company may manage the company.
( 2) A company shall have not less than three nor more than twelve di-
rectors who shall form a hoard of <Urectors.
( 3) Where the memorandum of association does· not specify the number
of directors but fi~es only a maximum and a minimum, the meeting
of suhscriheJ.~ Shall decide the number of directors to be appoimed.
( 4) Bodie~ corporate may he directors, but the chairman of the hoard of
directors shall he a pesron.
Art. 348. - Chairman. - General Manager. - Secretary.
( 1 ) The hoard shall elect a chairman from among its members where no
chairman has been elected by a meeting of subscribers or shareholders.
( 2) The hoard may revoke the a~;;')intment of a chairman elected by the
hoard.
( 3) A general manager shall he appointed by the hoard. The provisions of
Art. 34, 35, 109 (1) (f) and 121 (h) of this Code shall apply.
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COMMERCIAL CODE 73
( 4) The general manager is an employee of the company and mar not be

a director.
( 5) The board may appoint a secretary.
Art. 349. - Qualificatron shares.

( 1) The directors shall deposit as security with the company such num·
ber of their registered shares in the company as is fixed in the memo-
randum of association.
( 2 ) These shares shall not be handed back until the owners have ceased to
be directors and have fully discharged their llahillties. if amy. to the
company.
Art. 350. - Appointment of directors.

( 1 ) The first directors may be appointed under the memorandum or arti·
cles of association. This appointment shall be submitted to a meeting
of subscribers for confirmation. If such confirmation is not given, the
meeting shall appoint other directors.
( 2) Subsequent directors shall be appointed by a general meeting.
( 3) Directors may not be appointed for more than three yeus.
(4) Unless otherwise provided in the memorandum or artic1ee of associa·
tion, directors are eligible for re-election.
( 5) Where more than ,two directors are to be elected, such elections may
not take place simultaneously.
Art. 351. - Replacement of directors.

(1) Where, during a financial year, one or more of the directors haTe
left the board, the surviving directors may appoint other, persons to
complete the period for which the directors who Mve left the board
were appointed.
( 2) _Their appointments shall be submitted to the next general meeting for
confirma,tion and the general meeting may confirm their appointments
or appoint other directors in their place. The acts done by persons
appointed under sub-art. ( 1 ) shall be valid notwithstanding that the
appointment of such persons is not confirmed by the general meeting.
(3) Where the surviving directors are less than half of the board,of direc-
tors, they may not appoint directors under stlib-art. (1) but shall con.
vene a general meeting to appoint other directors.
( 4) Where there are no surviving directors, the auditors shall convene a
general meeting without delay for directors to be elected..
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74 COMMERCIAL CODE
( 5) During the period prior to the calling of the general meeting under sub-
art. (4), the auditors may carry on the management of the company.
Art. 352. - Rights of a minority.

Where there are several groups of shareholders with a differeut legal status,
the articles of association shall provide for each group to elect a~ least one
representative on the board of directors.

(1) Directors may receive a fixed annual remuneration, the amount of which
shall be determined by a general meeting and charged against general
expenses.
(2) The articles of association may provide that the directors may receive
a specified share in the net profits of a financial year.
(3) The fixed remuneration and share in the profits to be allocated to the
board of directors shall be allocated in one sum. The board shall ar-
range the distribution among its members in such proportion as it deems
fit.
(4) The amount of the share in the net profits may not exceed 10%. This
share is calculated after deduction of:
( a) amounts allocated to reserve funds provided by law or the articles
of association;
(b) the statutory dividend, where provided in the articles of associa-
tion or where not provided, a sum representing 5% of the paid
up value of shares which have not been redeemed;
(c) amounts allocaited to reserve funds established by resolution of a
gener.u meeting;
(d) amounts carried forward.
( 5) In fiAing the share under sub-art. (4) regard may be had to amounts
distributed or capitalised and charged in a previous balance sheet, with
the exception of those arising in a 1iuaucial year closed before the com-
ing into force of this Code.
(6) The director's share in the net profits shall not be paid where no divid-
end has been distributed to the shareholders.
( 7) The Ministry of Commerce and Industry. taking into account the spe-
cial benefits which have been provided to directors having the status
of founders and having regard to the position of the company and to
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COMMERCIAL CODE 75
the salaries and benefits of its employees, may, on the position of share·
holders representing not less than 10% of the capital, order tlte reduc·
tion of the remuneration of the directors where it considers it excessive.
Art. 354. - Removal.
Notwithstanding any provision to the contrary, directors may he removed at

any time by a general meeting: provided that a director who was removed
without good cause may claim compensation.
Art. 355. - Restri-:tions on private trade.

Unless authorised by a gencral meeting, directors may not he partuers with
joint and several liability in rival compauies nor compete against the com·
pany either on their own behalf or on behalf of third parties.
Art. 356. - Dealings between a company and its directors.
( 1) Any dealings made directly or indirectly between a company and a

director shall receive the prior approval of the board of directors and
notice shall be given to the auditors.
( 2) Approval and notice under sub·art. (I) shall he required in respect
of any dealings made between a company and another concern where
one of the directors of the company is owner, partner, agent, director
or manager of such concern.
(3) The auditors shall submit a special report to the general meeting relat·
ing to dealings approved by the hoard of directors. The meeting may
take any action it thinks fit.
( 4) Dealings approved by the meeting may only he set aside on the ground
of fraud.
(5) Dealings not approved shall remain in force but the director concern.
ed shall be liable for damages arising from fraud and if he fails to
meet his liability the board of directors shall be liable.
( 6) The provisions of this Article shall not apply to normal agreements
between the company and its clients.
Art. 357. - Directors may not contract loons with the company.
(1) Directors of a company other than bodies corporate may not borrow
money from the company, obtain an overdraft in current account or
have any oblig&>tion guaranteed in respect of business transacted with
third parties.
( 2 ) The provisions of sub-art. (1) shan not apply in respect of day to day
business of a company which carries on banking business.
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16 COMMERCIAL CODE
4ft. 858.. - Det:Ui.Qns 0/ the boord 0/ directors.

( 1) No deciaion may be taken by the board of directors unless a majority
of 'direCtors is present. Decisions shall be taken by an absolute majority.
Voting may be by proxy.
(2) An aheent director may be represented at a board meeting only by
aDOtlaer director who acts as proxy for the absent director only.
(3)Decimons of the board shan be drawn up as minutes and shall be
signed by the ehairmaD and a secretary. The minutes shall be kept in
• :inmate book.
( 4) Copies of decisions shall be signed by the chairman and a secretary.
"-t. 359, - ~ 0/ directors.
(1) Every company shall keep at its head office a register of its directors
and managers with, particulars as to their civil status, profession, and
any directorship held in other companies and, where the director is a
IVJD.pany. the name of the company and the address of its head office.
(2) All particulars entered in the register and any amendments thereto
ahall be sent to the Ministry of Commerce and Industry within fifteen
days from the. making of the entry or amendment.
(3) Tile repter shall be open to inspection in accordllnce with Art. 331 (3).
Art. 360. - Regi6ter of shares and debentures held by the directors.
( 1) Every eampm,y tball keep at its head office a register showing the num·
ber and value of shares or dehen!tures held by each director:
(JI.,) ju the company;
(b) in subsidiary companies;
( c) in any holding company of whicb the company is a subsidiary.
(2) The . . . . and any documents to be submitted at the general meet·
ing shall he open to in8pection by any share or debenture holder he-
fme·the 8DlIlual general meeting.
( 3) The register shall be open to inspecti04 by a representative of the Mi.
nistry of Commerce and Iu.duetry at any time and. extracts or a copy
of the register may be taken.
(') TiIw Wfiiste.r .of dUecton shall be available at the annual general meet·
jq for ~QIl by any member attending the Dieeting.
Art. 361. - Statements to be provided concerning remuneration 0/ directors.
(1) The baJa:ace sheet submitted to the annuaJ general meeting shall show
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the total amount of remuneration, allowances, annuities, Jeti'nmlent

benefits and benefits in kind given to the directors.
(2) Loans or guarantees to directors shall also he shown.
Art. 362. - Duties of directors.

In addition to their duties under Art. 364, directors shall be responsible for:
( a) keeping regular records of the management and of meetings;
(b) keeping accounts and books;
( c) submitting the accounts to the auditors and an annual report of the
company's operations including a financial statement to the meetings;
(d) convening meetings as provided in the articles of association;
( e) convening a general meeting without delay where three quarters of
the capital are lost;
(f) setting up the reserve funds required by law or the articles of 8880-
ciation;
(g) applying to the court where the company stops payments with a view
either to a composition with ('reditors or the winding-up of the com·
pany.
Art. 3()";. - Powers of directors.
(I) The directors shall have such powers as are given to them by law. the
memorandum or articles of association and resolutions passed at meet-
ings of shareholders.
(2) The articles of association shall specify whether the directors are joint.
ly responsible as managers or agents of the company or whether one
only of the directors is responsible.
(3) Persons authorised to act as agents for the company may exercise in
its name their powers as agents. Any restriction on their powers shall
not affect third parties acting in good faith.
Art. 364. - Liability of directors to the company.

( I) Direetors shall be responsible for exercising the duties imposed on them
by law, the memorandum or articles of association and resolutions of
meetings, with the care due from an agent.
(!l) Directors shall, be jointly and severally liable to the company for da.
mage caused by failure to carry out their duties.
( 3) Directors who are jointly and severally liable shall have a general duty
to act with due care in relation to the general management.
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78 COMMERCIAL CODE
(4) Directors shall be jointly and severally liable when they fail to take
all steps within their power to prevent or to mitigate acts prejudicial
to the company which are within their knowledge.
( 5) Directors shall be responsiLle for showing that they have exercised due
care and diligence.
( 6) A director shall not be liable where he is not at fault and has caused
a minute dissenting from the action which has been taken by the board
to be entered forthwith in the directors' minute book and sent to the
auditors.
Art. 365. - Proceedings to enforce directors liuui/,ity,
(1) No proceedings shall be instituted against the directors without a re-

solution of a general meeting to this effecl. Such a resolution may be
moved and adopted althcugh not on the agenda,
(2) Where a resolution to institute proceedings or to compromise the claim
is adopted by a vote of shareholders representing at least one fifth of
the capital, the director concerned shall be removed. The same meet-
ing shall appoint a director to replace the director who has been re-
moved.
(3) A resolution not to institute proceedings and to compromise shall not
be adopted where shareholders representing one fifth of the capital
vote against the resolution.
( 4) Where a resolution under sub-art. (2) is adopted but the company
fails to institute proceedings within three months, the shareholders who
voted for the resolution may jointly institute proceedings.
Art. 366. - Liability to creditors.

(1) Directors shall be liable to the company's creditors where they fail to
preserve intaot the company's assets.
(2) Proceedings may be instituted by the creditors against the directors
where the company's assets are insufficient to meet its liabilities.
(3) A resolution of the general meeting not to institute proceedings against
the directors shall not affect the creditor's rights.
( 4) Creditors may not apply to set aside a resolution to compromise except
on the grounds available to them under civil law.
Art. 367. - Proceedings instituted by shareholders and third parties.

Nothing in this Section shall affect the rights of shareholders or third parties
who havc been injured by the fault or fraud of the directors.
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Section 2. Auditors
Art. 368. - Appointment of auditors.
(1) The general :electing of every company limited by shares shall elect
one or more auditors and one or more assistant auditors.
(2) Shareholders representing not less than 20% of the capital may appoint
an auditor selected by them.
(3) Where there is more than one auditor, they may exercise their duties
jointly or separately.
( 4) A body corporate may act as auditor.

Art. 369. - Nomination and term of appointment.
(1) Auditors shall be elected by the meeting of subscribers and thereafter

by the annual general meeting.
(2) Auditors elected by the meeting of subscribers shall hold office until
the first annual general meeting. Auditors elected at' an annual general
meeting may hold office for three years.
(3) When signing as auditor, an auditor shall add the name of the com-
pany whose accounts he is auditing.
Art. 370. - Persons not competent.
( 1) The following persons may not be elected as auditors:

(a) founders, contributors in kind, beneficiaries holding special bene-
fits, directors of the company or of one of its subsidiaries or of ill!
holdings company;
(b) spouses or relatives by consanguinity of affinity to the fourth de-
gree inclusive, of the persons mentioned in sub-art. (1) (a);
( c) persons who receive from the persons mentioned in sub-art. (1)
(a) a salary or periodical remuneration in connection with duties
other than those of an auditor.
(2) Auditors may not be appointed directors or managers of the company

which they audit, nor of one of its subsidiaries or its holding company
within three years from the date of the termination of thdr functions.
( 3) Reports submitted by an auditor and adopted by the annual general
meeting shall not, save in the case of fraud, be invalid merely by
reason of the faot that the provisions of this Article have not been
observed.
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Art. 371. - Revocation of the appointment of an auditor.

A general meeting may at any time revoke the appointment of any auditor
without prejudice ,to an'Y claim ne mBIY have for wrongful dismissal.
Art. S72. - Remuneration.

( 1) The remuneration of auditors shall he fixed by the general meeting
OR their appointment.
( 2) Where the general meeting fails to agree on the remuneration of thE
auditors, the Ministry of Commerce and Industry may on the applica-
tion of any interested party fix the remuneration.
Art. 878. - ProfeuionaZ teereey.
Auditors shall he liable to the penalties prescribed in AN. 407 of the Penal
Code for breaches of professional secrecy.
Art. 374. - Dutiell of tlu! auditors.
The auditors shall have the following duties:
( a) to audit the books and securities of the company;
(b) to wrify the Correctness and accuracy of the inventories, balance sheets
and profit and loss accounts;
( c) to certify that the report of the hoard of directors reflects the correct
state of the company's affairs;
( d) to carry out such special duties as may he assigned to them.
Art. 375. - Report to general meetings.
(1) The auditors shall submit to the annual general meeting a written re-
port on the manner in which they have carried out their duties and
their comments on the report of the hoard of directors.
(2) They shall recommend approval of the accounts and make such
eommentl! thereon as they think fit or refuse to recommend approval,
giving rea'80ns for referring the matter back to the directors.
(3) They may comment on the proposed distribution of profits.
(4) The general meeting shall not consider the balance sheet in the
absence of a report under sub.art.(l).
Art. 816. - Auditors to inform directors of irregularities.
(1) Where the auditors find irregularities or breaches of legal or statutory
requirements, they shaH inform the directors and, where grave irregu-
Iarities or breaches have occurred, they shall inform the general meet-
ing.
(2) The 'llUditors shall inform the public prosecutor of any matters which
would appear to disclose the commission of an offence.
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Art. 377. - Calling of general meetings.

( 1) The auditors shall call a general meeting where the directors fail to
do so under the law or in accordance with the memorandum or articles
of association.
( 2) They shall call a general meeting where shareholders representing at
least 2,0% of the capital so request.
( 3) Where there are several auditors, they may joiDJtly call a meeting in ac-
cordance with the articles of association and may, where they think
fit, fix for the meeting a place other than the company's ht:.ad office
or other place laid down in the articles of as!Ociation, but in the same
locality.
( 4) The auditors shall prepare the agenda and a report to be read at the
meeting giving the reasons for calling the meeting. One of the auditors
shall preside over the meeting.
( 5) Where the auditors disagree, one of them may move the court having
jurisdiction in the area in which the head office is situate for an order
appointing an officer of the court to exercise the powers under sub-
art. (3) and (4).
(6) Expenses incurred under this Article shall be bome by the company.
Art. 378. - Powers.

(1) The auditors may at any time make on the spot such audits and checks
as they think necessary and may call for any information, agreements,
books, accounts, minute books and such other documents as may be re-
quired for the proper execution of their duties.
(2) Audit8rs shall be present at shareholders' meetings and at the annual
general meeting.
Art. 379. - Audit of the accounts of a holding company.

Auditors shall exercise their powers under Art. 378 in respect of the ac-
counts of holding companies under Art. 451.
Art. 380. - Liability of auditors.

(1) Auditors shall be civilly liable to the company and thi,.d parties for
any fault in the exercise of their duties which occasioned loss.
(2) An auditor who knowingly gives or confirms an untrue report concem-
ing the position of a (',ompany or fails to inform the public prosecutor
of an offence which he knows to have been committed shall be punish-
ed under Art. 438 or Art. 664 of the Penal Cede, u the case may be.
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Art. 381. - Investigatwn into the position of a company on the request of

sTun-eholders.
(I) Shareholders representing at least one tenth of the shares issued may
ask the Ministry of Commerce and Industry to appoint one or more
qualified inspectors to make an investigation and report on the com-
pany's state of affairs.
(2) The petition shall contain such evidence as the Ministry deems neces-
sary and the petitioners may be required to guarantee up to a maxi-
mum of 500 Ethiopian dollars the expenses of the investigation.
Art. 382. - Investigation compulsory.

The Ministry shall appoint one or more qualified inspectors to act under
Art. 381 where there has been a resolution of a general meeting or an
order of the court.
Art. 383. - Investigatwn ordered by the Ministry of Commerce and Industry.

The Ministry of Commerce and Industry may appoint inspectors to con-
duct an investigation where it has good reason to believe that the opera-
tions of the company are such as may reveal:
( a) fraud on creditors; or
(b) acts prejudicial to a class of shareholders; or
(c) illegal or fraudulent activities; or
( d) acts which constitute offences against the law.
Art. 384. - Investigations may be extended to the affairs of Mlding compa-

nies and subsidiaries.
Where inspectors have been appointed under Art. 381, 382 or 383 to inve-
stigate into the affairs of a company and they are of the opinion that a full
investigation into the affairs of such company cannot properly be carried
out without an investigation into the affairs of the holding or subsidiary
company of such company, they shall report their opinion to the Ministry
of Commerce and Industry which may order that the investigation he ex-
tended to the affairs of the holding or subsidiary company.
Art. 385. - Duties of companies under investigatwn.

(I) The directors and authorised agents of any company under investiga-
tion shall produce to the inspectors all hooks and documents required
by them and furnish all information necessary for the investigation.
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(2) Any director or authorised agent who obstructs the inspectors in the
course of the investigation shall be reported to the Ministry of Com-
merce and Industry which may caU8e proceedings to be instituted un-
der Art. 433 of the Penal Code.
Art. 386. - Inspectors' Report.

On receipt of the inspectors' report, the Ministry of Commerce and Indu-
stry shall send a copy thereof:
(a) to the companies ,,·hose affairs have been investigated;
(b) to the shareholders who petitioned for investigation;
(c) to the court which ordered an investigation.
Art. 387. - Investigation regarding nominees.

(1) Where the Ministry of Commerce and Industry has good reason to
believe .that rp~istered shareholders are only nominees of the persons
who exercise effective control of a company, the Ministry may appoint
inspectors to ascertain the real owners of the shares under Art. 383.
(2) The Ministry may order an investigation under sub-art. (1) at the
request of shareholders representing not less than one tenth of the
shares issued.
Section 3. Shareholders' Meetings

Paragraph 1. - General provisions
Art. 388. - General rules.

(1) A general meeting of shareholders, properly established and conduct-
ing its business in accordance with the law, acts on behalf of all share-
holders. Decisions of a general meeting bind all shareholders whether
absent, dissenting, incapable or having no right to vote.
(2) The provisions of sub-art. (1 J shall apply mutatis mutandis to special
meetings.
Art. 389. - Rights proper to shareholders.

(1) Notwithstanding the provisions of Art. 388, no shareholder may be
deprived without his consent of the rights inherent in membership.
(2) Rights inherent in membership are rights which, under the law or the
memorandum or articles of association, do not depend upon decisions
of the general meeting or board of directors or which are connected
with the right to take part in meetings, such as the right to be a
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84 COMMERCIAL CODE
member, to vote, to challenge a decision of the company or to receive

dividends and a share in a winding-up_
Art. 390. - Classes of meetings
(1) Shareholders' meetings may be general or special.

(2) General meetings are ordinary or extraordinary and comprise share-
holders of all classes.
(3) Special meetings comprise only shareholders of a specific class.
Art. 391. - Calling meetings.

(1) General meetings are called by the directors, the auditors, the liqui-
dators or, where appropriate, by an officer of the court.
(2) The court of the pl~ce where the head-office is situate may appoint an
officer of the court to call a meeting and to draw up the agenda for
consideration where shareholders representing one tenth of the share
capital show that such an appointment is necessary.
Art. 392. - Mode of calling.

(1) Notices calli.,;.; ll'cctings shall be i.sued in accordance with the article.
of association and shall be published in the Official Commercial Ga-
zette and in one newspaper authorised to publish legal notices and cir·
culating in the area where the head office is situate.
(2) The provisions of sub.art. (1) shall not apply where all the sharehol.
del's are registered and are notified of meetings by registered letter at
the company's expense.
(3) Any registered shareholder may, by registered letter, require the com-
pany to notify him of meetings by registered letter at his own expense.
( 4) The calling of meetings made necessary in the absence of a quorum
is prescribed in the provisions relating to each class of meeting.
Art. 393. - Ordinary meetings called by reason of lack of quorum.

Where an ordinary general meeting has been unable to function for lack
of the quorum provided in Art. 421, a second meeting shall be called in
the same manner and within the same period of time as the first meeting.
Art. 394. - Extraordinary or special meetings called by reason of lack of quorum.

Where for lack of the quorum provided in Articles 425 and 428 an extraordi-
nary or spedal meeting has been unable to funotion, a second and a third
meeting, if necessary, shall be called by two notices published at one week's
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COMMERCIAL CODE 85
interval in the Official Commercial Gazette and in a newspaper autJhorised to

publish legal notices, or under the provisions of Art. 392 (2), where appro-
priate.
Art. 395. - Time of notice of meetings.
Notice to he given for a first meeting shall be fifteen full days and for a
second or subsequent meeting called for lack of a quorum at the first meet-
ing, eight full days, irrespective of the mode of calling.
Art. 396. - Contents of notices of meetings.
(I) Notices of meetings shall give the company's name, the nature, capital
and head office of the company and the place where and time ,within
whidh hearer shares (if any) are to he deposited.
(2) Notices of subsequent meetings made necessary by lack of quorum shall
givc the dates of the abortive meetings.
Art. 397. - Agenda.
(1) Save as is provided in Art. 391 (2), the agenda shall he prepared by
the person calling the meeting.
(2) Unless otherwise provided, only items on the agenda may he discussed.
However, the meeting may at any time revoke the appointment of di-
rectors and appoint new directors in their place.
(3) Only items on the agenda of the first meeting may he discussed at sub-
sequent meetings made necessary by lack of quorum (Art. 393 and
394).
Art. 398. - Proxies.
( 1) 4-shal·eholder may nominate one proxy only. Where a shareholder has
appointed a proxy, he may not vote in person.
(2) The representation of joint holders of shares, of reversioners and of
pledgees is provided for in Art. 328 and 329.
Art. 399. - Requirements in respect of conduct of business.
( 1) A meeting is not legally constituted for taking decisions where there
is not a quorum and a majority.
(2) The quorum in relation to the capital is as laid down for each class
of meeting. For all meetings the quorum shall he calculated on all the
shares making up the capital, less these shares wihich carry no voting
riglhts under -the law or the articles of association.
(3) The memorandum and the articles of association may not vary the
provisions of this Code relating to majority and quorum.
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Art. 4;00• ..:.. Shares redeemed by the company carry no votin:J rights.
A company may not vote with shares which it has redeemed under Art. 332.
Art. tiH. - Period 01 time lor registration 01 shares.
The articles of association shall determine the period of time within which
the holders of registered shares shall he entered in the company's register
and bearer shares deposited. This period of time shall not expire more than
five full days before the date of the meeting. This period may he shortened
in the articles of association.
Art. 4<12. - Proxy.
The form of proxy, the place where and the time within which they shall
he deposited shall he determined by the directors: Provided that such pe-
riod of time may not expire more than three full days before the meeting.
Art. 403. - Attendance sluM!t.
(1) An attendance sheet shaH he kept for each meeting. It shall show the
names and address of sha:.·eholders present or represented by proxy and
the number of sharl'5 and votes held by each shareholder.
(2) The attend...nce sheet shall be initialled by the shareholders or their pro.
xies, and shall he certified as correct by the bureau of the meeting.
Art. 4;04. - Chair11l4n.

(1) The chairman of the board of directors or, in his absence, the senior
director shall preside at all meetings. In the absence of both such per-
sons, the person named in the articles of association or appointed by
the meeting shall preside.
(2) Where the meeting has been called by the auditors, an officer of the
court or a liquidator, the person calling the meeting shall preside.
Art. 405. - Tellers and secretary.
(1) The two members of the meeting who hold or represent the greater
number of shares shall be appointed tellers, where they are willing to
accept such appointment.
(2) The bureau shall appoint a secretary who, unless otherwise provided,
need not be a shareholder.
Art. 40·6. - Right to inspect documents.
( 1) Every shareholder may at all times, lilt the head office, inspect and
take copies of:
( a) balance sheets and profit and loss accounts;
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(b) reports submitted by the directors and by the auditors to general

meetings relating to the three preceding financial years;
(c) minutes and attendance sheets of these meetings.
(2) Where a company refuses to give a shareholder access to any of the
documents specified in sub-art. (1), the Ministry of Commerce and
Industry shall be informed.
(3) The rights under this Article are enjoyed by joint holders of shares,
reversioners and usufructuaries, and pledgees.
Art. 407. - Voting rights attached to shares.
( 1) The voting I;ights attached to ordinary or dividend shares shall be in
proportion to the amount of capital represented.
(2) Every share carries at least one vote.
Art. 408. - Limitation of votes.

The memorandum or articles of association may limit the number of votes
which shareholders may exercise at meetings so long as such limitation is
equal for all shares without distinction of class.
Art. 409. - Conflicts of interest.

(1) Where the interests of a member, acting on his own behalf or OIl be-
half of a third party, conflict with the interests of the COInpmy. III1Ch
member may not exercise his right to vote.
( 2) Where failure to comply with the provisions of sulHlrt. (1) reeu1ta in
a resolution being adopted' prejudicial to the company, such reaoludon
may be set aside in accordance with the provisions of Art. '16.
( 3) Directors may not vote on resolutions relating to their duties aDd u..
bilities.
( 4) Shares which are deprived of voting rights under this Article abaIl he
taken into account in calculating the quorum.
Art. 410. - Provisions restricting the free exercise of tloring righu intlGlid.
Any provision restricting the free exercise of voting rights in ahareholden'
meetings shall be of no effect.
Art. 411. - Minutes.
(1) Discussions at meetings shall be reduced to minutes entered in a mi-
nute book and signed by a majority of the members of the bureau.
Such entry shan be certified as correct by the chairman of the board
of directors of the company or by two directors.
( 2 ) The minutes of a meeting shall include:
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88 COMMERCIAL CODE
(a) the manner in which the meeting was called; and

(b) the place and date of the meeting; and
(c) the agenda; and
(d) the members of the bureau; and
(e) the number of shares represented and the quorum; and
(f) the documents laid before the meeting; and
(g) a summary of the di5cussions; and
(h) the results of votes taken; and
(i) the texts of resolutions adopted.
Art. 412. - Minute where there is no quorum.

Where a meeting lacks a quorum, the chairman shall record this fact in
the minute book.
Art. 413. - Copies or extracts of the minutes.

Copies or extracts of the minutes shall be certified by the chairman of the
board of directors or by two directors.
Art. 414. - Adjournment C?f meetings.

(1) Where shareholders representing one third of the capital represented
at a meeting consider that they have insufficient information upon the
matters to be discussed, they may require the meeting to be adjourned
for a period not exceeding three days.
(2) This right may be exercised once in respect of one matter.
Art. 415. - Informal meeting of all shareholders.

(1) Shareholders or proxies representing all the shares may by agreement
hold a general meeting without further formality.
(2) Where shareholders or proxies representing all the shares are present,
the meeting may take any decision and adopt any resolution as in a
general meeting.
Art. 416. - Effect of resolutions.

(1) Resolutions adopted by a meeting in accordance with the law, the me-
morandum or articles of association shall bind all members, including
those who were not present or dissented.
(2) Resolutions adopted contrary to the law, ~he memorandum or articles of
association may be challenged within three months from the resolution
but in no case after three months from the entry of the resolution in
the commercial register.
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(3) Applications to set aside resolutions shall be made to the court within
whose area of jurisdiction the head office is situate. The court may re-
quire 1lhe cla.i.m.ant to provide security for costs.
( 4) On the request <'f the claimant and after hearing the directors and audi-
tors, the court may, where good rea5()llS are disclosed, suspend the
execution of the resolution challenged pending the court's decision.
( 5) Where a resolution is set aside, the decision of the court shall hind all
members and the directors shall he responsible for taking alI measures
necessary to implement such decision.
(6) Nothing in this Article shall affect rights of third parties acquired in
good faith while the resolution was effective.
PARAGRAPH 2. - ORDINARY MEETINGS

Art. 417. - Right to inspect documents.
In addition to his rights under Art. 406, any shareholder may, during the
fifteen days which precede an annual ordinary general meeting, inspect and
take copies at the head office of the balance sheet, the profit and 10118 account
and the directors' and auditors' reports to he submitted at the annual ge-
neral meeting.
Art. 418. - Meetings.

(1) Within four months from the end of each financial year, an ordinary
annual general meeting shall he called by the directors.
( 2) This period of time may be extended to six months by the articles ot
association.
(3) Where necessary, other ordinary general meetings may he held.
Art. 419. - Business conducted at the meeting.

( 1) The balance sheet, the profit and loss account and the directors' and
auditors' reports .shall he read out at the ordinary general.meeting. After
discussion it shall approve or reject the accounts for the past financi,l
year. It shall decide, where nece5lllll'Y, on the allocation and distriba.tion
of profits and on all questions arising out of the accounts for the put
financial year.
(2) The meeting may appoint or remove directors and auditors, decide the
amount of their remuneration, amend where neceeury the IICCOWlU
after considering the report required under Art. 375, approve the iIIIIe
of debentures as well as the guarantees attached thereto and decide all
matters other than those reserved ,to extraordinary geuenl meetiup.
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Art. 420. Taking part in meetings.

(1) Notwithstanding any provision to the contrary, any shareholder has the
right to tak6 part in ordinary meetings without regard to the number
of shares held.
( 2) Unless otherwise provided in the articles ot association, any person may
be represented by a third party, whether a shareholder or not.
Art. ,t21. - Majority and quorum in ordinary general meetings.
( 1) When first called, general meetings shall be composed of that number
of shareholders which represents either in person or by proxy at least
one·quarter of the voting shares.
( 2) When called for a second time, the meeting may be held and discussions
made without regard to the number of voting shares represented.
( 3) Decisions are taken by a simple majority, abstentions and blank ballots
(if any) being disregarded.
PARAGRAPH 3. - EXTRAORDINARY MEETINGS

(1) Any shareholder may, during the fifteen days whicih precede an exua-
ordinary meeting, inspect and take copies at the head office of the text
of resolutions to be proposed or of the auditors' report to be submitted.
( 2 ) A shareholder may require the company in writing to send him copies
at his own expense.
Art. 423. - Business.

Unless otherwise provided by law, only extraordinary meetings may amend
the memorandum or articles of association.
Art. 424. - Admission.
Any shareholder, including preference shareholders, may take part in an
extraordiamy meeting without regard to the number of shares held.
Art. 525. - Majority and quorum in extraordinary meetings.
(1) Not less than a two-thirds majority is required for a resolution to be
adopted in an extraordinary meeting, abstentions and blank ballots be-
ing disregarded.
(2) Resolutions to:
(a) change the nationality of the company; or
(b) require shareholders to increase their investments in the company,
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shall only he adopted where the holders of all shares having voting
rights are present or represented and the vote is unanimous.
(3) Resolutions other than resolutions under sub-art. (2) may only be adop-
ted:
(a) at a first meeting, where not less than one half of the holder, of
all shm-es having voting rights are present or represented;
(b) aI1: a second meeting, wlli'ere not less than one third of the iholders
of aill shares having voting rights are present or represented;
(c) at a third mooting, where not less tIhan one tenth of the ITl0lders of
all shares having voting rights are present or represnted.
(4) Nothing in this Article shall affect the provisions of Art. 463.
PARAGRAPH 4. - SPECIAL MEETINGS
Art. 426. - Cases where special meetings are to be called.

A resolution of a general meeting to modify the rights of a class of share-
holders becomes effective only when confirmed by a special meeting of the
shareholders in the class concerned.

The provisions of Art. 422 shan apply mutatis mutandis to special meetings.
Art. 428. - Quorum and majority in special meetings.

(1) Special meetings shall he composed:
(a) at a first meeting, of shareholders holding not less than one half of all
voting shares;
(b) ata second meeting, of shareholders holding not less than one third of
all voting shares;
(c) at a third meeting, of shareholders holding not less than one quarter of
all voting shares.
Shareholders may he represented by proxies.
(2) The majority in special meetings shall he as provided in Art. 425 (1).
Chapter 5. Debentures
Art. 429. - Cases where issue is prohibited.
No negotiable debentures shall he issued by:
( 1) individuals;
(2) companies whose capital is not fully paid;
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(3) companies which have not issued a balance sheet in respect of their first
financial year.
Art. 430. - Maximum amount of the issue.

(1) Debentures issued by a company may not exceed the amount of paid
up capital shown in the last adopted balance sheet. This amount may
he exceeded:
(a) where the company's immovable property is mortgaged and the
debentures issued do not exceed two thirds of the value of the
mortgage; or
(b) where the excess over the paid-up capital is guaranteed:
(i ) by registered securities or securities issued or guaranteed by
the State and the date of redemption is not earlier than that
of the debentures; or
(ii) by government or public authorities annuities.
(2) Such securities shall he deposited ill a bank and such part of the an-
nuities shall be blocked in a bank upto the time of repayment as is ne-
cessary to meet payments of intereEt and amortisation.
(3) The provisions of sub-art. (1) shall not apply to real estate loan or
agricultural mortgage companies.
Art. 431. - Reduction of capital where there (Ire debentures.
A company which has issued debentures lIlay only reduce its capital in pro-
portion to the debentures redeemed. Where a reduction of capital is neces-
sary owing to losses, the amount of the legal reserve shall continue to be
calculated on the hasis of the capital existing at the time of issue for so long
as the capital and the legal reserve are less than the value of the unredeemed
debentures.
Art. 432. - Premium bonds and bonds at a discount.

(1) Bonds may be issued at a price greater than their par value.
(2) Bonds may not be issued at a price lower than their par value except
in accordance with special laws.
Art. 433. - Contents of debenture certificates.

Debenture certificates shall be issued from a counterfoil register and shall
show:
(a) the .company's name, its ohjects, the head office of the company, and
the place where the company was registered:
(b) when the company was formed and for how long;
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(c) the paid-up capital on the date of issue;

(d) the date of resolution of the general meeting and its entry in the register;
(p) the ,.erial number amI nominal value of the certificate, the rate and
date of interest payments and the terms for redemption;
(f) the amount of the issue and the special gum'antees attaching to the de-
bentures and the datc of the deed setting up such guarantees;
(g) the amount of debentures or loan stock issued previously and not amor·
tised, indicating the guarantees attaching thereto;
(h) where appropriate, the period or periods of time within which deben-
ture holders may convert their debentures into shares, and the provi.
sions for such conversion,
Art. 434, - Application of prodsions relating to shares.
The provisions of Art, 318. 319, 325, 328, 329, 340 and 341 of this Code
shall apply mutatis mutandis to dchentures.
Art. 435, - Debenture holders' meetings,
(1) Holders of debentures of a given issue may combine as a legal perso·

nality to protect their common intel'ests as provided hereinafter,
(2) Notwithstanding any provision to the contrary, debenture holders who
have combined under sub·art. (1) may at any time meet in general
meeting.
Art. 436. - Calling of debenture holders' meetings.
(1) A meeting of debenture holders may be called by the company or by the

representative of the debenture holders, if any.
(2) A meeting may also be called by debenture holders representing one
twentieth of the i5sued and unredeemed debentures.
(3) The provisions of Art. 388 et seq. relating to the calling and holding
of shareholders' meetings shall apply mutatis mutandis to the calling
and holding of debenture holders' meetings.
( 4) Directors, auditors or employees of the company having issued deben.
tures or of eompanies having guaranteed sueh issue may not represent
debenture holders in general meetings.
(5) Holders of debentures which have been amortised and redeemed may
not take part in meetings.
(6) The company which has redeemed debentures may not take part in the
debenture h:>lders' meeting by reason of the debentures it ihias redeemed,
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A company which holds more than 30 per cent of the capital of the com-
pany which has issued the debentures may not take part in the debenture
holders' meeting.
( 7) The calling and holding of general meetings of debenture holders shall
be at the expense of the debtor company.
Art. 437. - Business of debentures holders' meetings.

(1) Resolutions adopted by debenture holders' meetings bind all debenture
holders, whether absent, dissenting or incapable.
(2) Meetings may adopt resolutions to protect the interests of debenture
holders, to enforce the loan agreement and to provide for all necessary
expenses in connection therewith.
Art. 438. - Decisions on proposals by the company.
( 1) The meeting may also consider proposals of the debtor company relat-
ing to:
(a) modifications in the structure of the company;
(h) amalgamation with another company;
(c) i&sue of debentures having priority over existing debenture.
(2) The company may enforce proposals under sub-art. (1) nOh'l'ithstand-
ing that the debenture holders' meeting does not approve such pro-
posals: Provided that the company shall in such a case redeem with-
in three months from such proposals having become effective the de-
. bentures of such debenture holders as may so request.
(3) The meeting may also consider proposa~ relating to variations in the
terms of the loan.
( 4) The meeting may not increase the liability of the debenture holders by
imposing additional payments or agree to the conversion of debentures
into shares, except by an unanimous vote, nor provide for differential
treatment amongst the debenture holders.
Art. 439. - Conditions for the validity of decisions. Quorum.

(1) A meeting may take decisions where its members represent not less
than one-third of the debentures which may be represented.
(2) For matters to be decided under Art. 438, the quorum shall be three-
quarters.
(3) Where the quorum under sub-art. (1) and (2) is not attained at the
first meeting, a second meeting shall he called in the same manner and
within the same period of time. The notice of calling shall contain
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COMMERCIAL CODE 95
the same agenda, showing the date of the abortive meeting. The second
meeting may make decisions regardless of the quorum present.
( 4) For matters to be decided under Art. 438, where a quorum of one-
baH is not attained at the second meeting, a furhler meeting shall be
called in the same manner and within the same period of time. Such
meeting may make decisions where one-quarter of the debent1Ue8 a:re
present or represented.
Art. 440. - Majority.

(1) Resolutions shall be adopted by simple majority.
(2) Resolutions under Art. 438 shall be adopted by a two-thirds majority.
(3) The voting rights of debentures shall be in proportion to the share of
,the loan which they represent respectively , each debenture giving th..l
right to not less than one vote.
Art. 441. - Confirmation of certain decisions.

(1) A resolution adopted under Art. 438 shall be submitted to the court
for confirmation within fifteen days from the meeting by the compa-
ny, the representative of the debenture holders or by a debenture hoI·
der. In default of submission, the :resolution shall be of no effect.
( 2) Debenture holders who dissented or were absent may oppose the confir·
mation of the resolution.
Art. 442. - Agent of debenture holders.

(1) Debenture holders may be represented by one or more agents who shall
be nominated or removed by a general meeting of debenture holders
having th~ quorum specified in Art. 439 (1) and (3) and a majority
as specified in Art. 440 (1).
(2) The same quorum and majority shall be required for a decision on thE:":
remuneration and powers. Remuneration shall be bome by the debtor
company.
(3) The agents of the debenture holders may, in case of urgency, be ap-
pointed or replaced by the COUrt on the application <:: the debtor com·
pany in the absence of appointments made by a properly constituted
general meeting, or on the application of one or more f!ebenture hol.
ders holding not less than one twentieth of the debentures issued.
( 4) The provisions of Art. 436 (4) shall apply to the appointment of an
agent of the debenture holders.
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Art. 443. - Powers of agents.

(I) Unless otherwise provided by the general meeting of debenture holders,
agents of the debenlure holders may do all things necessary in the
interest of the debenture holders, and in particular accept and preserve
securities guaranteeing the loan.
(2) They shall represent the debenture holders in all legal proceedings.
(3) They may take part in shareholders' general meetings.
( 4) They shall be present at the drawing of debentures for redemption.
Art. 444. - Duties in the event of the bankruptcy of the debtor company.
( I) Where the debtor company is adjudged bankrupt or enters into a sche.
me of arrangement, the agent of the debenture holders, if any, shall
prove for all debenture holders thereof. He shall receive on their be-
half all notices of meetings.
(2) The agent of the debenture holders may, if so authorised by the gene.
ral meeting of debenture holders, vote at creditors' meetings on behalf
of all th!' dehenture holders. In calculating the quorum and major~ty,
ull debenIUl'c> issued on the same date shall be deemed to constitUite one
debt.
Chapter 6. Accounts of companies
Art. 445. - General provisions.

Unless otherwise expres8ly provided by law, the provisions of this Code rela·
ling to commercial Loob and hcok.keeping shall appIy to the accounts of
,. . lwrc pOillpanies.
Art. 446. - Accounts. Annual report.

(l) At thc end of each financial } ear, the directors shall prepare a detailed
inventory and valuation of assets and liabilities.
(2) They shall draw up a balance sheet and a profit and loss account and
prepare a report on the state of the company's activities and affairs
during the last financial year.
( 3) Thc report shall give detailed information on the profit and loss account,
an exact statement of the total amount of remuneration of the directors
and auditors, and proposals for the distribution of dividends, if any.
Art. 447. - Submission of accounts and report to the auditors.

The inventory, balance sheet, profit and loss account and the directors' reo
port shall be ,ubmitted to the auditors and the Ministry of Commerce and
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Industry not less than forty days before the notices calling the annual gene-
ral meeting are despatched.
Art. 448. - Drawing-up of the balance sheet and profit and loss account.
( 1) Thc balance sheet and profit and loss account shall be prepared each
year in the same form as in preceding years and the methods of valua-
tion shall remain the same, unless the general meeting adopts variations
in the mode of presentation of the accounts or the metlhods of valua_
tion on the reasoned advice of the auditors.
(2) The profit and loss account shall show under separate heads losses or
profits arising out of the company's various activities.
Art. 449. - Annexures.

A return of liabilities which do not appear in the balance sheet, such as
guarantees, shall be annexed to the balance sheet.
Art. 450. - Amortisation and allowances.

(1) Provisions for amortisation shall be made each year so that the item
to be amortised be written off at the end of its period of use. Where,
during the peoriod of amortisation, the rate proves insufficient, such
rate shall be increased so that the amortisation corresponds to the de-
preciation.
(2) Provisions shall be made for amortisation and allowances for deprecia-
tion of assets at the end of each financial year, even where there are
no profim.
(3) The costs of capital issues and increases shall be amortised not later
than on the expiry of the fifth financial year following that during
which such issue or increase was made.
Art. 451. - Accounts of holding companies.

(1) Where a company is a holding company, the accounts of its subsidiar-
ies shall be submitted to tlhe an!lual general meeting at the same time
and in 1I11,e same manner as its own accounts.
(2) A consolidated balance sheet and profit and loss account shall be prepa-
red in respect of the holding company and its subRiJiaries.
(3) The provisions of sub-art. (2) shall not apply where ,he directors are
of opinion that the drawing up of such balance sheet would be imprac-
ticable or too onerous, or of little concern to the shareholders on account
of the small financial interesm involved.
( 4) The prov isiom of sub-art. (2) shall not apply if the Ministry of Com-
merce and Industry approves, where the directors of the holding COl!1-
8*
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98 COMMERCIAL CODE
pany are of opinion that the drawing up of such balance sheet could
prejudice the company or its subsidiaries, or that the company and its
subsidiaries carry out business of such a differing nature that they may
not reasonably he deemed to form a single enterprise.
Art. 452. - Profits.
(1) The net profits comprise the net receipts for the financial year after de-
duction of general co~ts and other charges. and of amorti~ati'Ja and
allowances.
(2) The profit for distribution is the profit for the financial year less pre-
vious losses and plus additional revenue and any distribution from the
reserve funds speeially approved by the general meeting.
( 3) The general meeting shall specify the reserve funds from which profit
for distribution may he taken.
Art. 453. - Reserve funds.

(1) Transfers to reserve funds shall be made from the net profits shown
in the profit and loss aceount.
(2) Reserve funds shall be as follows:
( a ) the legal reserve required by law;
(b) the supplementary reserve created by an ordinary general meeting
in accordance with the articles of association;
( c) optional reserve created by an ordinary general meeting in accor-
dance with the articles of association;
( d) free reserve created by an ordinary genpral meeting there being no
spceial prmision in the la\\ or articlps of a.;,'opiatioll.
(3) Unless otherwise provided in the articles of association. reserve funds
shall not bear interest.
Art. 454. - Legal reserve fund.

(1) Not less than one twentieth of the net profits shall be transferred each
year to the legal reserve fund until it amounts to one-fifth of the capital.
(2) Transfers shall be made to the legal reserve fund where it has fallen
below the amount fixed in sub-art. (1).
Art. 455. - Reserve created by issue premiums.
(1) Where an extraordinary general meeting has approved an increase in

capital, the issue premiUIDS may be transferred to a reserve fund.
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COMMERCIAL CODE 99
( 2 ) Only former and new shareholders may share in the distribution of

such reserve.
Art. 456. - Allocation and distribution 0/ profits.
( 1) Distribution of profits shall he effected after transfer to the legal reser-
ve as provided in Art. 454.
(2) Unless otherwise provided by law, the balance shall he distributed in
accordance with the articles of association.
( 3) Payments to directors shall he made in accordance with the provisions
of Art. 353.
Art. 457. - Fixed OT interim interests.
( 1) The articles of association may provide that a fixed or interim interest
shall he paid to shareholders even where there are no profits.
(2) Such interest, in a fixed amount, shall he carried to the debit of the
installation account. It may only he provided for during the period of
preparatory works and construction of the enterprise and shall ceue
to he payable as soon as normal business hegins. The artieles of 8881)0
ciation shall, within these limits, specify the date when such interest
shall cease to he paid.
( 3) Where the articles of association provide for a fixed or interim iDtere8t
as defined in sub·art. (1) and (2), such interest shall not be paid unless
the articles of association have been published.
Art. 458. - Payment 0/ dividends. Rights 0/ sluzreholders.
(1) Dividends may only be paid to shareholders from net profit shown in
the approved balance sheet.
(2) Dividends distributed contrary to the provisions of sub-art. (1) shall he
treated as fictitious dividends and the persons making the distribution
shall he criminally and civilly liable.
( 3) The date and methods of paymel1ll: of dividends shall he decided by the
general meeting.
(4) Up to the date fixed for payment, the general meeting may for good
reason vary or cancel decisions of a preceding general meeting concern-
ing the distribution of dividends or reserves.
( 5) A shareholder shall become a creditor of the company for the amount
of the dividend from the date fixed for payment.
Art. 459. - Claiming back a/dividends.
Dividends distributed contrary to the proVISIOns of Art. 458 may not be
claimed back from the shareholders, except in the case of family companiee
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100 COMMERCIAL CODE
or where distribution was made in the absence of a balance sheet or not in

accordance with the approved balance sheet.
Art. 460. - Effect of approval of the balance sheet.

The approval of the balance sheet by the meeting shall not affect the liabi-
lity of directors, auditors or general managers in respect of their manage-
ment.
Art. 461. - Publication of the balance sheet.

Within thirty days of the approval of the halance sheet, a copy thereof toge-
ther with the relevant minute of approval by the meeting shall be sent by
the directors to the Ministry of Commerce and Industry for publication in
the Official Commercial Gazette.
Chapter 7
Amendments to the memorandum or articles of association
Art. 462. - Application of general rT,les.

(1) Extraordinary meetin;;s called to vote on amendments to the memoran-
dum or artic:es of association shall conduct their business in accordan-
ce with tIle provision of Art. 388·416 and 422-425.
(2) Resolutions shall be published in accordance with the provisions of
Art. 224.
Art. 463. - Right of wilhdrawal from the company.
( 1) Shareholders who dissent from resolutions concerning any change in
the objects or nature of the company or the transfer of the head office
aIn-oad may withdraw from the company and have their shares redeem-
ed, at the average price on the stock exchange over the last six months.
Where the shares are not quoted on the stock exchange, they shall be
redeemed at a price proportionate to the company's assets as shown in
the balance sheet f01' the last financial year.
(2) Where shareholders wish to withdraw under sub-art. (1), they shall
notify the company by registered letter:
(a) within three days from the meeting, where they have taken part
in such meeting; or
(b) where they were not present at the meeting, within fifteen days
from the publication of the resolution in the Official Commercial
Gazette.
(3) The provisions of this Article shall apply notwithstanding any provision
to the contrary in the articles of association.
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Art. 464. - lrzcrese of capital. Procedure.

(1) The capital may be increased hy the issue of new sharcs or hy an in-
crease in the par value of existing shares.
(2) New shares issued may either be paid up:
(a) in cash;
(h) hy paying off current dehts with shares; or
(c) hy capitalisation of reserves or other funds at the disposal of the
company; or
(d) by conversion of debentures into shares.
(3) An increase of capital hy increasing the par value of shares may only
he effected under Art. 425 (2) where such increase is not paid up by
capitalisation of reserves or other funds.
Art. 465. - Delegation of powers to directors.
(1) An extraordinary general meeting may hy resolution delegate to the
directors all powers to effect the increase of capital approved by the
meeting.
(2) Any provision in the memorandum or articles of association delegat-
ing such powers in advance to the directors shall be of no effect.
Art. 466. - Period for effecting an increase of capital.

A resolution of a general meeting to increase the capital under Art. 465
shall become of no effect if not carried out within five years unless the
increase is hy conversion of debentures.
Art. 467. - Capital to be fully paid before a new issue.

Where a company whose capital is not fully paid increases its capital by
a new issue of shares to he paid up in cash or of convertible debentures,
such issue shall he null and void.
Art. 468. - Conditions for the issue of new shares.

Unless otiherwise provided br !dW, a company may only issue new shares in
accordance with the provisions relating to the formation of share compa-
mes.
Art. 469. - Subscription with oller to the public.
Where new shares are offered for public suhscription, the offer to the suh-
scribers shall he hy prospectus signed by a representative of the company.
The prospectus shall show:
(1) the date of registration of the company in the commercial register;
(2) the company's name and head office;
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102 COMMERCIAL CODE
(3) the existing amount and composition of the capital, showing the va-
rious kinds and classes of shares, their par value and preferences at-
taching thereto;
(4) the managers and auditors;
(5) the last profit and loss account, balance shcct and auditors' report;
(6) dividends paid during the last five years or since formation;
(7) dehenture loans issued;

( 8) the decision of the general meeting regarding the new shares, showing
in particular the total amount, their number, par value, nature and
issue price;
(9) contrihutions in kind and special benefits allocated;

(10) the period from which the new shares will give the right to a dividend
and any restrictions regarding such right, as wen as any preference
accorded;
(11) the date up to which the subscriber is bound.
Art. 470. -- Preferrca right of subscription.

(1) Shareholders shall have a preferred right of suhscription of new cash
shares, in proportion to the number of shares held.
(2) This right may be transferred or assigned under the same conditions
as the share itself, during the period of subscription.
( 3) This right may not be exercised in the event of conversion of deben-
tures into shares. SharehQlders shall renounce such right under the
provisions of Art. 474, at the time of issue of debentures convertible
into shares at the will of the holders.
Art. 471. - Rights of reduced subscription.
Where any shareholdem have not subscribed shares in respect of which they
had a preferred right, the shares shall be allocated to those shareholders
having applied for a greater number of shares than they would have been
entitled to under their preferred right, such allocation being proportional
to their share in the capital and within the limits of their applications.
Art. 472. - Allocation of the remainder.

Where preferred allocations and the reduced allocations provided in Art.
471 have not taken up the whole of the increase of capital, the balance
shall he allocated in a('rordance with the decisions of the general meeting.
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Art. 473. - Exceptions to the pre/erred right.

( 1) The general meeting wmoh resolves an increaee of capital may also
resolve that the provisiOllll of Art. 470, 471 and 472 shall not apply,
;';'1. whole or in part, but after considering:
.. :.~ -
'(!, a directors' report giving rea8OJI8 for the increase of capital and
the setting aside of the preferred right of subscription, the allottees
of the new shares, the number of shares allocated to each, the issue
price and the basis for determining such price; and
(b) an 'luditors' reportcerti£y,ing the correctness of the directors' report.
( 2) Any allottees of new shares may not vote in person or by proxy at
a metting which sets aside in their favour the application of 'the pr0-
visions of Art. 470, 471 and 472.
(3) The quorum and majority required for such decision shall be calcu·
lated on the whole of the shares making up the share capital but to the
exclusion of the shares held or represented by Suob allottees.
Art. 474. - Issue 0/ convertible debentures.

( 1) The issue of convertible debentures is subject tn ~he prior approval of
'an extraordinary general meeting.
( 2) Such approval requires exprees renunciation by the shareholders of the
preferred right of :mb$criprion of the shares to be issued under such
conversion, for the benefit of the holders of the convertible debentures.
(3) The director~' report required under Art. 437 (1) (a) shall give rea.
sons for the issue and the period of time within which the option gran.
ted to the debenture holders lihall he exercised, and the manner of eon·
version.
( 4) The auditors shall prepare a special report on the propo!l81.s submitted
to the meeting as regards ,the manner of conversion.
Art. 475. - Documents con/erring speciGl preferred rights prohibited.

No documents conferring a preferred right of sublleription may be issued.
Art. 476. - Periods of time fOT the uercise of the right of IJl1.hlCriplion.
The period of time within which shareholders may exercise their right of
subscription may not he 1_ than thirty days from the opening of the sub-
scription.
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Art. 477. - Publication 0/ notices 0/ subscription.

( 1) Tbe date of apeniag el a subscription sba1l be notified to shareholders
by a DOtioe published in the Official Commercial Gazette and in a new·
spaper empowered to publiah legal notices circulating at the place where
the lIeed office is situate, ten days before the suhscripion list opens.
Such notice shall indicate to shareholders their preferred right, the da·
tes of opening and cbing of the subscription list and the issue price
of the abaree and the amount to be paid.up.
( 2) WJJere all the shares are registered shares, the shareholders may be
notified by registered letter ten days before the subscription list opens.
Art. 478. - SubecriptioJl, 0/ new sluJres.
(1) An application to subscribe is not effective unless accompanied by the
amount to be paid on subscription.
(2) WheJ.e increases of capital are effected by the issue of cash shares, the
provisions of Art. 312 (3) and 319·324 shall apply.
Art. 479. - Declaration 0/ subscription.

The directors shall keep a record showing that:
(a) the new shares have been fully subscribed;
(b) the amounts to be paid up have been paid;
( c) the authorised increase of capital has taken place; and
(4) the necessary amendments to the articles of association have been
effected.
Art. 489. - Increase 0/ capital by contribution in kind.

The provisions of Art. 315, 321 and 322 of this Code shall apply to increases
of capital effeoted. by contributions in kind or which carry special benefits.
Art. 481. - Payment by set off.
(1) New cash shares which form the whole or part of aD increase of capital
may he used to pay olf the current liquid debts of the company at the
date the suhscriptionlist opens.
(2) An account showing the settlement of the debt shall be drawn up by the
directors and cerltified as correct by the auditors who shall prepare a
report showing the value of the debt so settled.
Art. 482. - Capitalisation 0/ TeseTV~.

Subject to the provisions of Art. 454 (2), an extraordinary general meeting
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may decide to iJlert'a.<c the capit,,[ hy transferring thereto the whole 01' parl
of the reserves and to vary the articles of a~sociation accordingly: Provided
that, where the legal reserve is so transferred, no distribution to sharehol(\en!
may be made until the legal reserve is restored
Art. 483. - Amortisation of capital.

(1) Only the articles of association or a resolution of an extraordinary gene·
ral meeeting may authorise amortisation of capital.
(2) Only profits and reserves other than the legal reserve may be used for
such amortisation.
(3) Amortisation is effected by the reden~ption of shares within the samp
class. The date on which shares shall bc redeemed may be selected by
drawings.
(4) Reduction of capital shall not result from amortisation.
Art. 484. - Reduction of capital.

Proposals for a reduclion of capital shall be sent to the audilors not less
than fifteen days before calling the meeting lo approve such redUf'lioll. Till'
auditors shall report to Ih" 'lweling their opinion and the reasons therefor
on the proposals.
Art. 485. - Reduction of capital to be published.

Where a reduction of capital has been effected, an entry shall he made in
the commercial register lind published in accordance with the provisions of
Art. 224.
Art. 486. - Reduction of capital following losses.
The provisions of Art. 487·490 shall apply when losses are the reason for a
reduction of capital.
Art. 487. - Manner of reduction.

( 1) A reduclion of capital shall he effected;
(a) by reducing the par value of shares; or
(b) by exchanging old shares for a lesser, numh.er of new shares.
(2) Where a general meeting resolves that a reduction of capital shall he
effected as provided in (b), the shareholders holding an insufficient
number of shares to he exchanged shall within the period fixed by the
meeting make up the number of shares to a number which can he
exchanged or dispose of their shares to another shareholder.
Art. 488. - Preservation or conferral of rights on shareholders.

A general meeting may in a resolution authorising a reduction provide that
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the shareholders shall be paid as a compeDllation for the reduction of the

number of their shares or of the par value thereof an amount corresponding
to the reduction, before any distribution of profits is made in any financial
year.
Art. 489. - Rights of creditors.

Where the claim of a creditor holding rights prior to the publication of the
reduction of capital is not paid or such creditor is not given adequate gua-
rantees for the payment of his claim, he may oppose the adoption of a res0-
lution under Art. 488 or any distribution of profits until the capital is resto-
red to the amount existing at the time when the claim originated.
Art. 490. - Reduction of capital below the minimum required by law.

(1) Where, by reason of losses, the capital is reduced below the minimum
permitted in Art. 306 (1), the capital shall be increased to the mini-
mum required in Art. 306 (1) within a period of one year from the
date of publication in the official commercial gazette in accordance with
the provisions of Art. 485.
(2) Nothing in this Article shall affect the rights of creditors under Art. 489.
( 3) Where the increase of capital required by sub-art. (1) is not effected

or the company is not reorganised, the dissolution of the company may
be ordered by the court upon the application of any int~ed person.
Art. 491. - Reduction of capital not motivated by losses.

The provisions of Art. 492-494 shall anply where losses are not the reason
for a reduction of capital.
Art. 492. - Equality of shareholders.

The equality of shareholders shall not he affected by a reduction of capital.

( 1) Any creditor holding rights prior to the publication in the official com-
mercial gazette under Art. 485 may, where the reduction of capital is
in an amount exceeding }O % , object to the resolution within three
months from such publication.
(2) The court may disallow such objection or order the company to pay the
claimant or to provide adequate guarantees for payment.
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COMMERCIAL CODE 107
(3) No reduction of capital may be effected until the period specified in

sub-art. (1) has expired.
Art. 494. - Minute recording reduction.

(1) Where a reduotion of capital has been effected, a minute shall be pre·
pared by the directors within one month and not later than one year
from the date of publication in the official commercial gazette as pro-
vided in Art. 485.
(2) The minute shall he published in the same time and manner as deci·
sions of general meetings amending the articles of association.
Chapter 8. Dissolution and Winding-up
Art. 495. - Grounds for dissolution.

(1) A share company may be dissolved for one of the following reasons:
( a) expiry of the life of the company as fixed in the memorandum of
association, unless extended by a decision of an extraordinary I!:("
neral meeting;
(b) completion of the venture for which the company was formed;
( c) failure of the purpose or impossibility of performance;
(d) voluntary dissolution resolved by an extraordinary general meeting;
(e) dissolution by order of the court for good cause on the application
of a member;
(f) subject to the provisions of Art. 311, acquisition of all the shares by
a member;
( g) inst~tution of bankruptcy proceedings;
(h) lose of tlhree-quarters of the capital.
( 2) An extraordinary general meeting shall he called to consider voluntary
dissolution or the continuation of the company where three-quarters of
the capital have been lost as provided in sub·art. (1) (h).
( 3) Where the directors or auditors fail to call a general meeting or a gene-

ral meeting cannot he regularly held, the court may, on the applica-
tion of any interested party, order dissolution.
Art. 496. - Appointment and removal of liquidators.

( 1) Where the appointment of liquidators is not provided for in the memo.
randum or articles of association, they shall be appointed by the gene-
neral meeting which resolved dissolution.
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108 COMMERCIAL CODE
(2) Where liquidators are not appointed under sub-art. (1), they may be
appointed by the court on the application of the members, directors or
auditors_
(3) The appointment of liquidators may be revoked by the general meeting
or by the court for good cause on the application of members or audi-
tors.
( 4) Appointment of new liquidators shall be made as provided in sub-art.
(1) and (2).
Art. 497. - Survival of the company during winding-up.

(1) Until winding.up is completed, the company shall retain i,ts legal per.
sonality and name, to which the words "in liquidation" slUin be added.
(2) During winding-up, the organs of the company shall restrict their actio
vities to acts necessary to facilitate the winding-up and which are not
acts within the scope of the liquidators.
Art. 498. - Bankruptcy and winding-up.

(1) Where a company is declared bankrupt, the winding-up shall proceed
under the provisions of Book V of this Code.
(2) The dM-ectors' powers shall be restricted to representing tlhe company if
necessary.
Art. 499. - Duties and liability of liquidators.

( 1) UDiless otherwise provided by law or the articles of association, the liqui-
dators shall have the same duties and liabilities as directors. -
(2) The liquidartors shall take JlClIIICSSion of the property and books of the
company. 'Uhe directors shall prepare Ii report for dIe liquidators on
the management of the company from the end of the last financial year
to the date of the winding-up.
( 3) The liquidators and directors' shall jointly prepare and sign an inven-
tory of assets and liabilities.
( 4) WheJe Ilhe assets appNr to he iDBuHicient to cover the debts of the
company, tihe liquidators sh8ill oall upon the members to pay accord-
ing to their share holding such instalme0t8 as may be due on their
shares.
Art. 500. - Powers of liquidators.

( 1) Suhjeqt to any limitations imposed by the articles of 8MOCiation or by
the meeting appointing tlhem, liquidators shall Ib.ave full PQWers.
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COMMERCIAL CODE 109
liquidators may sell the property of the compauy as whole, compro-

mise and arbitrate and "hall rcprc·,ent the company in legal procced-
ings.
(2) They may not undertake new business, unless required for the execu-
tion of contracts still running or where the interests of the winding-up
so require. They shall be personally, jointly amI severally liable in rps-
pect of anv business undertaken outside the limits provided in this Ar-
ticle.
Art. 501. - Prohibition from di8trilJIIlill{; aswts among 111 ('m bers before full
payment of debts.
Until the creditors of the company have been paid or provisions for payment
made, the liquidators may not distribute any part of the assets among the
members_
Art. 502. - Calling on creditors.

(1) Creditors shall he paid on the basis of a halance sheet prepared by the
liquidators as soon as they are appointed.
(2) Creditors shaH be informed of the dissolution of the company and requi-
red to file their claims with suppOl"ting vouchers.
(3) Creditors appearing in the company's books or who are otherwise known
shall he notified by registered letter. Notice to other creditors shall be
given by notice, published in three successive monthly issues of the
official commercial gazette and in the form laid down in the articles of
association.
Art. 503. - Protection of creditors.

(1) Where known creditors have failed to file their claims, the amounts
owing to them shall he paid into court.
(2) Sums shall he set aside to meet claims in rc"pect of undertakings of the
company whioh are not completed or disputed claim" where the credi-
tors have not heen guaranteed or distribution of a"els has not been
postponed until such undertakings are completed.
Art. 504 .. - Final balance sheet.
(I) After paying the company's liabilities, the liquidators shall prep81'c a
final balance 1!beet, showing what percentage of tilte surplus assets j, av-
ailable for distribution on eaeh share.
(2) Subject 'to the provisions of the articles of association, the liquidators
shall calculate the percentage under sub-art. (1) having regard to whe-
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ther shares have been fully paid up and to preferential rights attaching
to shares.
(3) The balance sheet signed by the liquidators and the auditors's report
shall be deposited in the Ministry of Commerce and Industry.
( 4 ) Any shareholder may, within three months from the deposit of the fi-
nal balance sheet under sub-art. (3), apply to the court to set aside the
final balance sheet. Such application shall be heard after the period
of three months has expired and, where there are several applications,
they shall be heard together. The court's decision shall be binding on
all members and shareholders of the company.
(S) Where no application has been made within three months, the final ba-
lance sheet shall be deemed to be approved.
Art. SOS.- Suspension of distribution.
The surplus assets shall not be distribtued to the sharehoiders until one year
from the third publication specfied in Art. S,02 (3) in the official commer-
cial gazette:
Provided that the court may order the distribution of the surplus assets be-
fore the expiry of this period when satisfied that the creditors will not suf-
fer.
Art. S06. - Deposit of amounts uncollected.

Where a shareholder has not collected the percentage of the surplus assets
due to him within three months from the deposit mentioned in ADt. S'04 (3),
the liquidators shall deposit such sum in a special account in the State Bank
of Ethiopia together with the name of the shareholder or the numbers of the
shares, if they are to bearer.
Art. S07. - Striking off the commercial register.

When the final balance sheet has been approved, the liquidators shall make
an application for the registration of the company to be cancelled in accor-
dance with the provisions of Art. 226.
Art. S08. - Rights of creditors.
(1) After action has been taken under Art. S07, creditors who have not
been paid may claim against the shareholders in person to the extent
of their shares in the surplus assets.
(2) Creditors may claim against the liquidators, where they have not been
paid owing to the liquidators' negligence.
Art. S09. - Preservation of the booles.
(1) The books of a company which has been dissolved shall be deposited
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with the Ministry of Commerce and Industry where they shall be kept
for ten years.
(2) They shall be open to i.nspeot:ion after payment of the prescribed fee.
TITLE VII. PRIVATE LIMITED COMPANIES

Chapter 1. Formation and General Provisions
Art. 510. - Definitions. Nature.
(I) A private limited company is a cOlllpany whose member~ are liable only
to the extent of their contributions.
(2) A private limited company shall not have less than two or more than
fifty members and is always commercial in form.
(3) The company shall not issue transferable securities in any form.
Art. 511. - Reduction of the number of members below the legal minimum.
Where the number of members is reduced below two, or where the organs
of the company cease to exist, the court may. on the application of a mem-
ber or a creditor, order the dissolution of the company and make such pro-
visional orders as are necessary unless the company makes arrangements to
oomply with the law within a reasonable time.
Art. 512. - Capital.
(I) The capital of a private limited liability company shall not be less
than 15,000 Ethipian dollars.
(2) The amount of a share shall not be less than 10 Ethiopian dollars.
( 3) All shares shall be of equal value and a member may hold more than
one share.
Art. 513. - Prohibited transactiulls.

:\. private limited company shall not undertake banking. insurance or any
business of a similar nature.
Art. 514. - DesiglWtion.

(I) A private limited company may havc a firm-name which may indicate
the nature of its business.
(2) The firm-name shall be followed by the words "Priv'lt.e Limited Com-
pany."
Art. 515. - Particulars required on company papers.
The firm-name as defined in AI"t. 514 (2) and the amount of the capital
of the company shall appear on all company documents, invoices, publi-
cations and other papers.
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112 COMMERCIAL CODE
Art. 516. - Formation.
The company is instituted when the deed, in the form of a memorandum

of association, setting up the company is signed by all the members or by
persons acting on their behalf and is authenticated.
Art. 517. - Terms of the memorandum of association.
The memorandum of association shall show:

(a) the names, nationality and addresses of the members;
(b) the company name, head office, and branches if any;
( c) the business purposes of the company;
(d) the amount or the capital;
(e) the value of contributions made by each member;
(f) the valuation of contributions in kind;
(g) a statement that the capital is fully paid;
(h) the number of shares held by each member;
(i) the procedure for distribution of profits;
(j) the number of managers, their powers and the agents, if any;
(k) the number of auditors, if any;
(l) the period of time for which the company is established.
Art. 518. - Articles of association.
The provisions of Art. 314 shall apply to priva,te limited companies.
Art. 519. - Contributions in kind.

( 1) Where a member makes a contribution in kind, the memorandum of
association shall show the nature and the value of the contribution, the
price accepted by the other members and the share in the capital allo·
cated to the member.
(2) The method of valuation shall be determined by the members.
( 3) Members shall be jointly and severally liable to third persons for the
valuation fixed.
(4) Where it is shown that a contribution has been overvalued, the contri·
buting member shall make good the overvaluation in cash. Members
shaH be jointly and severally liable for such payment, notwithstanding
that they were not aware of the overvaluation.

(1) The company shall be made known to third parties in accordance with
the provisions of Art. 219·224 of this Code. The memorandum of asso·
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COMMERCIAL CODE 113
ciation and the articles of association, if any, shall be deposited.

( 2 ) The notice to be published and the application for registration in the
commercial register shall contain the particulars specified in Art. 517
(a) - (h) and (j) - (1).
(3) The provisions of Art. 324 shall apply.
Chapter 2. Shares
Art. 521. - Share register.
( 1) All shares shall be entered in a register which shall show:

(a) the names of the members;
(b) the value of all contributions made by the members;
( c) all transfers of shares;
( d) all amendments to these particulars.
( 2 ) At the beginning of each calendar year a list containing the praticu.
lars under (a) and (b) of sub-art. (1) shall be signed by the managers
and sent to the Ministry of Commerce and Industry, unless the mana·
gers declare that there has been no change since the last list was depo-
sited.
( 3) The managers shall be jointly and severally liable for any loss occasion·
ed by inaccuracy in the keeping of the share register or lists. The lists
shall be open for inspection by the public.
Art. 522. - Assignment of sluues.
Assignments of shares shall be in writing -and shan
he of no effect in rela·
tion to the company or third parties unless they have been entered in the
share register.
Art. 523. - Assignement of shares outside the company.
(1) Unless otherwise provided in the articles of association, there shall he no
restriction on the transfer of shares between members.
( 2) A transfer of shares outside the company shall he approved by a majo-

rity of the members representing at least :three-quarters of the capital,
unless a larger majority or unanimity is fixed in the an:des of aasoeia-
tion.
(3) Such approval shall he entered in the commercial register.

( 4) The provisions of sub-art. (2) shall apply-even where the company is
in liquidation.
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114 COMMERCIAL CODE
(5) Where execution is levied On a member's share, the purchaser shall

obtain the consent of the other members.
Art. 524. - Devolution of shares by way of succession.
(1) Unless otherwise provided in the articles of association, the shares of

a deceased member devolve upon his heirs.
(2) The articles of association may provide t!h!al a member has the right to
leave his shares to the heir he wishes.
Chapter 3. Organisation of the Company
Art. 525. - Management.
(1) A private limited company shall be managed by one or more managers.

(2) Where there are more than twenty members, decisions shall be taken
at meetings of the members and auditors shall he appointed.
(3) Where there are twenty or less members ,the members shall not be
bound by the provisions of sub-art. (2).
Art. 526. - Appointment of managers.
Managers, other than members, may be appointed by the members or by the

memorandum or articles of association for such period as is considered desir-
able.
Art. 527. - Dismissal of managers.
( 1) A manager appointed by the memorandum of association may only be

dismesed by the members under a decision taken in accordance with
the provisions of Art. 536.
(2) A manager appointed by the members may be dismissed in accordance
with the provisions of Art. 535.
(3) Dismissal shall only be for good cause acceptable to a court. A manager
who has been dismissed shall forthwith and for ever cease to fUllction.
Where the court is of opinion that a dismissal was without good cause,
it may grant damages to the manager who has been dismissed.
(4) Notwithstanding the provisions of sub-art. (3), the articles of assoeia-

tion may stipulate that managers may be removed at the pleasure of
the members, irrespective of the form of appointment.
( 5) Revocatory proceedings for due cause may be brought by any member

individually.
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Art. 528. - Powers of managers.
(1) Within the limits of the objects of the company, managers shall have
full powers.
(2) Pi"Ovisiolls in the articles of association restricting the powers of the
managers shall be binding only as between members and managers.
,.
They shall not bind third parties, even if properly published.
Ari. 529. - Manager's remuneration.

The manager's remulleration shall be fixed by the members. It lllay consist
cit;lter of a fixed salary. or of a share in the profits, or both.
Art. 530. - Liability of managers.

In accordance with civil law, managers shall be liable individually or jointly
and severally, as the case may be, to the company and third parties for any
breach of their duties under this Code or the articles of association. -'
Art. 531. - Bankruptcy of the company.

( ]) Where in a bankruptcy the assets are shown to be inadequate, the court
may, on the application of tlle trustee in bakruptcy, order that the com-
pany's debts or part of them shall be paid by the managers or by the
members or by both or some of them, with or without joint liability.
(2) An order under sub-art. (I) shall not be made in respect of members
who have not acted as managers, nor shall it be made where the mana-
gers and members show that they have aeted witla due eare and dili-
gence.
(1) A company consisting of more than twenty members shall hold a gene-
ral meeting each year at the date fixed by the articles of associatiol'l.
(2) Other meetings may be called by the manager or, in his absence, by the
auditors, if any, nnd in their absence by members representing more
than one-half of the capital.
Art. 533. - DecMions tuken without a meeting.

Where the holding of a meeting is not required by the law or by the arti-
cles of association,the managers shall send to each member the text of reso-
lutions or decisions to be taken and ask for the members written vote thereon.
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Art. 534. Votes held by members.
(1) Notwithstanding any provision to the contrary in the memorandum of

association, every member may take part in the meetings.
(2) Each member shall be entitled to a number of votes equal to the num·
ber of shares held by him.
Art. 535. - Majority and quomm.

(1) Decisions under Art. 532 (1) and Art. 533 shall be taken by a majo.
rity of members representing more than one half of the capital.
(2) Where such majority is not obtained, the members shall be called again
by registered letter, and decisions shall be taken by a simple majority
without regard to the capital represented.
Art. 536. - Modification of the articles of association.
(1) Change in the nationality of the company requires the unanimous de-
cision of the members.
(2) All other amendmp'lts to the articles of association require a majority
vote of the members representing three-quarters of the capital, unless
a larger majority is provided in the articles of association. No member
may be required to inc~ease his contribution without his consent.
(3) Amendments shall be published in accordance with the law.

(1) Where there are twenty or less members, every member may at any
time, in person or through his agent, inspect and take a copy of the
inventory, the balance sheet and the auditors' report, if any, at the
head office.
(2) Where there are more than twenty members, the rights under sub-art
(I) may only be exercised during the fifteen days preceding the gene-
ral meeting.
Art. 538. - Auditors.

(1) Where a company consists of more than twenty members, not less than
three auditors shall be appointed in the memorandum of association.
(2) Auditors may he re-elected at such periods and under such conditions
as may be provided in the articles of association.
(3) Auditors may be dismissed as provided in the articles of association.
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COMMERCIAL CODE 117
Failing such provision, they may be dismissed as provided in Art. 535.

(4) The provisions of Art. 374 and 378 shall apply to auditors.
(5) Auditors shall be liable, individually or jointly and severally, to the
company and third parties for any fault or negligence in the execu·
tion of their duties.
(6) Auditors shall not be civilly liable for offences committed by the rna.
nagers, unless they were aware of such offences and failed to report
them to the meeting.
Chapter 4. Accounts
Art. 539. - Legal reserve.
Not less than one-twentieth of the profits shall be transferred each year to
the legal reserve fund until such fund amounts to one-tenth of the capital.
Art. 540. - Fictitious dividends.
(1) Members may he required to repay dividends which have been paid
out of sums which are not actual profits.
(2) Claims for repaJ'ment shall be barred after five years from the date the
dividends were paid.
Art. 541. - Fixed interest.
(1) The memorandum of association may provide that a fixed interest shall
he paid to members, even where there are no profits, during the period
when works are being constructed prior to business operations. Such
period shall be fixed in the memorandum of association.
(2) Such provision shall be of no effect unless published in the official
commercial gazette.
(3) Such interest shall be carried to the debit of the installation account
and spread over the years where profits are made, in accordance with
the articles of association.
Chapter 5. Dissolution
Art. 542. - Grounds of dissolution.
(1) A private limited company may be dissolved on the grounds applic.

able to all business organizations, including dissolution by the court
for good cause and dissolution at the request of any member where
the term of the company has not been fixed.
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118 COMMERCIAL CODE
(2) Provision may be included in the articles of association permitting re-

demption of the members' shares for a fixed sum_
(3) A judicial interdiction, bankruptcy or insolvency of a member shall
not cause dissolution of a company, nor shall the death of a member,
unless otherwise expressly provided in the articles of association.
(4) The articles of association may provide that the heirs of a deceased
member may, at their option, join the eomp:my or he repair! the decf'n,p
member's shares at a rate based on the last inventory.
Art. 543. - Loss of thlee-quarters of the capital.

(1) Where three-quarters of the capital are lost. the managers shall consult
with the members and decide whether the company should Le dissolved.
(2) Where the managers fail to consult the members or no valid decision
is taken, any interested person may apply to the court for dissolution.
TITLE VIII. CONVERSION AND AMALGAMATION

(1) The convers:'.,n of one form of business organization into another form
does not necessarily cause the creation of a new legal person.
(2) The members may unanimously or by the majority required by law
or the articles of association decide on conversion. In no case shall
the decision increase the liabilities of a member without his consent.
(3) A member may not be deprived, in whole or in part, of the rights of
membership without his consent in cases of conversion.
( 4) Such decisions shall be hy a duly authenticated deed and shall be pu-
hlished in accordance with the provisions of Art_ 224.
(5) The rules relating to the formation of the relevant business organisa-
tion shall apply without prejudice to the rights of third parties.
Art. 545. - Conversion of a general partnership, a limited partnership or a

share company into a private limited company.
(1) Any general or limited partnership and company limited by share may
be converted into private limited companies.
(2) In the case of a company limited by shares, the decision shall he tak-
en by an extraordinary general meeting held under the provisions of
Art. 425.
( 3) Members who dissent may withdraw as provided in Art. 463.

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COMMERCIAL CODE 119

( 1) The assets of the former firm shall pass automatically to the new bu-
siness organisation as from the date of registration in the Commercial
Register.
(2) On registration, creditors of the former firm shall be required to esta-
blish their claims within a reasonable time and shall be inform~ that,
unless they object thereto, they shall he deemed to he creditors of the
new firm.
(3) The provisions of Art. 502 shall apply to calls to creditors under sub-
art. (2).
( 4) Creditors who do not accept the new firm shall he paid off or gua-
ranteed. No payment out of the assets shall be made to shareholders
until all creditors have been paid or guaranteed.
(5) Managers shall be Jointly and severally responsible for carrying out the
provisions of sub-art. (2 )-( 4) inclusive.
( 6) Managers shall cause the conversion of the former firm to be published.
They shall cause the registration of the former firm to he cancelled
where the provis,ions of sub·art. (4) have been complied IWith.
Art. 547. - Conversion of a private limited comp«ny into a compan.y limiled

by shares.
(1) Private limited company may be converted into share companies un-
der the provisions of Art. 536.
( 2) The names of the members taking the decision shall he written in the
minutes and such members shall become founders of the Dew share
company.
(3) Members who dissent and whose dissent is recorded in the minutes
may withdraw under the provisions of Art. 463.
Art. 548. - Liability of members.
( 1) The conversion of a firm shall not discharge members with unlimitecl
liability of their liability for undertakings made prior to the regi8tra-
tion of the decision of conversion in the, commercial regiater, unleu
such registration indicates that the creditors have approved the c0n-
version.
(2) Approval shall he presumed where !reditors have been informed of

the decision of conversion by registered letter and have Dot exple8lly
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120 COMMERCIAL CODE
dissented therefrom within thirty days from the date of such notifica.
tion.
Art. 549. - Amalgamation.
(1) Two or more fi'rIns may amalgamate, either by tak.ing over or by the
formation of a new firm.
(2) The provisions of sub·art. (1) shall apply to firms in liquidation.
Art. 550. - Decision to amalgamate.

A decision to amalgamate shall be tak.en by each of the firms concel'1led.
Special meetings of shareholders of different cl!\sses or meetings of dehen·
ture fiohters shall approve the taking oVI'.r or heing taken over.
Art. 551. - Deed of amalgamation.

(1) The terms of the amalgamation shall be drawn up by a deed which
shall be published in accordance with the provisions of Art. 224.
(2) Notices of the amalgamation shall he published at the head office of
the firm taking over or of the new firm resulting from the amalgama.
tion, as well as at the head offices of firms ceasing to exist on amalga.
mation.
(3) The claims and liahilities of the firm ceasing to exist shall pass to the
firm taking over or to the new firm.
( 1) Creditors of the firm or firms taken over or the firms constituting a new
fiml, whose claims came into being before the publication of the deed
of amalgamation in the official commercial gazette may object to the
amalgamation within three months from the date of such publication.
(2) The court shall reject such objection where it is satisfied that all the
creditors have agreed to amalgamation and that those who dissented
have been paid or that sums corresponding to their debts have been
paid into a special account in the State Bank of Ethiopia.
(3) The court may reject such objection and order that the deed of amal.
gamation shall be confirmed and that the firm taking over or the new
firm resulting from the amalgamation shall pay the debts or provide
adequate guarantees.
Art. 553. - Rights of debenture holders.
( 1) Whcre amalgamation is not approved by a meeting of the debenture

holders of the firm being taken over, the debtor firm shall redeem the
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CoMMERCIAL CoDE 121
dehentul'es of holders who so require, not later than three months from
the date of publication of the deed. of amalgamation in the official com-
mercial gazette.
(2) These provisions shan apply to debenture holders of firms amalgamat-
ing on the creation of a new firm.
Art. 554. - Publication of the rights of creditors and debenture holders.
Entries made in the commercial register &han expressly refer to the ;riglhlts
of creditors w1der Art. 552 and of debenture holders under Art. 553.
TITLE IX
BUSINESS ORGANISATIONS INCORPORATED ABROAD
OR OPERATING ABROAD
Art. 555. - Finns incorporated abroad having their head office in Ethiopia.
Finns incorporated abroad and whose head office or principal place of bu-
siness is in Ethiopia shall be subject to all .the provisions of this Code lind
regulations made thereunder, including provi~ions relating to memoranda of
association.
Art. 556. - Firms incorporated abroad having a subsidiary office or branches
in Ethiopia.
(1) Firms incorporated abroad and which have suh6idia.ry offiees er bran-
ches in Ethiopia, with permanent representation, shall be subject in
respect of each office or branch to the provisions of this Code relating
to deposit and publication of the memorandum of association ani pu-
blication of balance sheets.
( 2) Such firms shall publish the n8Dles of persons representing them per-
manently in Ethiopia, and shan furnish their signatures.
(3) Such finns shan be subject as regards their branches or subsidiaries
to the provisions governing the operation of the enterprise and impoe-
ing special conditions.
Art. 557. - Foreign firms which differ from the forms of Ethiopian bruines
organizations.
Finns incorporated abroad, which differ from those provided for and c0-
vered by this Code, shan be subject to those provisions of this Code con-
cerning share companies, which relate to the publication of the acts of the
firm and the liability of directors.
Art. 558. - Liability arising out of failure to comply with requiremems.

Persons acting in the name of the firm who have not ~lied with the
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122 COMMBBCIAL CODB
provlBlons of Art. 555-557 inclusive shall in full be jointly and severally

liable in res~ct of the firm's undertakings.
Art. 559. - Firms incorporated in Ethiopia and operating abroad.
The provisions of Ethiopian laws shall apply to firms whioo arc incorporat-
ed in Ethiopia for the purpose of busincss activity abroad.
Art. 560. - Firms in which foreign interests are represented.
Nothing in this Code shall affect the pl'Ovisions of special prohibiting, or
subjecting to special conditions, the exercise of certain activities by firms
in which forcign interests are represented.
BOOK III. CARRIAGE AND INSURANCE

TITLE I. CARRIAGE BY LAND
Chapter I. General Provisions
Art. 561. - Contract of carriage.
A contract of carriage is a contract whereby a person, called the carrier,
undertakes for reward to carry persons, baggage or goods and to convey
them to a specified place.
Art. 562. - Baggage.
(1) Objects which a passenger causes to be carried with him, such as
objects contained in trunks, baskets, hand-bags or other packages of
a similar nature, shall be deemed to be baggage.
(2) Objects which a passenger is allowed to carry with him and which
are not registered by the carrier shall be deemed to be hand-baggage.
(3) Objects which are entrusted to and taken over by the carrier shall be
deemed to the registered baggage.
Art. 563. - Carriage by land.
The provisions of this Title shall apply to any person who undertakes for
reward to carry persons, baggage or goods by land, in particular by road,
railway or inland waterways such as rivers, canals or lakes.
Art. 564. - Carriage by air.
The provisions of Title II of this Book shall apply to the carriage by air
of persons, baggage or goods.
Art. 565. - Carriage by sea.
The relevant provisions of the Maritime Code shall apply to the carriage
by sea of persons, baggage or goods.
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COMMERCIAL Com: 123
Art. 566. - Contract 01 carriage made by agel/f.

The provision.s of Art. 2251 of the Civil Code sllaU apply 10 COil Irnt:l,; of
carriage made by agents.
Chapter 2. Transport Titles

Section 1. Passenger's Ticket
Art. 567. - Ticket may be required.
(I) A contract of carriag~ of persons shall come into heing where the par-
ties agree. The carrier may require the passenger to procure for him-
self and to preserve until completion of the voyage a transport title
such as a bill, ticket or season ticket.
(2) Provisions may be made to the effect that a person who travels with-
out a ticket shall be liable to pay a surcharge in addition to the cost
of the journey.
(3) The cost of transportation and the time of departure and arrival shall
be specified on the passenger's ticket.
Section 2. Luggage - Tickets

Art. 568. - Right 01 passenger.
The passenger may require the carrier to deliver to him in respect of
registered baggage a luggage-ticket showing the date and place of issue,
the place from and to which the baggage is to be carried, the number of
pieces and the weight of the baggage, and the cost of transport unless it
is included in the cost of the passenger's tran.sport.
Art. 569. - Purpose olluggage.ticket.
(1) Unless the contrary is proved, a luggage-ticket shall he proof of the
registration and conditions of transport of the baggage.
(2) The provision.s of this Title shall apply and the contract of carriage
shall be valid and remain in force notwithstanding that there is no
luggage-ticket or no valid ticket or the ticket has heen lost. The ear·
rier shall not hand the baggage to the person who requires it without
a luggage.ticket unless such peroon can show that he is entitled to
the baggage.
Secti<m 3. Transport titles in respect of goods

Art. 570. - Transport title not issued, not valid or lOllt.
The provisions of this Title shall apply and the contract of carriage of
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124 COMMERl:IAL CODE
goods shall be valid and remain in force notwithstanding that there is

no valid ticket or the title has been lost.
Art. 571. - Issue of consignment note.

Any carrier of goods may require the sender to prepare and to hand to
him a document called a consignment note. Any sender may require the
carrier to accept such consignment note.
Art. 572. - Copies of consignment note.

(1) Three copies of the consignment note shall he made.
(2) The first copy shall be signed by the sender and shall remain with
the carrier.
(3) The second copy shall he signed by the sender and the carrier and
shall remain with the goods.
( 4) The third copy shall be signed by the carrier and handed by the
carrier to the sender after the goods have been accepted.
Art. 573. - Particulars in consignment note.

The consignment note shall show:
(1) the date and place of issue;
( 2) the place from and to which the goods are to he carried;
(3) the names and addresses of the sender and addressee;
(4) the name of the carrier;
(5) the means of transport;
(6) the nature, number, volume or weight of the goods;
(7) the distinguishing marks or numbers affixed on the parcels, if any;
(8) the cost of transport, the time within which and the route whereby
the goods are to be carried.
Art. 574. - Consignment note to order.
A consigDment note may be made to order where the sender and the car.
rier agree.
Art .. 575. - Other documents.

Where the sender and the carrier agree, a consignment note may be re-
placed by any other document, such as a receipt delivered by the carrier
on the sender having made all appropriate statements.
Art. 576. - Effect of transport titles.
Unless the contrary is proved, a consignment note or receipt delivered by

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COMMERCIAL CODE 125
the carrier shall be proof of tlle makiilg of the contract, of the receipt of
the goods and of the nature,. number, volume or weight of the goods.
Chapter 3. Rights and Duties of parties to a contract of carriage

Section 1. Rights and duties of sender and addressee
Art. 577. - Statements by sender.

( 1) Each piece of the consignment shall show:
( a) the name and address of the sender and the addressee;
(b) the place from and to which the goods are to be carried;
( c) the nature, numher, value or weight, of the goods;
(d) the distinguishing marks or numbers affixed on the parcels, if
any.
(2) The sender shall be liable for any damage caused to the carrier or to
a person for whom the carrier is responsible arising OUt of irregular,
inaccurate or incomplete statements relating to the consignment.
Art. 578. - Packing.

(1) Where the nature of the goods is such that packing is needed, the sen·
del' shall pack the goods so that iliey be not lost nor damaged nor
likely to damage persons, baggage or other goods carried.
(2) The sender shall be liable for any damage arising out of defective pack-
ing. The carrier shall be liable for such damage where he accepted to
carry the goods and he knew that they were not packed or the pack-
ing was defective.
Art. 579. - Right 01 sender to dispose of the goods.
(1) Where he carries out all his duties under the contract of carriage, the
sender may dispose of the goods, either by taking them back from the
carrier or by stopping iliem during their transport or by causing them
to be delivered during the transport before they arrive at the place
of destination to a person other than the addressee named in the con-
tract.
(2) Where a transport title has been delivered to the sender, he may not
dispose of ilie goods unless he produces ilie title to the carrier.
Art. 580. - When sender may not dispose of the goods.
The sender may not dispose of the goods after the transport title has been
handed to the addressee or where the goods have been carried to their desti-
nation and the addressee has required the carrier to deliver them to him.
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126 COMMERCIAL CODE
Art. 581. Rights of a,ddressee.

Without prejudice to the provi,ions of Art. 579 and 580, the addressee
may exercise all the rights and shall incur all the liabilities arising out
of a contract of carriage to which he has agreed.
Art. 582. - Cost of transport.
(1) The cost of transport and all incidental expenses shall be met by the
sender.
(2) Where the goods have been sent carriage forward, the sender and
the addressee who accepted the consignment shall be jointly and seve-
rally liable for the cost of transport and all incidental expenses.
Section 2. Duties of carrier of goods or registered baggage
Art. 583. - Conveyance of goods and baggage.

(1) The carrier shall, within the agreed time, convey the goods to the agreed
place with an customary care and deliver them to the addressee.
(2) He shall in the same manner convey registered baggage and deliver
it to the addressee or the person acting on his behalf.
Art. 584. - Notice to addressee.
Where the goods cannot be delivered at the addressee's domicile or are 110t
taken away by the addressee, the carrier shall witbout delay inform the
addressee of the arrival of the goods and of the time when and place where
they are available.
Art. 585. - Goods which cannot be delivered.
(1) Where goods cannot be delivered, the carrier shall without delay in-
form the sender and require him to give instructions. Where the car-
rier cannot keep the goods in his custody, he shall move the court to
order that the goods be deposited with a third party.
(2) Where goods which cannot be delivered are of a perishable nature
and the carrier cannot receive the sender's instructions in due time,
he shall cause the goods to be sold.
Art. 586. - Baggage which cannot be delivered.
(1) Where registered baggage cannot be delivered at the addressee's domi-
cile and is not taken away on arrival by the passengCT or the person
acting on his behalf, the carrier shan where possible require :~f! passen-
ger to give instructions.
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COMMERCIAL CoDE 127
(2) Where the carrier cannot keep the registered baggage in his custody
or such baggage is of a perishable nature, ,ule provisions of Art. 585
shall apply.
Section 3. Duties of parties to a contract of carriage of persons

Art. 587. - Duties of passenger.
Tihe passenger shall pay the fare agreed in tlhe contract, present IhdmseH at
the time and place of departure and comply during the journey With the
instructions given by the carrier or prescribed by law.
Art. 588. - Dut~s of carrier.
The carrier shall carry the passenger safely to his destination and shall
comply with the terms of the contract as to time and comfort.
Chapter 4. Liability of the carrier

Art. 589. - Hand baggage.
Hand baggage shall remain in the passenger's custody and the carrier shall
not be liable for the loss of or damage to such baggage.
Art. 590. - Loss of or damage to goods or registered baggage.
Wihtout prejudice to the provisions of the following articles, the carrier
shall be liable for the loss, whether total or partial, of goods or registered
baggage or for any damage thereto or delay in the conveyance thereof.
Art. 591. - Liability excluded in certain cases.
The carrier shall be relieved in whole or in part of his. liability under
Art. 590 where he can show that the loss, damage or delay was due in
whole or in part to force majeure, an inherent defect in the object carried
or the fault of the sender or addressee.
Art. 592. - Wear and tear.
The loss of weight or volume which goods or registered baggage suHer
by reason of the transport shall be regarded as an inherent defect and
the carrier shall be liable for such loss only as exceeds customary limits.
Art. 593. - Provisions excluding liability.
( 1) The carrier may hy agreement relieve himseH of liahility for delay in
the conveyance of goods or registered baggage.
( 2) AIly provision relieving the carrier of liability for lOllS of or damage
to goods or registered baggage shall be of no effect.
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128 COMMERCIAL CODE
Art. 594. - Limitation o/liability.

The carl"ier mar by agreement limit his liability for any total or partial
loss (>f or damage to goods ~or registered baggage. Any suob limitation
shall be of no effect where the agreed compensation is so disproportionate
to the value of the object carried as to make the carrier's liability negligible.
Art. 595. - Liability 0/ carrier 0/ passengers.

Without prejudice to the provisions of the following articles, a person who
carries passengers shall be liable for any delay in the carriage and for the
death of or bodily injury to a passenger due to an accident occurring dur-
ing the journey or whilst the passenger was mounting or alighting.
Art. 596. - Liabilityexcluded in certain cases.

The carrier shall be relieved in whole or in part of his liability for death
or bodily injury under Art. 595 where he can show that the a~cident
was due in whole or" in part to force majeure, the act of a third party
or the fault of the passenger himself.
Art. 597. - Lim~tation a/liability.

(1) The carrier's liability shall not exceed Eth. $ 40,00·0 per passenger,
whoever the passenger may be.
(2) Where compensation is to be paid by way of annuity, the capital
of the annuity shall not exceed Eth. S 40;1)0.0.

( 1) The carrier may by agreement relieve himself of liability for any delay
in the carrying.
( 2) Any provision relieving the carrier of liability for death or bodily in-
jury or limiting the carrier's liability to less than Eth. S 40,000 shall
be of no effect.
Art. 599. - Liability not limited in certain cases.
The provisions of Art. 594 and 597 shall not apply where it is proved that
the damage is due to the carrier's act or omission and the carner knew
that such act or omission would or could cause damage.
Art. 6()0. - Liability 0/ successive. carriers.
( 1) Where a contract of carriage is- performed by more than one carner.
the passenger or those having rights from hi~ may ouly claim against
the carrier in charge of that part of the journey during which the
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COMMERCIAL CODE 129
accident or delay occurred unless it has been expressly specified that

the liability of the lit-st carrier would extend to the whole journey.
(2) In respect of goods or registercd baggage, the sender may claim against
the first carrier and the addressee may claim against the last carrier.
The scnder and addressee may in addition claim against the carrier
in charge of that part of the carrying during which the loss, whether
total or partial, the damage or the delay occurred.
(3) The carriers mentioned in sub·art. (2) shall be jointly and severally
liable to the sender and addressee.
Chapter 5. Legal proceedings
Art. 601. - Expert opinion, deposit and sale.

(1) Where a dispute arises as to goods or registered baggage, the court
within whose area of jurisdiction the goods or baggage are, may on
application allow the calling of expert evidence. The applicant shall
give notice thereof to all interested parties except in cases of urgency
where notice may be waived by the court.
(2) The cOUrt may order the goods or baggage to be deposited with a third
party.
( 3) The court may order the goods or baggage to be sold on having cheek-
ed the condition thereof.
Art. 602. - Acceptance and protest.
(1) Unconditional acceptance of goods or registered baggage shall be a
bar to any claim for total or partial loss, damage or delay being
brought against the carrier, unless there has been fraud on the car-
rier's part.
(2) The carrier shall be liable for any non-apparent damage where the ad-
dressee enters a protest against the carrier as soon as he is aware of
such damage or within not more than seven days from the delivery
of the goods or baggage.
Art. 603. - Limitation.
( 1) Any claim arising out of a contract of carriage shall be barred after
two years from the day when the passengers, goods or registered bag-
gage have or should have arrived at their destination or when their
carrying was abandoned.
( 2) Where tl claim is barred, the creditor may not set up· his claim by way
of counter claim nor by way of defence.
10·
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130 COMMERCIAL CODE
TITLE II. CARRIAGE BY Am

Chapter 1. General provisions
Art. 604. - Scope of application.
The provisions of this Title shall apply to the carriage of persons, baggage
or goods by aircraft whether for reward or free of charge.
Art. 605. - Definition of aircraft.
Any apparatus capable of raising or circulating in the air shall he deemed
to he an aircraft within the meaning of Art. 604.
Chapter 2. Transport titles

Section 1. Passenger's ticket
Art. 606. - Issue of ticket.
( I) A ticket shall he delivered to any person to he carried by air.
(2) The ticket shall show:
( a) the place and date of issue;
(b) the name and address of the carrier;
( c) the place from and to which the passenger is to he carried and
the places of call, if any;
( d) the fare of transport.
( 3) The ticket shall contain a notice informing the passenger that the
carrier's liability is limited for death or bodily injury and for the loss
of or damage to baggage .
Art. 607. - Purpose o/,ticket.
(1') Unless the contrary is proved, the ticket shall he proof of the making
and conditions of the contract of carriage.
( 2) The provisions of this Title shall apply and the contract of carriage
shall he v8Iid and remain in force notwithstanding that there is no
ticket or no valid ticket or the ticket has heen lost. Where the carrier
agrees to a passenger embarking without a ticket or where the ticket
does not contain the notice provided in Art. 606 (3), the provisions of
Art. 636, 637 and 638 regarding the carrier's limited liability shall
not apply.
Section 2. Luggage - Ticket

Art. 608. - Issue oflussase-ticket.
( I) A luggage-ticket shall he issued where registered baggage is to he car-
ried by air.
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COMMERCIAL CODE 131
(2) The luggage-ticket shall show:

(a) the place and date of issue;
(b) the name and address of the carrier;
( c) the number of the passenger's ticket;
(d) the place from and to which the baggage is to be carried;
( e ) the number and weight of the pieces.
(3) Whcrc the luggage-ticket is not connected with a passenger's ticket
under Art. 606 or is not included therein, it shall show that the ear-
rier's liability is limited in respect of the loss of or damage to the
baggage.
Art. 609. - Purpose olluggage.ticket.
(1) Unless the contrary is proved, the luggage-ticket shall be proof of the
registration of the baggage and of the conditions of the contract of
carriage.
(2) The provisions of this Title shall apply and the contract of carriage
shall be valid and remain in force notwithstanding that there is no
luggage-ticket or no valid ticket or the ticket has been lost. Where
the carrier accepts the baggage without a luggage-ticket or where a
luggage-ticket is not connected with or included in a passanger's ticket
and does not contain the notice provided in Art. 60S (3), the pro-
visions of Art. 637 regarding the carrier's limited liability shall not
apply.
Section 3. Bill of lading

Art. 610. - Issue 01 bill 01 lading.
Any carrier of goods may require the sender to prepare and to hand to
him a document ea1led a bill <If lading. Any sender may require the carrier
to accept such bill of lading.
Art. 611. - Bill 01 lading not issued, not valid or 10#.
The provisions of this Title shall apply and the contract of carriage shall
be valid and remain in force notwithstanding that there is no bill of lading
or no valid bilI or the bill ,has been lost.
Art. 612. - Copies 01 bill 01 lading.
( 1) Three copies of the bill of lading shall be prepared by the sender and
delivered to the carrier together with the goods.
(2) The first copy shall bear the words: "for the carrier" and shall be
signed by the sender.
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132 COMMERCIAL CODE
(3) The second copy shall bear the words: "for the addressee." It ~hall ],e
signed by the sender and the carrier and shall remain wilh the goods.
( 4) The third copy shall be signed by the carrier and hlll1ded to the sender
ufter the goods have been accepted by the carrier.
Art. 613. - Signatures.

(1) The carrier shall sign the bill of lading before the goods are loaded.
(2) The carrier's signature may be replaced by a stamp. The sender's sign-
nature may be printed or replaced by a stamp.
(3) Unless the contrary is proved, the carrier shall be deemed to act on
behalf of the sender where he prepares the bill of lading at the re-
quest of the sender.
Art. 614. - More than olle parcel.
Where more than one pareel is to be carried, the carrier may require the
sender to prepare separate bills of lading.
Art. 615. - Particulars in the bill of lading.

(1) The bill of lading shall show:
( a) the place and date of issue;
(b) the place from and to which the goods are to be carried;
( c) the name and addresses of the sender, the addressee and the first
carrier;
(d) the nature, number of pieces, volume or weight of the goods;
( e) the distinguishing marks or numbers affixed on the parcels, if any;
(f) the condition of the goods and the nature and condition of pack-
ing, if any;
(g) the cost of transport;
(h) the time within which and the route whereby the goods are to be
carried.
(2) The bill of lading shall contain a notice informing the sender of the
carrier's limited liability for loss of or damage to the goods.
Art. 616. - Bill of lading to order.

Where the sender and carrier agree, the bill of lading may be to order.
Art. 617. - Bill of lading not issued or incomplete.

Where the carrier Hoepls goods to be loaded without a bill of lading
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CoMMERCIAL CoDE 133
having been prepared or containing the noUce provided in Art. 615 (2),
the provisions of Art. 637 ~ the carrier's limited liability shall
not apply.
( 1) The sender shall be liable for the accuracy of the statements he makes
in ,the bill of lading.
(2) He shall be liable for any damage caused to the carrier or to a person
for whom the carrier is responsible arising out of irregular, inaccurate
or incomplete lltatements in the bill of lading.
Art. 619. - Effect of bill of lading.
(1) Unless the contrary is proved, a bill of lading shall be proof of the
making of the contract, of the receipt of the goods and of the conditions
of transport.
( 2) Statements as to the ~t, size and packing of the goods and to
the number of parcels shall be deemed to be correct unless the con·
trary is proved.
( 3) Statements as to the quautity, volume or condition of the goods may
be proved against the carrier only where the accuracy of the bill ~f
lading has been checked by the carrier in the presence of the sender
and the result of the check certified on the bill of lading, or where
such statements relate to the apparent condition of the goods.
Chapter 3. Rights and duties of sender and addressee

Art. 620. - Right of sender to dispose of the goods.
( 1) Where he carries out all his duties under the contract of carriage, the
sender may dispose of the goods, either by withdrawing them from
,the airport at the plaee of departure of destination, or by stopping
them at a place of call or by cawdng them to be delivered during the
carrying or on completion of the carrying to a person other ~han the
addressee named in the bill of lading or by requiring them to be flown
back to the airport at the place of departure.
( 2 ) The sender may exercille hla rights under mb-art. (1) where no damage
is caused thereby to the carrier or other senders. He shall be liable
for all expenses arising out of the exercise of such rights.
( 3) The carrier shall forthwith inform the sender where instructions given
by the sender under sub-art. (1) cannot be carried out.
Art. 621. - Failure to produce bill of lading.
( 1) A carrier who complies with instructions given by the sender without
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134 CO~ERCIAL CODE
requiring the aender to produce his copy of the bill of lading shall
be liable for any damage caused thereby to any person who may have
regularly obtained the bill of lading.
(2) A carrier who has paid co~tion for damages under suh-art. (1)
may cladm against the sender for the reimhursemeIlit of such compen.
sation.
Art. 622. - When sender may not dUpose of the goods.

The sender may not exercise his rights under Art. 62,0 as from. the date
when the addressee may exercise his rights under Art. 623, unless the ad.
dre!!see cannot be found. or refuses to accept the goods or the bill of lading.
Art. 623. - Rights of addrel&ee.

(1) Unless the sender exercises his right under Art. 620, ·the addressee
may on .the arrival of tlhe goods at their destination reqmre .the carrier
to hand to him the copy of the bill of lading and to deliver the
goods to him.
(2) The provisions of sub.art. (1) shall not apply unless the addressee
carrie3 out his duties as to payment and transport under the bill of
lading.
Art. 624. - Notice to addressee.

Unless otherwise agreed, the carrier shall forthwith inform the addressee
of the arrival of the goods.
Art. 625. - Loss of the goods.

Where the carrier admits that goods have been lost or where the goods
have not arrived within seven days from the date on which they were due,
the addressee may require the carrier to discharge his liabilities under the
contract of carriage.
Art. 626. - Rights exercised on behalf of a third party.

Where they comply with the conditions laid down in the contract of car·
riage, the sender and addressee may exercise all their rights under the pre-
ceding articles in their own name, whether on their own behaL<f or on be·
half of a third party.
Art. 627. - Relations between sender and addressee.

Nothing in Art. 620·626 shall affect the relations between the ;.cnder and
the addressee nor the relations between third parties who have ri:ghts from
the sender or address.oe.
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COMMERCIAL CODE 135
Art. 628. - Art. 620·626 not applicable in certain cases.

Any provision contrary to the provisions of Art. 620·626 shall be of no
effect unless it is laid down in the bill of lading.
Art. 629. - In/ormation to be given by sender.
( 1) The sender shall give all information and annex to the bill of lading
all documents necessary for complying with customs, dues or control
regulations before the goods can be delivered to the addressee.
(2) The sender shall be liable for any damage caused to the carrier where
he does not give such information or documents or gives inaccurate
or incomplete information or documents.
(3) The provisions of sub-art. (2) shall not apply where a fault has been
committed by the carrier or his agent.
( 4) The carrier shall not be bound to examine whether the information or
documents given to him are accurate or sufficient.
Chapter 4. Liability of the Carrier

Art. 630. - Injury to tM person.
The carrier shall be liable for the death of or bodily injury to a passen·
ger due to an accident occurring aboard an aircraft or whilst the passenger
was embarking or disembarking.
Art. 631. - Loss 0/ or damage to baggage or goods.
The carrier shall be liable for the loss of or damage to registered baggage
or goods due to an occurrence having taken place whilst such baggage or
goods were carried by air.
Art. 632. - Carrying by air.
(1) Carrying by air within the meaning of Art. 631 shall include the time
within which the baggage or goods are in the carrier's custody, whe-
ther at the airport or in the aircraft or in any other place not being'
all airport where the aircraft ma.y have to land.
(2) Carrying by air shall not include any carrying by land, sea or river
taking place out;;id'e au airport. In cases of carrying by land, sea or
river ,taking place with a view to loading, delivering or transhipping,
any loss or damage shall be deemed to have occurred while the bag-
gage or goods were carried by air, unless the contrary is proved.
Art. 633. - Delay.
The carrier shall be liable for any delay in carrying passengers, baggage or
goods.
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136 COMMBRCIAL CODE
Art. 634. - ProoJ oj care by carrier.

The carrier shall not be liable where he can show that he and his agents
have taken all measures necessary for averting the damage or that such
measures could not be taken.
Art. 635. - Injured party at Jault.
The court may reduce or waive the carrier's liability where the carrier
can show that the damage was caused in whole or in part by the injured
party himself.
Art. 636. - Limitation oJ liability Jor damage to the person.
(1) The carrier's liability shall not exceed Eth. $ 40,000 per passenger.
Where compensation is to be paid by way of annuity, the capital of
the annuity shall not exceed Eth. $ 40,O()0.
(2) The provisions of sub-art. (1) shall apply only where no higher limit
bas been agreed by the passenger and the carrier.
Art. 637. - Limitation oJ liability Jar baggage or goods.
(1) In respect of goods and registered baggage, the carrier's liability shall
not exceed Eth. $ 410 per kg.
(2) The provisions of sub-art. (1) shall not apply where the sender' on
handing the goods or baggage to the carrier, expressly specifies that
he has a special interest in their delivery and pays such surcharge as
may be required.
( 3) In the case provided in sub-art. (2) the carrier shall pay the agreed
compensation unless he can show that such compensation exceeds the
sender's actual interest in the delivery.
(4) In the event of lOll, damage or delay affecting part only of the regi-
stered baggage or goods or any object fornrlng part thereof, the car-
rier's limited liability shall be determined having regard to the total
weight of the baggage, goods or object concerned.
(5) Where a loss, damage or delay under sub-art. (4) affects other goods
carried under the same luggage-ticket or bill of lading, the carrier's
limited liability shall be determined having regard.,to the total weight
of the goods concerned.
Art. 638. - Objects in the passenger's custody.
In respect of objects in the pa8lleDger's custody, the carrier's liability shall

not exceed Eth. $ 800 per passenger.
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COMMERCIAL COllE 137
Art. 639. - Cases where the limits are exceeded.
(I) The limits laid down in Art. 636-638 shall not prevent the court from
granting such additional compensation as may be required to cover
all or part of the expenses incurred by the plantiff in bringing his suit.
(2) The provisions of sub-art. (I) shall not apply where the compensa·
tion granted, not including expenses incurred by the plantiff, dOllS not
exceed the sum offered in writing by the carrier to the plaintiff within
six months from the occurrence of the damage or before the suit was
brought, where it was brought more than six months after the occur·
rence of the damage.

Any provision relieving the carrier from liability or fixing limits lower
than those provided in the preceding Articles shall be of no effect, and
the provisions of this Title shall apply and the contract shall remain in
force.
Art. 641. - Inherent defect in the goods.

Notwithstanding thc provisions of Art. 640, the carrier may relieve him·
self of liability for any loss or damage arising out of an inherent defect
in the goods carried.
Art. 642. - Legal proceedings.
(1) An aotion for damages under Art. 6 31-633 may only be brought on
the conditions and subject !o the limits provided in this Title.
(2) The provisions of sub·art. (I) shall also apply to claims under Art.
630, without prejudice to the persons who are entitled to claim anI!
to their respective rights.
Art. 643. - Liability not limited in certain cases.

(I) The provisions of Art. 636, 637 and 638 shall not apply where it i~
proved that the damage is due to an act or omission of the carrier
or his agent, where the carrier or agent knew that such act or omis·
sion would or could cause damage.
(2) Where the act or omission is due to an agent, it shall have to :be
proved that the agent was acting in the discharge of his duties.
Art. 644. - Claim against the carrier's agent.
(I) Where a claim for damages under this Title is brought against the
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138 COMMERCIAL CODE
carrier's agent, the provisions of Art. 636, 637 and 638 shall apply to
the agent, provided he acted in the discharge of his duties.
( 2) The total compensation due from the carrier and the agent shall not
exceed the limits laid down in Art. 636, 637 and 638.
( 3) The provisions of sub-art. (1) and ( 2 ) shall not apply where it is
proved that the damage is due to the agent's act or omission and
the agent knew that such act or omission would or would be likely
to cause damage.
Art. 645. - Accepronce and protest.

(1) Unless the contrary is proved, unconditional acceptance of baggage
or goods by the addressee shall be proof that the goods have been
delivered in good condition and in accordance with the bill of lading.
(2) In cases of damage, the addressee shall enter a protest against the
carrier as soon as hc is aware of tlhe damage or w1tJhln not more tlhan
seven days from the delivery of the baggage and not more than four·
teen days from the delivery of the goods.
(3) In cases of delay, protest shall be enetred within not more than
twenty-one days from the date on which the baggage or goods were
delivered to the addressee.
( 4) Protest under tihis Alltide shall be entered by a notice on the bill of
lading or by any other document sent ,to the carrier within the periods
provided in this Article.
( 5) Where protest is not entered in due time, no claim may be brought
against the carrier, unless there has been fraud on the carrier's part.
Art. 646. - Death of debtor.

Where the debtor dies, claims for damages under this Title shall be
brought against those having rights from him.
Art. 647. - Jurisdiction.
( 1) Any claim for damages under this Title may be brought, in the dis-
cretion of the plaintiff, either before the court of the place where
the carrier is domiciled, has his principal place of bnsiness or has an
agent who made the contract or before the court of the place of
destination.
(2) Any provision contrary to the provisions of sub-art. (1) shall be of
no effect.
( 3) In respect of carriage of goods, provisions may be made with a view
to arbitration, provided such arbitration is to take place in any of
the places mentioned in sub-art. (1).
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COMMERCIAL CODE 139

Any claim for damages under this Title shall be barred after I two years
from the day when the aircraft arrived or should have arrived or when
the carrying was abandoned.
Art. 649. - Definition of days.
For the purpose of this Title "days" shall include all days, whether working
days or holidays.
Chapter 5. Provisions applicable to certain fonns

of transport
Art. 650. - Extraordinary circumstances.
The provisions of Art. 60,6-617 of this Code relating to transport titles
shall not apply to carriage taking place in extraordinary circumstances outside
normal operation of the transport undertaking.
Art. 651. - Succes~ve carriers.
For the purpose of this Title, carriage by air undertaken by successive
carriers shall be deemed to be one carriage where it has been regarded
by the parties as a single operation and whether it was provided in one or
more contracts.
Art. 652. - Liability of successive carriers.
( 1 ) In cases of carriage by air undertaken by successive carriers, the pro-
visions of this Title shall apply to each carrier who carries passen-
gers, baggage or goods and the carrier shall be deemed to be a party to
the contract of carriage where such contract relates to that part
of carrying to be effected under that carrier's responsibility.
(2) In cases of carriage as .defined in sub-art. (1), llhe pmtsenger or those
having rights from him may only claim against the carrier in charge
of that part of the journey during which the accident or delay oc-
curred, unless it has been spressly specified that the liability of the
first carrier would extend to the whole journey.
( 3) In respect of goods or registert 1 baggll8e, the sender may claim
against the first carrier and the addressee may claim l18ainst the last
carrier. The sender and addressee may in addition claim l18ainst the
carrier in charge of ,that part of the carrying during which the loss,
whether total or partial, the damage or the delay oecurred.
(j.) The carriers mentioned in sub-art. (3) shall be jointly and severally
liable to the sender and addressee.
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140 COMMERCIAL CODB
Art. 653. - Combined carriage.

(1) In cases of combined carriage effected partly by air and partly by
other means of transport, the provisions of this Title shall apply to
the carrying by air only.
( 2) The parties may make provisions on other means of transport in
the provisions of this Title regarding carrying by air.
TITLE III. INSURANCE

(1) An insurance policy is a contract whereby a person, called the in-
surer, undertake,; against payment of one or more premiums to pay
to a person, called the beneficiary, a sum of money where a speci-
fied risk materialises.
( 2) Where damages are insured, the insurance policy ahall extend to
the risks affecting property or arising out of the insured person's
civil liability.
( 3) Where persons are insured, the in surance policy shall extend to
risks arising out of death or life, or to risks arising out of injury to
the person or illness.
Art. 655. - Scope of application of this Title.
(1) The provisions of this Title shall apply to insurance of risks arising on
land, on rivers or in the air.
( 2 ) They shall not apply to marine insurance which shall be subject to
the relevant provisions of the Maritime Code, nor to State insurance.
Art. 656. - Insurance companies.
The conditions on which physical persons or business organisations may
carry on insurance business shall be provided by law.
Chapter 2. Provisions applicable to all forms of insurance

Section 1. Insurance Policy
Art. 657. - Proof of contract of insurance.
( 1) The contract of insurance shall be supported by a document called
an insurance policy.
(2) The policy may only be varied in writing by documents called
endorsements.
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COMMERCIAL CODE 141
( 3) The insurer and beneficiary shall be bound where, prior to the

signature of the policy or endorsements, the insurer hands to the
beneficiary a document setting up a provisional guarantee until the
policy or endorsement is signed.
Art. 658. - Particulars in the policy.

The insurance policy shall show:
(a) the place and date of the contract;
(b) the names and addresses of the parties;
( c) the item, liability or person insured;
(d) the nature of the risks insured;
(e) the amount of the guarantee;
(f) the amount of the premium;
(g) the term for whict. t~e contract is made.
Art. 659. - Entry into force of insurance policy.

(1) Unless otherwise expressly specified, the insurance policy shall come
into force on the day when the policy is signed.
(2) Provisions may he made to the effect that the policy shall only come
into force after the first premium has been paid.
Art. 660. - Policy to order.

( 1) The policy may be in the name of a specified person or to order.
(2) The insurer may set up against the assignee or endorsee the defences
which he could have set up against the original beneficiary.
Art. 661. - Policy made on·behalf of a third party.

(1) An insurance policy may be made by an accredited agent.
( 2) An insurance policy may he made on behalf of a third party even
where the subscriber is not an agent. The beneficiary may avail
himself of the insurance policy where he accepted it. Such accept-
ance may be given even after the risk insured has materialiaed. The
subscriber shall incur all liabilitit;s under the contract until the policy
is accepted by the beneficiary.
Art. 662. - Policy made for an unspecified third party.

(1) A conl.ract of i.nsurance may be made for lin unsp.ooified ,ulJii.rd party who
may eventually have an interest. It shall 00 deemed to be made on be-
half of the prospective beneficiary.
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142 COMMERCIAL CODE
(2) The subscriber of a policy under sub-art. (1) shall he liable to pay
the premiums. The insurer may set up against the beneficiary the
defences which he could have set up against the subscriber.
Section 2. Rights and duties of the parties
Art. 663. - Risks insured.

(I) The insurer shall guarantee the beneficiary against the risks specified
in the policy.
(2) Unless otherwise agreed, risks arising out of unforeseen events or the
negligence of the beneficiary shall be covered by the insurance.
(3) Notwithstanding any provision to the contrary, risks arising out of the
intentional default of the beneficiary shall not be covered by the insu.
ranee.
Art. 664. - Faults committed by persons for whom the beneficiary is responsible.
( 1) The insurer shall guarantee the beneficiary against losses or damages
due to the fault of persons for whom the beneficiary is responsible.
(2) The provisions of sub-art. (1) shall apply regardless of the nature or
gravity of the fault committed.
Art. 665. - Duties of insurer.

(1) The insurer shall pay the agreed sum within the time specified in the
policy or when the risk insured against occurs or at the time specified
in the policy.
(2) The insurer's liability shall not exceed the amount specified in the
policy.
Art. 666. - Payment of premiums.

(1) The beneficiary shall pay the agreed premium at the time specified in
the policy.
(2) Notwithstanding any provision to the contrary, the policy shall not
terminate as of right when the premium is not paid in due time.
The insurer shall demand payment.
(3) Notwithstanding any provision to the contrary, the policy shall be sus-
pended after one month from a demand under sub·art. (2) where the
premium is not paid.
( 4) Where the period of one month has expired, the insurer may claim
payment of the premium or require the termination of the policy.
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COMMERCIAL CODE 143
(5) Where the premium is paid, the policy shall re-enter into force on the
day of payment.
(6) The provisions of this Article shall not apply to life insurance.
Art 667. - Statements on making proposals for a policy.
On making proposals for a policy, the beneficiary shall state exactly all the
circumstances within his knowledge and which are likely to assist the in-
surer to appreciate fully the risks he undertakes to insure.
Art. 668. - Facts concealed and false statements.
(1) The policy shall be of no effect where the beneficiary intentionally

concealed facts or made false statements and such concealment or false
statements cause the insurer wrongly to appreciate the risks to be in-
sured so that, had he been aware of the truth, the insurer would not
have entered into the policy or would have imposed terms less favour-
able to the beneficiary. The insurer shall retain all premiums paid.
(2) Notwithstanding any provision to the contrary, the policy shall re-
main in force where concealment or f"l,c statements are not delibe-
rate and it cannot be shown that the beneficiary acted in bad faith.
(a) Where concealment or false statements are discovered before the
risk materialises, the insurer may terminate the policy by giving
one month's notice or may maintain the policy and increase the
premium.
(b) Where concealment or false statements are discovered after the
risk has materialised, the sum to be paid by the insurer shall be
reduced having regard to the difference between the premiums
actually paid and the premiums which ought to have been paid,
had the beneficiary not concealed the facts or made no false state-
ments.
Art. 669. - Increase of risks.
(1) Where the risks increase in such a manner that the insurer, had he
known the facts at the time when the policy was made, would not have
entered into the policy or would have imposed terms less favourable
to the beneficiary, the beneficiary shall inform the insurer within fifteen
days from the occurrence increasing the risks, where such occurrence
is due to the beneficiary, or within fifteen days from the beneficiary
being aware' of such occurrence. These periods may not be shortened
in the policy.
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COMMERCIAL CODE
(2) The insurer may terminate the policy or maintain it and increase the
premium.
(3) 1100 pro¥isions of Art. 668 shall apply where the beneficiary does not
inform the insurer under sub·art. (1) or gives false information.
( 4) The provisions of this Article shall not apply to life insurance.
Art. 670. - Occurrence of ri6k to be notified.
(1) Unless he is prevented by force majeure, the beneficiary shall inform
the insurer of any occurrence likely to render the ill8urer liable as
soon as he knows of such occurrence or within not more than five days.
( 2) This period may not be shortened in the policy.
Art. 671. - Bankruptcy.
(1) T'he insurance policy shall not terminate as of right where the bene-
ficiary is declared bankrupt. The- trustees in bankruptcy shall benefit
by the policy and shall be liable for the unpaid premiums.
(2) The trustees in bankruptcy and the insurer may terminate the policy
within three months from the judgment in bankruptcy.
( 3) The policy shall terminate within one month from the insurer being
declared bankrupt.
Art. 672. - Death of beneficiary.
(1) Notwithstanding any provision to the contrary, the policy shall con-
tinue with the heirs where the beneficiary dies.
(2) The heirs and the ,insurer may terminate the policy within three months
from the beneficiary's death.
Art. 673. - Assignment of object insured.
( 1) Notwitbstanding any provision to the contrary, the policy shall conti.
nue with the assignee where the object insured is assigned.
( 2) The assignee and the insurer may terminate the policy within three
months from the assignment.
Section 3. Limitation
( 1) Any claim arising out of a contract of insurance shall be barred after
two years from the occurrence giving rise to the claim or from the
day when the parties knew of the occurrence.
(2) In case of concealment or false statements, the period of limitation
shall run from the day when the insurer knew of the concealment
or false statement.
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COMMERCIAL CODE itS
( 3) The periods proV'ided in tlhis Article ~ nOlt be shortened in the

policy.
Chapter 3. Insurance against damages
Section 1. Insurance of objects
Art. 675. - Insurance permitted.
( 1) Any person interested in the preservation of an object may insure it.
(2) Any direct or indirect interest in a risk may be itwured.
Art. 6:16. - Risks excluded.
(1) Unless otherwise agreed, the insurer shall not he liable for louea or
damages due to international or civil war.
( 2) The· insurer shall establish that the loss or damage occurred as
provided in suwrt. (1).
Art. 677. - Loss of object insured.

the policy shall terminate as of right where the objeetinsured is lost
for a r~n not specified in the policy.
Art. ,~78~ - Compensation.
A· contract for the insurance of an object·is a contract for eoibpenaation.
The compensation shall not exceed the value of· the object insured on
the day of the occurrence.
Art. ~r9. -:- ~bjeci -dnderinmred.
Where on the day of the occurrence the object imured is of a value
greater than the amount for which it is insured, the ins~ person sball
be deemed to be his own insurer for the difference and shall share
proportionately in the damage, unless otherwise provided in the policy.
Art. 680. - Object overinsured. ,
( 1) Where the compensation provided in the policy exceeds the value
of the obj~t insured and 'there has been fraud on the pert of either
party, the other party may lequire the poliey to terminate and may
in addition claw damages.
(2) Where there has been no fraud, the policy shall remain in force
but to the extent only of the .actual value, of- the object insured.
( 3) Where the beneficiary requii-es the insurance to. be Je(iuced, the
insured shall be entitled to reduced premiUms but he shall retain all
premiums paid prior to the reduction.
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1" COMMBRCIAL CODB
Art. 681. - Cumulalive insurance.

( 1) Where several iDBUl'ers insure the same object against the same risk
so that the object is overinsured, each insurer may, where there has
heen fraud on the part of the beneficiary, require the termination
of the policy and may in addition claim damages.
(2) Where the beneficiary is in good faith, each insurer shall, where
the risk materialises, pay compensation in proportion to the value
insured by him.
Art. 682. - Loss of object insured.
(1) The policy shall he of no effect where, at the time when it is made,
the object is already lost or no longer exposed to a risk. The
premiums paid shall he refunded to the beneficiary.
Art. 683. - Substitution of insurer.
( 1) The insurer who has paid the agreed compensation shall substitute
himself to the extent of the amount paid by him for the beneficiary
for the purpose of claiming against third parties who caused the
damage.
(2) Where the beneficiary makes substitution under sub-art. ( 1) impoe-
sible, the insurer may he relieved in whole or in part of his
liabilities to the beneficiary.
(3) Notwithstanding any provision to the contrary, the insurer may not
claim against the ascendants, descendants, agents or employees of the
insured person nor against persons living with him, unless such per-
sons have acted maliciously.
Art. 684. - Rights of privileged and secured creditors.
(1) Notwithstanding any provision to the contrary, where a mortgaged
object is insured, compensation shall he paid to the mortgagee.
The mortgagee may claim directly from the insurer who may set up
the defences which he could have set up against the beneficiary.
( 2) Payments made in good faith by the insurer to the insured in ignoran-
ce of the mortgage shall be valid.
Section 2. Insurance of liability for damages

Art. 685. - Insurer when liable.
The insurer who insured a liability for damages shall not pay compensation
until a cliam is made against the insured person with a view to amicable
or judicial settlement.
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COMMERCIAL CODE 1407
Art. 686. - Liability admitted.

(1) Provisions may be made to the effect that admission of liability or
compromise made without the insurer's consent may not be set up
against the insurer.
(2) Admission of·a fact coea 110t amount to admissioll of liability.
Art. 687. - Direction of the case.
(1) Provisions may be made to the effect that the insurer shall have the
direction of any civil case originating from a claim brought by the
injured party.
( 2) Any provision to the effect that the insurer shaH have the direction
of any criminal case originating from criminal proceedings instituted
against the beneficiary shall be of no effect. The· beneficiary may,
in particular, exercise or refuse to exercise his right of recourse.
Art. 688. - Compensation to-be paid to injured party.
(I) No insured person shaH receive compensatio~ until the third party
injured has been paid to the extent of the amount inIured.
( 2) Any stipulation contrary to the provisiOns of this Article aball be of no
effect.
Chapter 4. Insurance of persons

Section 1. General provisions
Art. 689. - Amount insured f~eely fixed.
A contract for the. insurance of persona shall not be deemed to be a
contract for compensation. The amount insured may be freely fixed and
shall be due regardless of the damage suffered by the ii1sured person.
Art. 690. - Substitution not possible.
Notwithstanding any provision to the contrary, the insured who has paid
the agreed amount may not substitute himself for the subscriber or bene-
ficiary for the purpose of claiming against third parties who caused the
damage.
Section 2. Life insurance

A life insurance is a contract whereby the insurer undertakes against the
payment of one or more premiums to pay to the subscriber or to the
beneficiary a specified sum on certain conditions dependent upon the life
or death of the subscriber or third party insured.
Art. 692. - Life insurance.
(1) The insurer who enters into a life insurance undertakes to pay a
168 COMMERCIAL CODE
specified capital or life interest provided the iniured person is alive

at a date fixed in the policy.
(2) Tile insurer who enters .into an insurance for the event of death
underrtakes to pay, on the death of lIhe W'IlIl'ed per!IOn a specified
capital or life interest to those having rights from the insurtld person
or to the beneficiary named in the policy.
( 3) A combined policy may be made where the insurer undertakes to
pay both under sub-art. (1) and sub:art. (2).
Art. 693. - Life insurance made by third party.
An insutanee policy for the event of death may be made by a third
party. Such policy shall be of no effect unless the insured person agrees
in writing and indicates the amount insured. Where the insured person
is married, the consent of his spouse shall be required.
Art. 694. - Incapable person insured.
An insurance policy made for the event of the death of an incapable
'penca shaD. be of no effect notwithstanding that the incapabale' perIOn
or hi8 legal representative agreed to the insurance. The policy may be
cancelled on the application of any interested party and all premiums
paid shall be refunded. ' .
Art. 695. - Particulars in life insurance palicy.

In' 'addition ta the 'pat'tidalars leIf'lired under Art. 658',a life insurance
poHey Ihall _w:
(a) the D8lDe,' surname and the date of birth of the illsured person;
(b) the name and surname of the beneficiary, if he is known;,
( c) the occurrence on which the payment of the agreed ~ount
depends;
(el) .the manner of calculating any reduction in the 'value of the
Policy or its redemption value.
Art. 696. - Policy to order.
Where the policy is to order, the endorsment of the policy shall be of
no effect unless it is dated and shows the name of the beneficiary.
Art. 697. - P~.
A life insurance policy may be pledged by annexing a schedule to this

effect to the policy or by endorsing a policy to order or in accordance
with Art. 2866 of the Civil Code.
COMMERCIAL CODE 149
Art. 698. - Insured persoll to agree tu assignment or pledge.

The assignment, endorscment or pledge of the policy or thc changing of
the beneficiary named in the policy shall be of no effect unless Lhe
insured person agrees in writing.
Art. 699. - Suicide.
(1) Notwithstanding any provIsIon to the contrary, an insurance policy
for the event of death shall be of no effcct where the insured person
knowingly commits suicide. The insurer shall establish that suicide
was committed knowingly.
(2) The policy shall be effective where the beneficiary can show that
suicide was not committed knowingly.
Art. 700. - Murder of beneficiary.

An insurance policy for the event of death shall be of no effect where the
beneficiary intentionally kills the insured person and is convicted there-
of by a criminal court.
Art. 701. - Beneficiary of insurance policy.

(1) An insurance policy for the event of death may be made to the
benefit of specified beneficiaries.
( 2) The following persons shall be deemed to be specified beneficiaries
notwithstanding that they are not mentioned by name:
(a) the subscriber's spouse, even where the marriage took place
after the policy was entered into;
(b) the subscriber's children, whether or not horn at the time when
the policy is entered into.
( 3) Where the beneficiary is not specified in the policy or the bene-
ficiary specified in the policy does not agree, the subscriber may
name a beneficiary or substitute a beneficiary for another by will,
schedule or endorsement.
Art. 702. - Beneficiary must be alive.
·Unless otherwise agreed, the benefit shall be deemed to be payable only
on the condition that the beneficiary be alivc 011 the day when the capital
or life interest is to be paid.
Art. 703. - Agreement of beneficiary.
(1) The allocation of the benefit of a policy to a specificd beneficiary
may not he revoked after the beneficiury has agreed to the policy.
150 COMMERCIAL CODE
(2) The allocation of the benefit of a policy Lo a specified beneficiary may

be revoked until such time as the beneficiary has agreed to the
policy.
Art. 704. - Effect on insurer.
The agreement of the beneficiary or the revocation of the beneficiary
may not be pleaded against the insurer unless he was aware thereof.
Art. 705. - Beneficiary not specified.
Where no beneficiary has been specified or he has heen revoked or is noL
alive, the capital to be' paid by the insurer shall be paid inLo the suI,·
scriber's estate.
Art. 706. - Rights of beneficiary.
( 1) The beneficiary may claim directly against the insurer.
( 2) The SUIDS to be paid to a specified benefieiary shall not form part
of the insured person's estate. The beneficiary shall be deemed to
be entitled thereto as from the day when the policy was entered into,
notwithstanding that he agreed to the policy after the death of the
insured person.
(3) The SUIDS to be paid to the subscriber's sponse shall be regarded as
the personal property of that spouse.
Art. 707. - No refund.
The SUIDS paid to the beneficiary shall not have to be refunded to the
inheritance.
Art. 7,08. - Rights of creditors.
( 1) The creditors of the insured person have no right on the sums to he
paid to the beneficiary.
(2) The provisions of Art. 1029 (a) of this Code shall not apply where the
insured person is declared bankrupt.
Art. 709. - Premiums not paid.
(1) The insurer may not bring an action for the payment of premiums
due in respect of a life insurance.
(2) If a premium has not heen paid 8't the due datc on a policy on whip,h
less than three annual premiums have been paid, the insurer may
demand payment. If payment is not made within one month from
the date of the demand, the insurer may terminate the policy,. This
period may not be shortened in the policy.
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(:l) ]I' iI preJlliulll Ila~ llol Jwen pHi.[ at tile clue ,latc on u policy on
which at least three unnual premiums huve been paid and payment
is not made within one month from the date of a demand for pay-
ment, the poliey shall not lapse. The insurer may issue a paid up
policy or otherwise reduce the capital or life interest of the policy
according to regulations made under Art. 656.
Art. 710. - Redeeming.

(1) Notwithstanding any provlSlon to the contrary, the insured person
may, at any time after three annual premiums have been paid, ask
to redecm an insuranec policy made for the event of his death.
(2) The manner of calculating the price of redeeming shall be specified
in the policy according to regulations made under Art. 656.
( 3) The provisions of this Article shall not apply to provisional insurance
policies for the event of death.
Section 3. Insurance against accidents and illness

Art. 711. - Risks insured.
~J) An insurance policy against accidents is a contract whereby the in-
surer undertakes to pay a specified sum to the insured person where
the insured person is the victim of an I'ccident during the period speci-
fied in the policy, or to the beneficiary named in thc policy, where
the insured perSon dies.
(2) The insurer may limit his guarantee to specified accidents or spe-
cified consequcnces of an accident.
(3) Accident includes any bodily injury arising out of unexpected ex-
traileous occurrences;
( 4 ) The insurer may insure against illness.
Art. 712. - Provisions relating to life insurance not applicable.

The provisions of Section 2 of this Chapter relating to life insurance
shall not apply to insurance against accidents or illness.
TITLE IV. GAMES AND GAMBLING

Art. 713. - Games and gambling.
(1) The provisions relating to insurance shall not apply to operations
which are in'the nature of games or gambling.
(2) Without prejudice to the provisions of Art. 714, games and gambling
shall not give rise to valid claims for payment.
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t
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152 COMMERCIAL CODE
(3) Where a person capable .mder civil law ha~ spontaneously paid a
debt arising out of a game or gambling in which 110 fraud has been
committed, such person cannot claim back the sum paid.
Art. 71.4. - Defence based on game not admissible.

(1) A defence based on game shall not be admissible in respect of stock
exchange speculations, even where such speculations are liquidated
by paying the differences, and regardless of the profession and in-
tention of the parties and of the importance of the speculations.
( 2) A defence based on game shall not be admissible in respect of games
or gambling connected with sporting activities but the court may reduce
the amount claimed where it thinks it to be excessive.
( 3) A defence based on game shall not be admissible in respect of any lot-
tery or betting authorised by the government.
BOOK IV
NEGOTIABLE INSTRUMENTS AND BANKING TRANSACTIONS
Art. 715. - Definitiolls.
(I) A negotiable instrument is any document incorporating a right to
an entitlement in such manner that it be not possible to enforce or
transfer the right separately from the instmment.
(2) The law recognises in particular as negotiable instmments commer-
cial instruments, transferabl~ securities, documents of title to goods.
Art. 716. - Obligations arising out of negotiable instruments.

(1) The po""essol' of a negoti'able 'inst''',!ment has a right to the entitle.
ment as expressed in the instrument against presentment of the saill
instrument to the debtor, on condition that he establishes that he
is a lawful possessor in the manner provided by law.
(2) The debtor shall only pay against delivery of the instrument.
( 3) Except in case of fraud or gross negligence on his part, the debtor
shall he released by payment at maturity to the person to whom the
instrument gives the capacity of creditor, notwithstanding that the
said person is not the holder of the right.
Art. 717. - Defences.
(I) The (lebtor may only set up against the holder of the instrument
defences based on their personal 'relations, defences of form and
those based on the text of the instrument.
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COMMERCIAL CODE 153
(~) H~ mily 8Pt "I' rkfrllces hac"'..! (Ill r"I"Hication of signature, lack of
capacity or l'0WC'l" uf representation at the time of issue of the ins-
strument, or on the absence of the necessary conditions for bringing
the proceedings.
(.'1) The dehtor may not set up against the holder of the instrument de-
fences based on his personal relations with preceding holders, unless
the holder, in acquiring the instrument, has knowingly acted to the
detriment of the debtor.
Arl. 718. - Holder in due course.

No claim for recovery may be made against a person who has acquired
a negotiable instrument in due course, in accordance wilh the rilles apply-
ing to negotiation.
Art. 719. - Forms of transfer.
Aecording to the forms provided for their transfer, negotiable instruments
may he to bearer, in a speficied name or to order.
Art. 720. - Conversion of instruments.

(1) Negotiable instruments to bearer may be converted into instru-
ments in a specified name by the person issuing them, on the request
and at the expense of the possessor_
(2) Except ~here conversion is forbidden by law or expressely by the person
issuing the instruments, instruments in a specified name may he con-
verted into instruments to hearer, on the request and at the expense of
the holder, the latter establishing his identity and his capacity in ac-
cordance with the provisions of Art. 723 (2).
Art. 721. - Instruments to bearer. Transfer and establishment of right by
holder.
(1) An instrument to bearer shall he transferred by delivery of the ins-
trument.
(2) The holder of an instrument to hearer establishes his right to the
entitlement as expressed in the instrument by the sole fact of present-
ment of the said instrument.
Art. 722. - Instruments in a specified, name. Establiahmenl 01 right by holder.
The holder of an instrument in a specified name establishes his right to
the entitlement as expressed in the instrument by the fact of his designa-
tion as beneficiary therein and in the register held by the person issuing
the said instrument.
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154 COMMERCIAL CODE
Art. 723. Inslrlllltefl[S in II s}Jf'cijiet/ twm". Transfer.

(1) Instruments in a specified name may be transferred by the entry or
the name of the transferee in the instrument and in the register held
hy the person issuing the said instrument. They may also be trans-
ferred by: delivery of a new instrument in the name of the new holder.
Such ddivery shall be entered in the register.
(2) A person requesting registration of an instrument in favour of another
person, or delivery of a new instrument registered in the name of the
latter shall establish his identity and his capacity to dispose thereof
under the law. If any of these formalities is required by the transferee,
the said transferee shall produe~ the instrument and establish his rights
by deed drawn up by a public officer.
(3) The person issuing the instrument shall be liable for making the ne·
cessary entries in the register and the instrument.
( 4) A person who· issues and transfers an instrument under this Article
shall be liable only for fault.
Art. 724. - Instruments tC' order. Transfer and establishment of right by holder.
(1) Instruments to order may be transferred by endorsement, followed by
delivery of the instrument !o the beneficiary under the transfer.
(2) The holder of an instrument to order establishes his right to the entit-
lement as expr~ssed in the instrument by an uninterrupted series of
endorsments, even if t~ last endorsement is in blank. Cancelled en-
dorsements shall be deemed not to be written. Where an endorsement
in blank is followed by another endorsement, the signatory vf this last
endorsement shall be deemed to ! ..lVe acquired the instrument by the
endorsement in blank.
Art. 725. - Forms of endorsement.

(1) An endorsement shall be written on the instrument and signed by
the endorser.
( 2) An endorsement not containing the name of the endorsee shall be
valid.
(3) An endorsemllDt "to bearer" shall be equivalent to an endorsement in
blank.
( 4) An endorsement shall be unconditional. Any condition to which it
is made subject shall be of no effect.
(5) A partial endorsement shall be null and void.
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COMMERCIAL CODE 155 V
Art. 726. - Eflerl$ of endorsement.

(1) An endorsement transfers all the rights ari8ing out of the instru-
mont.
(2) If the endorsement is in blank, ~he holder may:
( a) fill up llhe blank m·ther with his own name or tibat of another
person; or
(b) re-endorse the instrument in hlank or to another person; or
(c) transfer the instrument to a third person, without filug up thc
hlank and without endorsing it. '
Art. 727. - Obligations of endorser.
Unless otherwise provided hy lsw or by the instrument, the endorser shall
not he liable where the person issuing ~he instrument fails to carry out
h~s ohligamons.
Art. 728. - Endorsement for collection or by attorney.

( 1) Where vhe endorsement contains the words "value in collection,"
"for collection," "by attorney" or any oIIh.er similar words implying
agenoy, .the OOlder may exercise all tIhe rights arising out of$e instru-
ment, hut ,he can only endorse it in his capaciJty as agent.
(2) The person issuing the instrument may only set up against the agent
s~ch defences as conld he set up against the principal. .
( 3) The agency grarnted hy power of attorney shall not terminate by
reason of the death of the principal or his becoming legaUy inc'apahle.
Art. 729. - Endorsement in pledge.

( 1) Wlhere the endorsemtmt contains tlhe words '"ruue in security" ,
"value m pledie" or any other similrar words implying pledge,the
holder may exeroise all the ~ts arising out of the iristrum6Jllt, but
rus endorsement has the effects only of ~ endorsement by an agent.
(2) The person issuing the instrument may only set up againat the endor-
see in pledge such defences as are based on his personal relations
with the endorser, unless the endorsee, in receiving the instruments,
knowingly aoled to the detrriment of the debtor.
Art. ';30. - Assignment of instruments to order.

Acquisimon of an instrument to order by means other than endorsement
gives rise to the effects of an onlinary assignment only.
Art. 731. - Negotia.bk instruments damaged, destroyed, lost or stokn.

The procedure to ~ followed in the case of negoliilable instruments
damaged, destrqypcl, lost ~ stolen shall he pre.9CI'ihed.
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156 COMMERCIAL CODE
TITLE II. COMMERCIAL INSTRUMENTS

An. 732. - Definitions.
(1) Commercial instruments are negotiable instruments setting out an
entitlement consisting in the payment of a sum of money.
(2) Bills of exohange, promissory notes, cheques, travellers cheques and
warehouse goods deposit cerl,i,ficates shall be deemed to be com-
meroial instruments under 1Ims Code.
(3) 'J1he provisions of Art. 2813-2824 of the Civil Cod~ shall apply to
rwarehouse goods deposit certificates.
Art. 733. - Legal capacity.

Any person having contractual capacity may bind himself by commercial
instrument.
Am. 734. - Signature.

( 1) DeolaralJions made by commercial mstrumeIlil:s shall bear Ilhe signature
of ,the person making <llhem.
(2) Nevertlheless, signature may be apposed by a handwritten mark or
by mechanical process such as a stamp.
( 3) When a physical person is unable to sign, !his consent shall be evi-
denced by an aullhentic declaration on Ilhe instrumeIlJt.
Chapter 2. Bills of Exchange

Section 1. Establishment and fonn of bills of exchange
Art. 735. - Req,uirements.
A bill of exchange shall COIIJtai,n:
(a) the term "bill of exclmnge" inserted in the body of the instrument
and expressed in the language employed in drawing up the instru-
ment;
(b) an unconditional order to pay a sum oeJ::tain in money;
( c) the name of the person who is to pay (drawee);
(d) the time of payment;
( e) the place of payment;
(f) the name of the person to whom or to whose order payment is to
be made or an indication h t it shall. be payable to OOa;rer;
(g) the date lWIhen and place :Where the bill is issued;
(h) <!!he lligDature ofo'!tlJe .penon Who issues die hill (dmwer).
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Art. n6. - Requirements absent.

Where any of the requirements provided in Art. 735 is absent the instru-
ment shall not be valid as a bill of exchange, except in the cases speci.
fied in sub-art. (a), (b) and (c) hcreundc,:
(a) a bill of exchange in which the time of payment is not specified
sllall be deemed to he payahle at sight;
(b) unless o~hel'wise expressly specified, the place mentioned beside the
name of the drawee shall be deemed to be the place of payment, and
at the same time the place of the domicile of vhe drawee;
(c) a bill of exchange whil'h does not mention the place of its issue
shal1 he deemed to have heen drawn in the place mentioned beside
the Hame of the drawer.
Art. 737. - Special cases.

(I) A bill of exchange may be drawn payable to drawer's order.
(2) It Illay be drawn on the drawer himself.
(3) It may he drawn for account of a third person.
Art. 738. - Domidled bill.
A bill of exchange may be puyable at the domicile of a third party,
either in the locality where the drawee. has his domicile or in another
locality.
Art. 739. - Stipulatiun as to interest.

(I) In a hill of exchange payable at sight or at a fixed period after sight,
paymem of interest may be provided. A provision as to interest in-
serted in any other bill of exchange shall be of no effect.
(2) The provision for interest shall he of no effect unless the rate is
specified.
(3) Interest shall run from the dule of thl:' hill of exchange, uruess some
other date is sp<'cified .
. \rt. 7·10. --- Discr<'jJltllcy in the sun! payable.

( ~) \Vhere til(' sum payable by a bill of eX(Jhangc is expressed both ill
words and figures and there is a discrepancy, the sum expressed in
words shall prcvail.
(~) \\'1,,'"'' 1'1." slim 1';1lahlc hy ;1 I.ill of "x(-han!!" is expressed mOJ'" than
"'H-e ill w()l'(l~ or morc Ihull .. lice in figllH'S and there is a discre-
pan!'y, the smaller sum shall prevail.
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158 COMMERCIAL CODE
Art. HI. Signature 0/ persons incapable 0/ binding themselves.

If a hill .of exchange bears signatures .of persons incapable .of binding
themselves by a bill .of exoha:nge, f.orged signatures, signatures .of
fictiti.ous persons .or signatures which f.or any .other reason cannQt bind
the pers.ons wh.o signed the bill .of exchange .or .on whose behalf it was
~igned, the .obligations .of the .other persons wlho have signed it shall be
valid.
!\rt. 742. - Signature tfitholll pOIeer to ad.

Wh.osoever signs a bill .of exchange .on behalf .of person f.or wh.om the
had n.o power to act shall be bound himself as a party t.o the bill' and,
if he p.ays, shall have the same rights as the person for wthom he pur.
ported to act. The samc rulc shall apply to an agent wh.o exceeded his
powers.
Art. 743. - Liability 0/ drawer.

The drawer guaranlees botIh acceptance and paym.eJlJt. He may release
himself from guaranteeingaceeptance. Any provision by whidt. he releases
himself fr.om the guarantee .of payment shall be .of n.o effect.
Art. 744. - Bill 0/ exchange in blank.

If a bill .of exohange, wlhidh was moompltJil:e ·when issued, has been com·
pleted .otherwise than in acc.ordance with the agreements entered int.o,
the n.on-observance .of such agreements may not be set up against the
h.older unless he has acquired the bill .of exchange in bad faith .or, in
acquiring it, has committeed a fault.
Art_ 745. - Ante or post dated bill of exchange.

(1) A bill .of exchange shall not be null and void for tihe sole reason
that it has been antedated or postdated, pr.ov.ided ·tthaIt there is n.o
fraud or illegal~ty.
(2) A person t.o wh.om an intsrument so dated is delivered is deemed
to have acquired it at the date .of delivery.
Section 2. Negotiation of bills of exchange
i\rt. 7-16. - Negotiability.

(1) A bill .of exchange to bearer may bc transferred by simple delivery
.of vhe instrument.
(2) Any o~her hi1l .of exclhillnge, even if not expressly draWlll to order,
Jna~ he lrunsferrl'd by cIHlorsement. When bhe ilia'wer has inserted
ill a hill .of exchange the words "not to order" .or similar words,
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COMMERCIAL CODE 159
the instrument can only he 'transferred a!lCOI"Wmg to the form, and

willh ~he eifeel'i, of an ordinary assignment.
(3) The bill may he endorsed even in favour of the drawee, whether he
has accepted it or not, or of the drawer, or of any other party to the
bill.
( 4) These persons may re-endorse rhe hill.
Art. 747. - Elements of endorsement.
(I) An endorsement shall he unconditional. Any condition to Wlhich it

is made subject shall he of no effect.
(2) A partial endorsement shall he null and void.
(3) An endorsement "to bearer" is equivalent to an endorsement in
blank.
Art. 748. - Forms of endorsement.
( 1) An endorsement shall he written' on the bill of exchange or on a

slip affixed thereto (aNonge). It shall be signed by the endorser.
(2) The endorsement may leave the beneficiary unspecified or may
consist simply of the signature of the endorser (endorsement in
blank). In the latter case, the endorsement to be valid shall he
written on the hack of the hill of exchange or on the slip affixed
thereto (allonge).
Art. 749. - Effects of endorsement.
( I) An endorsement transfers aN the rigdtts arising ont of a bill of

exohange.
(2) If the instrument is in blank, the holder may:
( a) fill up the blank either with his own name or willh the name
of some o~her person;
(b) re-endorse the bill in blank, or to some other person;
( c) transfer the bill to a third person without filling up the blank
and willhout endorsing it.

(1) In Ilhe absence of any provision to the contrary, the endorser guaran-
tees both acceptance and payment.
(2) lIe may prohibit any further endorsemellJt; in this case he gives no
guarantee to the persons to whom the bill is subsequently endorsed.
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160 COMMERCIAL CODE
Art. 751. - Establishment of ritle by holder.

( 1 J The possessor of a bill of exChange shall he deemed to he the lawful
holder if he establishes his title to the bill through an uninterrupted
series of endorsements, eVeq} if the last endorsement is in blank.
Cancelled eq}dorsernents shall he deemed not to he written. Where
an endorsement in blank is followed by another endorsement, I'he
person who signed this last endorsement shall be deemed to have
acquired the bill by the endorsement in blank.
(2) W'here a person has been dispossessed of a hill of exchange, in any
manner whatsoever, the holder who establishes his right ,thereto as
provided in sub.art. (l) shall not be bound to give up the bill unless
he has acquired it in bad fa~th or unless in acquiring it he has
committed a fault.

Persons sued on a bill of exchange cannot set up against the holder
defences based on t!heir personal relati.ons with the drawer or with
previous rholders, unless the !holder, in acquiring the hill, has knowingly
acted to the detriment of the debtor.
Al't. 753. - Endorsement by attorney.
(1) Wihere an endorsement con'fains the words "value in collection,"
"for collection," "by attorney" or any other similar words implying
agency, ,the holder may exercise alI tihe rights arising oult of tlhe bill of
exchange, hut he can only endorse it in his capacity as agent.
(2) T,he parties liable can only set up against ~the agent defences which
could he set up against the principal.
( 3) The agency granted by power of aHorney shall not terminate Ly
reason of the death of the principal or his becoming legally incapable.
Art. 754. - Endorsement in pledge.

(1) Where an endorsement contains the words "value in security,"
"value in pledge" or any other similar words implying a pledge,
the holder m,ay exercise all the rights arising out of the bill of
exchange, but an endorsement by !ham has the effects only of an
endorsememby an agent.
(2) 1'he persons sued on the bill may not set up against the holder
defences hased on their personal rela,tions with the endorser unless
the iholder, in acquiring the hill, has knowingly aeted [0 the df'U·j.
ment of the debtor.
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l.Ol\1l\1ERCIAL CODE 161
Art. -~-
,.).) Entlor;,emcllt after maturity or after protest.
(l) An I'ndorscment after maturity shall have the same effe()t as an en·
(lorsement bcfore maturity. An endorsement after protest for non-
payment, or after the expiration of the limit of time fixed for draw-
ing up Vile protc~t. shall operate only as an ordinary assignment.
(2) Unless the contrary is proved, an endorsement without dwte shall
be deemed to han~ been written on the bill before the expiration of
the limit of time Jixed for drawing up the protest.
P) Where a refuf'al to pay has been evidenced by a declaration of the
drawee in accordance wiLh Art. 781 (2), an endorsement without
date shall be deemed to have been made before the protest.
Arl. 756. - Presumption as to the place of endorsement.

U nlcss the contl'ary is proved, an endorsement shall be deemed to have
becn written on the bill at the place wihere the endorsemenJt is dated.
Section 3. Acceptance
Art. 757. - Presentment for acceptance.
Until maturity a hill of exchange may be presented to the drawec for
acceptance at his domicile, either by the holder or by a person who is
merely in possession of the bill.
Art. 758. - Order 01' prohibition as to presentment.

( 1) In any bill of exchange the drawer may stipuJa,te that it be presented
ror acceptance with or without fixing a limit of time for presentment.
(2) Except in the case of a bill payable at the address of a third party
or in a locality other ~han that of the domicile of tlhe drawee or
of a bill drawn payable at a fixed period after sight, the drawer may
prohibit presentment for acceptance.
(3) He may also stipulate that presentment for acceptance slmll not
take place before a fixed date.
( 4) Unless the drawer has prohibited acceptance, every endorser may
stipulate that the bill shall be preSented for acceptance with or
without fixing a limit of time for presentment.
,\ rt. 759. - Obligation to present for acceptance bills of exchange payable

11/ a fixed period after sight.
(1) Bills of exuhange payable at a fixed period &fte.r sight shill he

presented for acceptance within one year of their date.
12*
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162 COMMERCIAL CODE
(2) The drawer may shorten or extend this period.

(3) These periods may be shortened hy ~he endorsers.
AI,t. 760. - Presentment a second time.
(1) T'he drawee to whom a hill is presented may demand that such hill
be wesented again to him on the following day. Parties interestefl
may not set up that this demand has not been complied with unless
such demand -is mentioned in the protest.
(2) The holder shall not be hound to surrender to the drawee a hill
presented for acceptance.
Art. 761. - Form of accepta~lce.
( 1) An acceptance ihlall be written on the hill of exchange and expressed

by the ,word "accepted" or any oLher similar words. It shall he signed
by the drawee. The simple signa,ture of the drawee on rhe face of the
bill constitute an acceptance.
(2) When the bill is payable at a certain time after sight or when it is to be
presented for acceptance within a certain limit of time in accordance
with a special stipulation, t:he acceptance shall be dated as of the day
when the acceptance is given, unless the holder requires that it shall
be dated as of 'tlhe day of presentment. If it is undated, the holder
in order to preserve his right of recourse against the endorsers and the
drawer shall authenticate the omission by a protest drawn up within
the proper time.
Art. 762. - Restrictive acceptance.

(1) An acceptance is unconditional but the drawee may rcstrict it to part
of ilihe sum payable.
(2) Any other modification introduced by an acceptance in the terms of
the bill of exchange shall be deemed to be a refusal to accept. The
acceptor shall be bound according to the terms of his acceptance.
Art. 763. - Domiciliation and place of payment.

(1) Where the drlllWer of a bill has indri.cated a place of payment other
tlhan the domicile of the drawee !Without specifying a third parl y a 1
whose address payment is to be made, ~he drawee may name w(·ll
,third party at the time of acceptance. In deraull of this i Ildication.
the acceptor shall be deemed to have undertaken 10 pay the hill
himself at the place of payment.
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COMMERCIAL CODE 168
( 2 ) If a MIl is payable at .the domicile of ,the dnwee, thelalter may

in his acoopta.nce indioote an address in tlhe Same pIlUle where pBIY-
ment is to be made.
Art. 764. - Effect of acceptance.
( 1) By accepting the drawee undertakes to p8iy the bill of exclutnge at
its maturiJty.
(2) In default of payment the holder, notwithstanding that he is the
d,rawer, may claim under .the bill of exchange against tihe acceptor
for all that can be demanded in accordance wiJtih Art. 791 and 792.
Art. 765. - Cancelled acceptance.
(1) Where the drawee who has wriltten lhlis acceptance on a biilil bas can-
celled it before restoring the bill, acceptance shan be deemed to be
refused. Unless the contrary is proved the cancellation shaUbe deemed
to have taken place before the bill was restored.
( ?) If flhe dr8lWee has natified his accepiIian.ee in writiIDg to tihe ho1d~ or
to any party who lhias signed the bill, he is liable to such pal'IIies ac-
cording to the terms of his acceptance.
Section 4. Acceptance for honour

Art. 766. - Acceptor for honour.
( 1) Payment of a bill of exchange may he gual"llDteed by an acceptance
for honour as to the JW!bole or part of ills amollilllt.
( 2 ) This guarantee may be given by a tIbinl ~n' or even by a person
wtho has signed as a p.amy to the bill.
Art. 767. - Forms of acceptance for honour.

( 1 ) The acceptance for honour shall be given either on the bill itself or
on an allonge, or by sepa1"ate act showing tihe place ~ it is made.
(2) It shaH be expressed by ,the "Yords "good as acceptamwe for honou,r"
or any other similar words followed by the signature of the acceptor
for honour.
(3) It shall be effe<ltive on the signarure of the acceptor for honour
placed as provided in sub-art. (2).
( 4) An acceptance for iIronoul' shall specify for !W1hose account it is given.
In default of this, it shall be deemed to be given for tIhe dr8JWeJ.'.
Art. 768. - Effects of acceptance for honour.

(1) The acceptor for honour shall be hound in the same mann,er as tJhe
person for whom he has become guarantor. .
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164 COMMERCIAL CODE
(2) His undertaking shall he valid even when tihe liability which he has
guaranteed is inoperative for any reason other than defect of form.
(3) Where he pays a bill of exchange, he may exerci~e the rights arlswg
out of the bill of exchange against the person guaranteed and against
lhose who are liable to the laUer on the bill of exchange.
Section 5. Maturity
Art. 769. - Categories of maturities.
(1) A bill of exchange may be drawn payable:
(a) at sight;
(b) at a fixed period after sight;
(c) at a fixed period after date;
(d) at a fixed date.
(2) Bills of exchange at other matur~ties or payable by instalments shall
he null and void.
Art. 770. - Bills of exchange at sight.

( 1) A bill of exehange at sight is payable on p,resentment. It shall he
presented for payment witlhln a year of its date. The drawer may
shorten or extend this period. These periods may he shortened by the
endorsers.
(2) The drawer may stipulate tha,t a hill of exohange payable at sight
shall not he presented for payament before a fixed date. In this ease
the period for presellJtment shall run from the said date.
Arl. 771. - Bills of exchange payable at a fixed period after sight.

( 1) The maturity of a bill of eXclhange payable at a fixed period after
sigbt sooll he determined either by the date of the acceptance or hy
the date of the protest.
(2) In the absence of ,the protest, an nndated acceptance shall be deemed,
so far as regards the acceptor, to have been given on the last day of
the limit of time for presentment for acceptance.
Art. 772. - Calculation of periods.

(1) Where a bill of exchange is drawn a,t one or more months aflcr dale
or after sight, the bill shall mature on the corresponding date of the
month when payment shall be made. If there be no correspondin~
dale, the hill shall mature Oil the last (lay of this month.
(2) When a hill oCexcilange is drawn at one or more months, and a half
after date or sight, entire months shall first he calculated.
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COMMERCIAL CODE 165
(3) II the maturity is fixed at the beginning, in CIhe middle or at the
month respectively.
two weeks but an aetuall period of .t

cnu or a month, thi~ ::lhall mean the first, fifteenth or last dar of the
(4) The words "eiglht days" or "fifteen days" shall indiC8lte not one
or fifteen days.
(;;) 'nile .words "half montlh" shall mean a period of fifteen days.
Art. 773. - Differellces in calendars.
OIl'
( 1) Where a hill of exohange ,is payable on a fixed day in a place were

the calendar is different from the calendar in the place of iesue, the day
of maturity shall he deemed to he fixed to the calendar of the place
of payment.
(2) Where a hill of exchange drawn ~ tJwo places having different
calenda,rs is payahle a1 a fixed period afmr date, the day of issue
shall he referred to the equivalent day of Clhe caleudar in tIhe place
of payment and 'the maturity shaH. he fixed accordingly.
( 3) The time for presen1ing bills of excihJange man he caWuIated as
provided in sub-art. (1) and (2).
( 4) 'Dhis Article shall nQt apply ifa different form of calculation bas
been expressly provided in ·the instrumeJlJt or results fl'OlDl the }¥U"
liculars entered therein.
Section 6. Payment
Art. 774. - Presentment for payment.
( 1) The holder of a bill of exchange payable on a fixed day or at a
fixed period af.ter date or after sight shall present, the bill for pay·
ment either on the day on which it is payahle or on one of ·the tlwo
business days wihioh follow.
(2) The presentment of a hill of exchange at a financial institution ap-
proved by the Government shall amount to preseJlJtmeJlJt for payment.
Art. 775. - Receipts. Partial payment.
( 1) The drawee who pays a hill of exchange Inay require that it be
surrendered to him receipted by the holder.
(2) The holder may not refuse partia,l paymeJlJt.
( 3) In case of partial payment, the drawee may require tlhat ·mention
of this payment be made on the hill and that a receipt therefor be
given to him.
( 4) Payments made on account on the sum expreesed in a bill of ex·
change shall discharge .tbe drawer and lihe endoner.
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166 COMMERCIA.L CODE
(5) The holder shall protem 1Ihe bill of exohange for the remainder.
Art. 776. - Paymene in advance and payment at maturity.

{I} The Idder 01. a bill of exchange cannot be compelled to receive
payment 1lhereoI. before maturi1ly.
(2) The drawee who pay. before maturity does so at his own risk and
peAl.
(3) He 'Who pays at maturity is va.1i.dly discharged, unless he has been
pilty 01. fraud or committed a fault. He shall be bound to verify
t!he regu1aroiIty of the series of endorsements but not the signature
of 1Ihe endorsers. .
Art. 777. - Payment in a foreign currency.

(1) Wihen a bill of exchange lis draMm payable in a currency which is
not that of the place of payment, the sum payable may be paid in
the cul'llellQy of ,the place of payment, according to iJts value on the
date of matwUlty. If the debtor is in default, the holder may at his
option demand that the amount of the hill he paid in the curl'ency
of the place of payment according to the rate on ,the day of maturity
or 1Ihe' day of payment.
(2) The drawer may specify that the sum payable shall he calculated
according to a ralte ~ iIIl the bill.
( 3) The foregoing rules shall not apply to t'he case in which ,the drawer
has stipulated that payment shall be made in a certain specified
currency (WOWsion for paymeIllt in foreign currency).
( 4) 1£ the amount of llh~ bill of exchange is specified in a currency having
~he same denominMIion, but a different value in the country of
issue and the country of paymeDJt, reference shall be deemed to be
made to tlhe currency of the place of payment.
Art. 778. - Deposu.

When a hill or exchange is not presented for payment within the limit
of time fixed by Art. 774, any debtor is authorised ,to deposit the amount
wiItih a financial institution approved by tlhe Government at 1lhe oharge,
risk and peril of the holder.
Art. 779. - Opposition to payment.

Payimetrt may only be opposed in the case of loss of the bill of exchange
or the bankruptcy of the. holder.
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COMMERCIAL CODE 167
Scdioll 7. Recourse for non-acceptance or non-payment
'h1. 730. --- Recourse of the holder.
The I]mlder may exel'cise his right of recourse against t!hc endorsers, the
Ilt'awer and other pal-ties liable:
(l) at maturity, Iwhere payment has not been made; or
(2) before maturity:
(a) if there has been total or partial refusal to accept; or
(b) in the event of bankruptcy of the drawee, whebher he h'as ac-
cepted or not, or in ~he event of a stoppage of payment on his
part even when not declared by a judgment, or where execution
has been levied on his goods without result; or
( c) in the event of bankruptcy of the drawer of a non - acceptable hill.
Art. 781. - Protest. Conditions and periods.
(1) Default of acceptance or of payment shall be evidenced by a deed

draw'll up by a public officer (protest for non-acceptance or non-
payment).
(2) A dated declaration ,wl'itten on the bill itself may replace this deed.
cxcept where the drawer, in the text of lIhe bill itself, stipulates for a
protest by dede drawn up by a public officer.
(3) Protest for non-acceptance shall be made within 1lllC limit of time
fixed for presentment for acceptance. Where, in the case p,rovided
in Art. 760 (I), ;the first presentment takes place on the last day of
that time, the protest may be drawn up on ·the next dillY.
( 4) Protest for non-paYlment of a bill of exchange payable on a fixed
day or at a fixed period after sight shall be made on one of the two
working days following the day on wIh~(Jh the bill is PlIIYable. In tit!'
case of a bill payable at sight, the protest shall be made as provided
in sub-art. (3).
(5) Presentment for payment and protest for non-payment shall not he
necessal1Y W!here protest for non-acceptance is made.
(6) Where the drawee, whether he has accepted or not, has suspended
payment or where execution on lhis goods has been unsuccessful, thc
holder may not exercise his right of recource until after present-
ment of rbe bill to the drawee for plllyment and after the protest Ihas
been drawn up.
(7) WhNe the drawee, whether he has accepted or not, is declared bank-
rupt, or where the drawer of a non-acceptable bill is declared bank-
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168 COMMERCIAL CODE
rup,t, the production of the judgment in bankruptcy shall cnable the

holder to exercisc his right of recourse.
Art. 782. - Responsible public officer.

A protest shall be dnllwn up hy a notary or )~y a rourt rrgistrar.
Art. 783. - Place of drawing-up of the protest.

A protest shall he drawn up ,in one document:
( a) at the domicile of tJhe person on Wlhom the bill of exchange was
p.ayahle or at his last known domicile;
(h) at the domicile of the persons specified on the bill of exchange as
paying it in need;
( e) at tIll' domicile of the third party having IlI'ccpled by inl!lrvention.
Art. 784. - Reqairements.

(1) A protest shall contain:
( a) tJhe name of tJhe person or bustiness organisation for and against
whom it is drawn up;
(h) a statement that the person or business organisation against whiclh
the protest is drawn up have been unsuccessfully summoned to
satisfy 1Ihe ontitlement arising out of the hill of exchange, or
that they (lannot be found;
( c) the place and day on which the summons was made or unsuccess-
fully presented;
( d) the stignature of the person who has drawn up the protest.
(2) Any partial payment shall he stated in the protest.
( 3) WiheretJhe drawee to whom a bill of exchange is presented for accep-
tance requires that a second presentment be made on the day after,
thi" reque"t shall be entered in the pratest.
Art. 785. - Form of the protest.

(1) A protest shall be drawn up by separate act and atached to the bill
of exchange.
(2) Where the protest is drawn up on presentment of identical parts of
the same bill of exchange or of the original and a copy of the bill,
it shall be attadhed to any of the parts or to the original bill.
(3) A note to this effect shan be made on the other parts or on the copy.
Art. 786. - Partial acceptance.

Where aereptanee is limited to a p,art of the amount and a protest is
drawn up to th~s <>freet, a copy of the hill shall he made and ~he protest
written on this copy.
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COMMERCIAL CODE 169
Art. 737. - Copy of/he protest.
The public oJli(oor wllU has drawn up the pI'utest shall make a copy IlhereoI
which shall contain:
( a) the amount payaWe;
(1) the date of maturity;
( c) the place and date of issue oftihe hill of exchange;
(d) ~he drawer, the dr3IWce, and the ~rson of business organisation to
whom or to whosc order paymen.t should he made;
(c) the person or business organisation .required to pay, if nOl: the drawee;
(£) those persons designated as having to pay in case of need and persons
accepting by intervention.
Art. 788. - Notice.
( I) The holder shall give notice of non-acceptance or non-payment to

his endorser and ,to the drawer witMn the four 'working days ,wtMch
follow the day of p~'otest or, in case of a provision "retour sans ~rais,"
the day of presentment.
(2) The public officer who has drawn up the. protest shall inform in
wriling the persons hound hy ,tihe hill of exc1hange whose addresses arc
either specified on the bill of exchange or known to the public ofii(\Cr
or speoified by the persons il:uaving required the protest. The cxpenses
arising out of such notice shall he added to the costs of the protest.
(3) Every endorser shall within the two working days following the
day on ,which he receives notice, noti£y ihiis endorser of the notice
the has received, mentioning the names and addresses of ,those who
have given the previous notices, and so on through tlhe series until
the drawer is reached. The periods menrtioned above shall run from
the receipt of the preceding notice.
( 4) Where in accordance wi~h sub-art. (3) notice is given to a person
whio has signed a hill of exchange, the same notice shall he givpn
willhin the same limit of time to his acceptor for honour.
( 5) Where an endorser either ihas not specified his address or has speci-
fied it in an illegihle manner, notice shall he given to ,the preceding
endorser.
( 6) A person required to give notice may give it in any form or by
returning the hill of exchange.
(7) Ill' shall show that he has given notice 'Widlin the prescribed time.
This time-limit shall he deemed to have been observed if a letter giving
the nOlice has been posted within the prescribed time.
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17{) COMMERCIAL CODE
(8) A person who doe. Hot giye n<Jtice within the pre8cribed time shall
not forfe~t his rights. 111' ,,1.,,11 hc lia"h~ for the damage, if any, cau,,-
ed by his negligence, hut ~he damages shall not exceed We amount
of the hill of exohange.
Art. 789. - Provision "sans protet".

(1) The drawer, an endorser or acceptor for honour may, hy the provi-
sion "retour sans frais," "sans protet" or any other similar words
written on the instnunent and signed, release the holder from having
a protest of non-acceptance or non-payment drawn up in order to
exercise his right of recourse.
( 2) 11his provision shall not release the holder from presenting the hill
wLtltin the prescl'ibed time, nor from the notices he is requircd tn
give. The burden of proving the non-observance of the limits of time
lies on the person who seeks to set ~t up agailrult the holder.
(3) Where the provision is written by lJhe drawer, it slhall be effective
against all persons who have signed the bill;· JWlhere it is writ:ten hy
an endorser or acceptor for honour, it shall he effective agai!llst such
endorser or acceptOr for honour.
( 4) Where, in spite of the provision written by the drawer, 1Ihe holder
has the poorest drawn up, he shall bear the expenses thereof. Wherc
the prvoision has been written by an endorser or acceptor for honour,
llhe costs of ,the protest, if any, may be recovered from all the persons
whio have signed the bill.
Art, 790. - Joint and several guarantee of persons bound by bill.

( 1) All dr8lWers, acceptors, endorsers or accepIDl'S for honour of a hill
of exchange shall be jointly and severally liable to the holder.
(2) The holder may claim against all these persons ind~vidually or col-
lectively without being required to observe the order in wlhich they
have become liable.
(3) Any person signing the bill who has taken it up and paid it has the
same rigbt.
( 4) Proceedings against one of the pw'ties liahle shall not bar pl'oceerl-
ings against the others, even though they may be subsequent to the
pal'lty first proceeded against.
Art. 791. - Extent of the rig.ht of recourse of the holder.

(1) 11he holder may recover from the person aga~nst whom he exercisps
his right of recourse:
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COMMERCIAL CODE 171
(a) the amou!lt or the lI''''{"('PI''f'd "" unpaid bill of c<\chan;;c "ith
intere~t, if iulen'st has heell provided for;
t h) interest at the legal rate from the date o£ ma·lurity;
(c) the expenses of protest and of the nt)tices given as well as olher
expenses;
(d) a commission 110t exceeding one third per ('cnt.
(2) Where tihe right of recourse is exercised before maturity, the amount
of the bill shall be Hlhjeet to a discount ",hid, shall he calculated
aooordillg to the ollicial ralc or discount ruUllg Oil the date whell
recourse is exereised at the place of domicile of the holder.
Art. 792. - Extent of the right of recourse of a person who takes up ((lid [lO}'S,
A party who lakes up and pays a hill of exchange can recover frolll I hI'
parties liable to him:
(a) the entire sum whioh he has paid;
(b) interest on the said sum calcula·ted at the legal rate, starting from
the day wihen he made paymen1t;
(c) any e:x;penseswhidh he has incurred;
(d) a commission not exceeding two per mille.
Art. 793. - Right to surrender of the bill, to tlze protest and a receipted
account.
(1) Any party again:;;t whom a right of recourse is or may be exercised
may require against payment that the bill be surrendered to him with
the protest and a receipted account.
(2) Any endorser who has taken up and paid a bill of exdhange lIIay
cancel his own endorsement and those of subsequent endorser,;.
Art.794. - Right of recourse after partial acceptance.

( 1) Where the right of recourse is exercised after a partial acceptan,'c
the party who pays the sum in respoot of which lilie hill has not beell
accepted may require that this payment be specified OIl the bill and
that he be given a receipt therefor.
(2) The holder shall give him a certified copy of the hill, togothcr \\iill
the protest, in order to permit subsequent recourse to he exerci,c.l.
Art. 795. - Redraft.

(]) Any person having the right of recourse may, in the absence of
,~greement to the contrary, reimburse himself by means of a fre~h
hill (rcdraft) 10 be drawn at sight on one of the parties lial,le 10
him and parable at tIre domicile of that party.
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172 COMMERCIAL CODE
(:::) TIl" .\HlrHfl )" ~U i 11 eI ",1.: . ill <lrlditkl11 to 1:he sum3 l11~nti~'n'7r1 ill
,\1'1. ',"II ;1".1 "'I~. ]',.uk,',·,,:,;'· ;11,,1 .'1;1111[, rllIty to he l'"irl Oil the redraft.
(:l) 1£ the reuraft is drawn Ly the holder, Lhe sum payahl e shall he fixed
according to the rate for a sight hill drawn a·t the place wherc the
original Lill was payable upon the pal·ty liable at tlhe place of his
domic>ile.
( ,t) If the reuraf t is ura wn by an endorser, the sum payahle shall be
fixed according 10 the rale for a sight hill drawn at the placc where
~hc urawer of Ihe redraft is domicileu upon the place of uomicile
of the party liahle.
Art. 796. - Loss of rights of recourse.
(1) After the expiration of the limits of time fixed for ,the presenlmpnt
of a bill of eX(Jhange drawn at sight or at a fixed period after sight or
for drawing up the protest for non-aooeptance or non payment or for
presentment for payment in the case of a provision "retour sans frais,"
the holder loses his rights of recourse against endorsers, against the
~awer and against the other parties liahle, with the exeption of the
acceptor.
(2) In default of presentment for acceptance ;witlhin the limit of time
stipulated by the dr!H1.J }'older loses Ih~s right of recourse for
non-payment, as well as for non-acceptance, unless it appears from
the terms of the provision ,that t1he drawer only meant to release
himself from the guarantee of aeceptance.
(3) Where the provision for a limit of time £01' presentment is contained
in an endorsement, fhe endorser alone can avail himself tlhereof.
Arl. 797. - Force majeure.

( 1) Where the presentment of the hill of exchange or the drawing up
of the protest within the prescribed time is ahsc i, t:' y prevented
(legal prohibition hy any Starte or other cases of force majeure), these
limits of time shall be eXltended.
(2) 'I1he ilrolder shall give notice~tlhout delay of the case of force ma-
jeure to his endorser and specify this notice, which he shall dalc a!lfl
sign, on the hill or on an allonge; in otlher respeats the provisions of
Art. 788 shall apply.
(3) Where force majeure has terminated, jjhc holder shall wuhout delay
prescnt the bill of exchange for acceptanec or payment and, \\'h .. 1'c
necessary, draw up the protest.
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COMMERCIAL CODE 173
( 4) Wih'ere force majeure oontinues to opera,te heyond tihtirty days af'ter

maturity, recourse may be exercised, and neither pTC8el1Jl:ment nor
the drawing up of II protest shall be necessary.
( 5) In the case of hills of exchange drawn at sight or at a fixed period
after sight, the time limit ofthiTty days Slhall run from the date on
whioh rtlhe holder, even before the expiration of the time for present-
ment, has given notice of force majeure to his endorser. In ·the case
of hills of exchange drawn at a certain time after siglht, the above
time-limit of thirty days shall be added to the period after sight
specified in the hill of exohange.
( 6) Faots wihich arc purely personal to the holder or to 1ihie person
entrusted with the presentment of the hill or drawing up of the
protest shall not be deemed to const~tute cases of force majeure.
Art. 798. - Sequestration of the movable property of parties bound by bill.
A part from the condiJtions prescribed for Iill'e hringing of proceedings for
guarantee, ,the holder of a hill of exahllll1geWiho has protested for non-
payment may, with the permission oftihe court,arttaoh the movable property
of the drawers, acceptors and endorses.
Arl. 799. - Proceedings for unlawful enrichment.
(1) The drawer and the acceptor shall be liable to the holder up to the
amount of the sum by which filley have unlawfully enriohed them-
selves at his expense, even where l'heir ohligations under the hill of
eXdhange~ave terminated by reason of extinctive prescription or
limitation of actions.
(2) Proceedings for unlawful enrichment may he brought against the
drawee, the third party at whose domicHe the bilJ. is payable a:nd
the person or business org:lJlisation on whose belh'llf the bi1l was
drawn.
(3) Endorsers whose oDligations have terminated cannot be made the
subject of these proceedings.
( 4) These proceedings may not be brought unless tlleholder cannot
bring causal proceedWgs.
Art. 800. - Reservation of causal proceedings.

(1) The I,,'oecl'(lings arising out of the legal relal,ion~ on IWlhidh the issue
or trausfer of the bill of exchange is based shall subsist, unless it is
proved that there has been novation.
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174 COMMERCIAL CODE
2) These proceedings can only he brougI1.t if non-acceptance or non-

payment has been evidenced by a protest.
( 3) The iholder may not bAng causal proceedings unless he offers to re-
tore .to the debtor the bill of exchange, at the same 1Iime depositing in
with the court registrar, after satisfying Lhe neces5ll1'y formalities for
preserving to the debtor sHah proceedings by way of recourse which
the latter may be entitled to bring.
Art. 801. - Cover for a bill and its transfer to succeeding holders.
(1) A bill of exchange is covered when at maturity the drawee 15 m pos-
session of securities or guarantees sufficient to fully cover the bill
and which are intended by the drawer or the principal to secure the
payment of the bill.
(2) W!here the drawer is bankrupt, the civil proceedings wihich he could
have brought against the drawee for restitution of the cover or repay-
ment of the amounts by which the latter 'was oredlited devolve upon
the holder of the hill of exc:lumge. The right 1!0 bring these proceed-
ings is transmitted to succeeding holders by WIlly of endorsement.
(3) Where a drawer declared bankrupt has endorsed the bill of exohange
and has set up the cover during the suspected period, tihe provisions
of sub-art. (2) shall not appl,y.
( .1,) The debt arising out oftlhe cover ill the hands of the drawee at the
time that a claim can be made on the bill of exohange is preferred as
regards tlhe creditors of the drawer.
( 5) Tlhe drawee may not release himself from the cover where the holder
prohibits ~llim from doing so. This prohibition lIlliay be made by
rcgi~tered lellter followed by the bringing of proceemng within fifteen
days from tlhe date of matur~ty. A prmest for non-payment is equivalent
to a prohibition under this Article.
Section 8. Intervention for honour
(l) 'J1hc drawer, an endorser or an acceptor for honour may specify a

person who is to accept or pay in case of need.
(2) A bill of exchange may, subject as hereinafter mentioned, he accepted
or paid hy apcl"son who inte.rvenes for rhe !honour of any debtor
al~ainst IW'hom 11 right of rt'{~ourse exists.
( 3) 1~he p~rson intervening may be a t!hil'd pal,ty, even dIe drawee, ot,.
save the acceptor, a party already liable on the hill of exchange.
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COMMERCIAL CODE 175
(4) The person intervening is bound to give, within two working days,
~otrice of his intervention to l1he party for' whose honour he has
intervened. In default, he ~\lall be li'llhle for the damage, if any, due
to his negligence, but the damages shall not exceed the amount of
the hill of exdhiange.
Art. 803. - Acceptance by intervention. Conditions. Position of the holder.

(1) Acceptance by intervention may be given in all cases where the
holder has a right of recourse before maturity on a bill which is
capable of acceptance.
(2) Where the hill of exchange specifies a person who is designated to
accept or pay it in case of need 8lI: the place of payment, <IIhe holder
m~ not exeroise his rights of recourse before maturity against the
person naming such referee in oose of need and against subsequent
signatories, unless he has presented ,11he hill of exchange to ,the referee
in case of need and until, if acceptance is refused by the latter, this
refusal has been aU1!hlenticated by a protest.
(3) In other cases of intervenllion 11he holder may refuse an a{)Ceptance
by intervention. Where he allows it, he loses his right of recourse
before maturity against the person on whose behalf such a{)Ceptance
!Was given and against subsequent signatories.
Al't. 804. - Forms.

Acceptance by intervention ~11 be specified on the bill of exchange. It
shall be signed by the person intervening. It shall m~ntion the person
\01' whose honour it has been given. In default of suoh mention, the
acceptance shall be deemed to ,have been given for the honour of 11he
drawer.
Art. 805. - Obligations of the acceptor. Position as to right of recourse.
(I) 11he acceptor hy intervention is liahle to the holder and to the
endorsers, subsequent to the pal1ty for .whose honour !he intervened, in
the same manner as such pMlty.
(2) Nohrillhstanding an aooeptance by intervention, the person for whom
it has been given and the acceptors for honour may require rthe holder,
in exdhlange ifor payment of the sum mentioned in Art. 792, to deliver
the hill, the protest and a receipted account, if any.
Art. 806. - Payment by intervention. Conditions.

(I) Payment by intervlmtioll m~y ,lake plal'c in all eascs where, either at
maturity or hcfOl'e maturity, vile JIOJ.der has a right of recourse on
the hill.
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176 COMMERCIAL CODE
( 2) Payment shall include 1lhe Wlhole 8IJll01ll1lt payable by the party for
wIbose honour j,t is made.
(3) 1t shall be made at the latest on the day following the last day
allowed for drawing up the protest for non· payment.
Art. 807. - Obligations of the holder.

(I) Where a bill of exchange has heen accepted by persons intervening
who are domiciled in 1'hc place of payment, or where persons domiciled
lfuere ihave been named as referees in case of need, the 'holder shall
present the bill to all tlhese presons and, rwhere necessary, have a
protest for non·payment drawn up at the latest on the day folIowing
the last day allowed for drawing up the protest.
(2) In default of protest within this limit of time, the pal'ty who has
. named tlhe referee in case of need or for Wlhose account 1lhe bill has
been accepted, and the subsequent endorsers, shall be disdharged.
Al't. 808. - Consequences of refusal.

The holder who refuses payment by intervention shall lose his right of
recourse against any person who would hlave been discharged thereby.
Art. 809. - Right to delivery of the bill, the protest and tM receipt.
(1) Payment by intervention shall be authenticated by a receipt given
on the bill of eJOOhange mentioning the person for wlhoee honour
payment has been made. In default of sudh mention, payment shall
he deemed to have been made for th.e honour of tihe drawer.
(2) 11he bill of exclmnge and :the p.rotest, it any, shall be surrendered to
the person payling by interv=tion.
Art. 810. - Transfer of rights of the holder. Competition for payment by

intervention.
(1) T.he person payling hy inlervention shall acquire tlhe rights arising
out of the hill of eXdhange against the party for Wlhose honour he
:has paid and against ·persons who a,re liable to the latter on the bill
of exchange. He may not re·endorse t!he Pill of exohange.
(2) Endorsers subsequent to ~he pal'ty for whose honour payment hus
been made shall be disaharged.
( 3) In the ease of competition for payment hy intervention, the payment
which effects the greater number of releases has toe preference. Any
perron who, with knowledge of the fuets, intervenes in a manner
contrary to th,is rule shall lose his right of l'CCourse against those who
would !have been discharged.
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COMMERCIAL CODE 177
Section 9. Parts of a set and copies

Art. 811. - Parts of a set. Right to several parts.
(]) A bill of exohange may be drawn in several identical parts.
(2) These parts shall he numbered in the body of the instrument itself
or eaoh paTt shall be regarded as a separate bill of exchange.
(3) Every ,11QJder of a bill which does not specify 1lhlllt it has been drawn
as a sole hill may, at his own expense, require the delivery of several
paNS. For this purpose, he shall apply to his immediate endorser
who shall assist him in proceeding agaiThSt ibis own endorser, and
so on in the series until the drawer is readhed. The endorsers shall
reproduce their endorsements on the new pam of the set.
Art. 812. - Relation between parts of a set.

(I) Payment made on one part of a set operates as a discharge, even
though there is no provi~ion that Ilhis :PaJYD1ent annuls the effect of
tlhe ovher parts. The draJWee shall be liable on each accepted part
whioh he has not recovered.
( 2) An endorser who has transferred parts of a set to different persons,
as well as subsequllllil: endorsers, shall be liable on all tihe parts bear.
ing their signature wlhich ,have not been restored.
Art. 813. - Sw.iement as to acceptance.

( I) A party "Wiho bas sent one part for acceptance shall specify on the
other parts the name of the person in wIIrose hands 1!his part is to
be found. Tihat person shall surrender it rto the lawful holder of an.
01lher part.
(2) Where he refuses, the holder may not exercise his right of recourse
until he has had a protest drawn up sp.ooifying:
( a) that the pa!'t sent for acceptance has not been surrendered to him
on ibis demand;
l b) that acceptance or payment could not be obtained of another
part.
Art. 814. - Form and effects.

(I) Every holder of a hill of exohange has the right to make copies of it.
(2) A copy shall reproduce the origional exaotly with 1!he endorsements
and all other statements therein. It Shall specify where the copy ends.
(3) It may be endorsed and guaranteed by acceptance for honour in the
same manner and with the same effeots as ~he original.
13*
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178 COMMERCIAL CODE
Art. 815. - Delivery 01 the onginat.

(1) A copy shall specify ,the person in possession of the original instru·
ment. The laLter shall hand over tJhe said instrument to 1Jhe lawful
holder of 'lihe copy.
( 2) Where he refuses, the holder may not exerci!'6 hls right of recourse
against 1ihe persons who have endorsed 1ihe copy or guaranteed it by
acceptance for honour until he has had a protest drawn up specifying
that the original has not been sut;rendered to him on his demand.
( 3) Where 'lihe originru instrument, Miter ",he last endorsement before the
making of the copy, contains a provision "commencing from here
an endorsement is only valid if made on the copy" or any other similar
~rds, a subsequent endorsement on the original shan be null and
void.
Section 10. Alterations

Art. 816. - Extent of the obligations of signatories.
In case of 811Jteration of ilIhe ,text of a bill of exchange, parties who have
signed subsequent to the alteration sha1J. be bound by the terms of the
altered Itext;parlies who have signed before tlhe alteration shall he bound
by ilhe terms of the original text.
Section 11. Limitation of actions

Art. 817. - Periods.
( 1) .All acllions ari.sing out of a hill of exchange against ",he aocepto;r shall
be barred Miter tihree years from lihe date of maturity.
( 2) AatioDS by the ihJolder against 1!M endorers and against t1he dra:wer
sba1l he barred aft~r one I)'"ear from the date of a protest drawn up
wi1Jbin proper time, or from the date of maturity where there is a
provision "retour sans frais."
( 3) Actions by endorsers against each other and against the drawer shall
he barred Miter six months from il'M day 'When the endorser took up
and paid the bill or from t1he day when he himself /Was sued.
( 4) Limitation shaUrun, in ,t1he case of legru proceedings, from the date
oflihe conclusion of the last proceedings.
( 5) LinUtation shall not apply wlbere judgment has been pronounced or
if the debt ihas been acknowledged by separate act.
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COMMERCIAL CODE 179
Al't. 818. - Interruption.

(1) The period of limitation shall be interrupted by the bringing of an
action, by notice being given of a third party action or by lodging a
claim in hankruptcy.
(2) Interruption of the period of limitation is only effective against the
person in respect of whom the pel'iod has been interrupted.
(3) Where the period of limitation is interrupted, a further period of the
same duration shall begin to run.
Section 12. General provisions

Art. 819. - Time limits. Holirkys.
(1) Payment of a hill of exchange which falls due on a public holiday
cannot he demanded until the next working day. Any other proceed-
ings relating tf) bill of exchange, in partioular presentment for
acceptance and protest, can only be taken on a working d8IY.
(2) Where any of these proceedings mus.f be mken wi1!hin a cel'tain limit
of time the last day of wlhioh is a public Iholiday, the limit of time
is extended until the first working day whicih foLlows !the expiration
of that time. Holidays which occur during the period shall be in-
cluded in calculating limits of time.
Art. 820. - Days regarded as official holidays.

Days on 'WIhioh, under 1Ihe provision of the laws in force, no payment can
be required nor any protest drawn up, shall be deemed to he public
holidays.
Art. 821. - Calculation of time limits.
Legal or contractual limits of time shall not include the day on which the
period hegins to rnn.
Al't. 822. - Prohibition of days of giace.

No day of grace may be granted.
Chapter 3. Promissory Notes
Art. 823. - Requirements.

A promissory note shall. contain:
(a) the term "promissory note" inserted in the body of the instrument
and expl'essed in the language employeed in drawing up the instru-
ment;
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180 COMMERCIAL ConE
(b) an unoonditional promise to pay a sum certain in money;

(c) the ,time of pay,ment;
(d) tihe place of payment;
( e) the name of the person ,to whom or to /Whose order pwyment is to he
made or a statement that the note is payable to bearer;
(f) the date ,when and placewlhere I1he note is issued;
(g) the signl¥ture of lIhe person w:ho issues the instrument (maker).
Art. 824. - Requirements absent.

Where any of the requirements provided in Am. 823 is absent, the instru-
ment shall not be valid as a promissory note except in tJhe oases specified
in sub-al't. (a), (b) and (c) hereunder:
(a) a promissory note in whioh the time of payment is not specified shall
be deemed to he payable at sight;
(b) unless oth<erwi.se expressly specified, the place where the instrument
is made shall be deemed ,to be both t1he place of payment and the
place of the domicile of the maker;
(c) & promissory nate which does not mention 1Ih:e place 'WIh.ere it was
made shall he deemed to have been made in the place mentioned
beside tlJhe name of the maker.
Am. 825. - Reference to provisions relating to bills of exchange.

(I) The following provisions relating to bills of exchange shall apply to
,promissory notes insofar as they are not inconsistent with the nature
of tihese instruments:
(a) endorsement (Al1t. 746-756);
(b) time of payment (Art. 769-773);
(c) recourse in case of non-payment (Art. 780-793, 795-797);
(d) protests (AI't. 781-791);
(e) :redrafts (Am. 795);
(f) payment by interve:tl!tion (Art. 802, 8064HO);
(g) copies (Art. 814 and 815);
('h) alterations (Art. 816);
(i) lim1tation 01. actions (Art. 817 and 818);
(j) holidays, calculation of time limits and prohibition of days of
grace (Art. 819-822).
(2) The following provisions shalI also apply Ito promissory notes: the
provisions ooncerning a hill·of exdhJange payable a,t ,the address of a
third paRy or in a looality other 1Ihan that of the domicile of the
drawee (Art. 738 and 763); stipulation for interest (Art. 739); discre-
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COMMERCIAL CODE 181
pancies as regards the sum payable (Art. 740); the colUlequeoetlt! of

signature under the conditions mentioned in Art. 741; the consequen-
ces of signature by a person who acts without authority or wIho exceeds
his authority (Art. 742); and the provisions regarding bills of exchan·
ge in blank (Art. 744).
(3) The followiJng provisions shall also apply to promissony notes: provi.
sions relating to acceptance for honour (Art. 766.768); in the case
provided for in Art. 767 (4), where the acceptance for Ihonour does
not specify on whose behaH h has been given, it shan be deemed to
have been I#ven on behaH of the maker of ilhe promissorY' note.
Art. 826. - Liability of maker. Presentment and time after sight.
( 1) The maker of a promissory note shall be bound in the same manner
as an acceptor of a bill of exchange.
(2) Promissory notes payable at a certain time after sight shall be pre·
sented for the viaa of the maker within tihe limits of time fixed by
Art. 759. The limit of time shall run from the date of the visa signed
hy the maker on tlhe note. The refusal of the maker to give his visa
with the date thereon shall be autihenticated by a protest (Art. 761),
the date of which marks the beginning - of the ~od of time after
sight.
Chapter 4. Cheques
Section 1. Drawing and form of a cheque
Art. 827. - Requirements.
A cheque shall contain:
(a) an unconditional order to pay a sum certain in money;
( h) the name of the person wlhlO is to pay (drawee);
( c) the place of payment;
( d) the date when and the place where the cheque is drawn;
( c) the signature of the per~ni< who draws the cheque (drawer).
Art. 828. - Requirements absent.
Where any of the requirements mentioned in Art. 827 is absent, the instru·
ment shall not be valid as a cheque except in the cases provided in sub-
art. (a) and (b) hereunder:
( a) unless otherwise expressly prorided, tb place mentioned under the name
of the drawee shall be deemed fG be, the place of payment. 1£ leVeral
places are mentioned under the name of -the drawee, the cheque IlbaJI be
payable at the first place mentioned;
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182 COMMERCIAL CODE
(b) in the absence uf the:>e statements, and of any other indication, the
cheque shall be parable at the place where the drawee has his principal
estahlishment.
Art. 829. - Specification of the drawee.

A cheque may only be drawn on a hanker or on an institution or establi~h
ment regarded by law as a banker.
Art. 830. - Previous cover.

( 1) A dlleque may only be issued if the drawer has funds with the drawee
and ill accordullce with an express or implicd agreement under which
thc drawer has the right to dispose of these funds by cheque. The va-
lidity of the cheque shall not he affected if these provisions are not
complied with.
(2) In case of refusal the drawer shall prove that the drawee iheld (JOver at
the time of issue of the instrument. If not, he shall guarantee it irres-
pective of whether the protest was made after the limits of time fixed.
Al't. 831. - Prohibition as to acceptance.

A cheque cannot ~je accepted. A statement of acceptance on a cheque shall
be disregarded.
Art. 832. - Certification of Ii cheque.

(1) Notwithstanding any p.rovision to the contrary, a cheque in respect
of whioh cover is available to the drawer may he certified by the
drawee if the drawer so requests.
( 2 ) The cover in respect of a certified cheque shall remain blooked in a
separate account for the benefit of the holder until the expiry of the
period of time for presentment provided in Ar:t. 855.
(3) Cel'tification is effected by the signature of the drawee on the face
of the cheque.
Art. 833. - Designation of payee.

( 1) A cheque may he made payable to;
(a) a specified perSOIl with or without the express clause "to
order"; or
(b) a specified person with a clause "not to order" or any similar
clause; or
(c) hearer.
(2) A cheque made p.ayable to a specified person with the words "or to
hearer" or any "imilar words shall he deemed to he a cheque to bearer.
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COMMERCIAL CODE 183
(3) A ohequc which docs not specify dlC payec shall he deemed to be
a cheque to hean<r.
Art. 834. - Cheque to drawer's order and cheque drawn on the drawer.
( I) A cheque may be drawn to rhe drawer's own order.
(2) A oheque may be drawn for account of a third person.
(3) A cheque drawn by a banker on himself may not be to bearer.
Al't. 835. - Provision for interest.

A cheque may be payable at 1Ihe domicile of a third party in the locality
where the drawee has his domicile or in another locality provided tlhot
such third pal'ty is a banker.
Art. 837. - Discrepancy in the sum payable.

(1) Where the amount of a cheque is expressed both in words and figures
and there is a discrepancy, tlhe amount expressed in words shall he
paid.
( 2) Where the amount of a cheque is expressed more ~han once in words
or more than once in figures and there is a discrepancy, the smaller
sum shall be paid.
Art. 838. - Signature of persons incapable of binding themselves.

Where a cheque bears, signatures of persons incapable of hil.ding them-
selves by a cheque, forged signatures or signatures of fictious per-
sons ,who signed the cheque or on whose hehruf it was signed, the obliga-
tions of the other persons who have signed it shall he valid.
Art. 839. - Signature without power to act.

Whosoever signs a dheque on behalf of a person for whom he has no power
to act shall bind himself as a party to the cheque and, if he pays, shall
have the same rights as the person for whom he purported to act. The
same rule shall apply to an agent who has exceeded bis powers.
Art. 840. - Responsibility of t.he drawer.

The drawer guarantees payment. Any prOVISIOn by whic/h, the drawer
releases himself from his guarantee shall he of no effect.
Art. 841. - Cheq.ue incomplete at issue.

If a oheque wih,ich was incomplete when issued has been completed other-
wise than in accordance witlh the agreements entered into, the non-obser-
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184 COMMERCIAL CODE
vance of suoh agreements may not be set up against the holder unless he
has acquired the clIeque in bad faith or, in acquiring it, tie has committed
a fault.
Section 2. Negotiation
Art. 842. - Negotiability.
(1) A clIeque IIIIIIlde payable to a specified person, with or wimout the
express clause "to order," may be transferred by means of endor-
sement.
(2) A cheque made payable to a specified petson in which the words
"not to order" or any similar words have been inserted, can only he
transferred according to the form and with the effects of an ordinary
assignment.
( 3) A clIeque may be endorsed even to the drawer or to any person
liable under the cheque, who may re-endorse the dheque.
Art. 843. - Elements of endorsement.
(1) An endorsement shall be wwonditional. Any condition to which it
is made subject shall be of no effect.
( 2) A partial endorsement or an endonem.ent by the draiwee shall be
null and void.
(3) An endorsement "to bearer" shall amount to an endorsement in blank..
( 4) An endorsement to the drawee has t!he effect of a receipt, unless the
drawee has several establishments and the endorsement is made in
favour of an establishment other than on which the cheque has been
drawn.
Art. 844. - Forms.
( 1) An endorsement shall be written on me cheque or on a slip affixed
thereto (allonge). It shall be signed by the endorser.
(2) The endorsement may leave the beneficiary unspecified or may consist
simply of the signature of ,the endorser (endorsement in blank.). In
the latter case the endorsement to be valid shall be written on the
back. of the cheque or on 1!he slip attached thereto (allonge).
Art. 845. - Effects.
( 1) An endorsement shall transfer all the rights arising out of a chequ«1
in particular the rights in respect of ~er as set forth in Art. 801.
( 2) Where the endorsement is in blank., the holder may:
(a) fill up tlhe blank. eimer with his own name or with the name
of SOIIDe other person; or
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COMMERCIAL CODE 185
(b) re·cndoJ'bc tho cheque in blank or to some other per!lOD.; or

(c) transfer the cheque to third pa1"l:y !Without filling up the blank
and ,without endorsing it.

(1) Unless otherwise expressly ~rovided, the endorser guarantees pay-
ment.
(2) He may prohibit any furvher endorsement; in this case he gives no
guarantee to the persons to Wlhom the clheque is subsequently endor!led.
Art. 847. - Establishment of title by the holder.

The possessor of an endorsable cheque shall he deemed to be the lawful
holder if he establishes Ihis title to the cheque through an uDint~pted
series of endorsements, even if the laet endorsement is in blank. Cancelled
endorsements shaH be disregarded. Where an endorsement in blank ill
followed by another endorsement the person who signed this last endor-
sement shaU be deemed to have acquired the cheque by 1!he en~ment
in blank.
Art. 848. - Cheque to bearer.

An endorsement on a cheque to bearer shall render the endorser liable
in accordance with the provisions l'eBarding the right of recourse but
thall not convert tlhe instrument into a cheque to order.
Art. 849. - Dispossession.

Where a person has, in any manner wJ.tsoever,,, diIpoMed of •
Clheque (whether it is a cheque to beal'eJ' or an eudanahle cheque t<t,
!Which the holder establishes his right in the manner mentioned in Am.
847), the holder into wthose possession tihe abeque ... come abdl not
surrender the cheque unless he has aeqoired it in bed faith or unleae in
acquiring it he has committed a fault.

Persons sued on a cheque cannot set ep againet tire hold« delenoee' -found-
ed on their personal relations with the drawer or with pnwioul bolder,
unless the holder in acquiring the cIJeque baa knowiDgly aeted to the
detriment of the debtor.
Art. 851. - Endorsement by attorney.
( 1) Wihere an endorsement contaJins the words "value in oo118OOOn,"
"for collection," "by attorney" or any other 8imil8tr wGlda implyiDs
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186 COMMERCIAL CODE
agency, the holder may exercise ail rights arIsmg out of thc cheque,
but hc can endorse it only in his capacity as agent.
( 2) In this case the parties liable can only set up against the holder
defences which could be set up against the endorser.
(3) The agency granted by power of attorney shall not terminate by
reason of the death of ,the principal or his becoming incapable.
Art. 852. - Endorsement after maturity or after protest.

(1) An endorsement a£ter protest or after an equivalent declaration or
af,ter the expiration of the limit of time for presentment shall have
the effect of an ordinary assignment.
(2) Unless the contrary is woved, an undated endorsement i.s deemed to
have been placed on the cheque prior to the protest or equivalent dec.
laration or prior Ito ~he expiration of the limit of time referred to in
su.b-art. (1).
Section 3. Acceptance for Honour (Aval)

Art. 853. - General provisions applicable.
The provsions of Art. 766-768 of this Code relating to acceptance for hon.
our sball apply to cheques.
Section 4. Presenbfient and payment

Art. 854. - Maturity.
A cheque is MJ'able lilt sight.
Art. 855. - Presentment for payment.
A cheque shall be presented for payment within six months of the datc
thereof, regardless of wihllm the cheque was issued.
Art. 856. - Difference in calend4rs.
Where a cheque is drawn in one place and is payaible in another having a
diHerent calendar, the day of issue shall be construed as being the equiv.
alent day of ,1Ihie calendar of the place of payment.
Art. 857. - Stopping payment of c.heq,ue.
The stopping of the payment of a dheque by the drawer is sufficient autho.
rity for a bank to refuse payment.
Art. 858. - Death of drawer after issue of a cheque.
Nedther the death of the drawer nor his incapacity taking place after tlhe is·
lue of the cheque shiallihave any effect as regards tihe cheque.
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COMMERCIAL CODE 187
Art. 859. - Receipts. Partiul payment.

(I) The drawee who pays a cheque may l·c(!uire that it be given to him
receipted by the holder.
(2) The holder may not refuse partial payment.
(3) Where ~he cover is less than the amount of the cheque, the holder
may require payment up to the amount of the cover.
(4) In case of purtial payment, the drawee may require that the partial
payment be mentioned on the cheque and a reciept given to him.
(5) Partial pnyments on the amount of a cheque shall discharge~he draw-
er and endorsers.
( 6) The holder shall pro test the cheque for the remainder.
Art. 860. - Verification of endorsements.

The drawee \\1110 pays an endorsable cheque shall not be hound to verify
the signature of the endorsers and shall only verify the signature of the
drawer and of the last endorsee.
Art. 861. - Discharge of the drawee.

A drawee who in the absence of objection pay a cheque in good faith and
in accordance wi~h normal business pratice shall be deemed to be validly
discharged.
Art. 862. - Payment in a foreign c.urrency.

( 1) Where a cheque is drawn pa'yable in a currency whiClh is not that of
the place of payment, the sum p.ay~le may, within tlhe limit of time
for the presentment of the Clheque, be paid in tihe currency of the
place Qf payment according to its value on the date of payment.
Where payment has not been made on presentment, the holder may
demand that payment of the amount of the eheque in the currency of
bhe place of payment he made according to the rate on the day of
pl'esentment or day of payment.
(2) The drawer may provide that the sum payahle shall he calculated ac-
cording to a rate expressed in the cheque.
(3) The provisions of sub-art. (I) and (2) sball not apply 'WIhere the
drawer rhas provided that payment shall he made in a specified cur-
rency (stipulation for effective payment in a foreign currency).
( 4) Wlhere the amount of the cheque is specified in a currency having
the same denomination hut a different value in the country of issue
and the country of payment, reference shall he deemed to be made to
the currency of the place of payment.
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188 COMMERCIAL CODE
Section 5. Crossed cheques and cheques payable in account

Art. 863. - Crossed cheqlW. Definition.
(1) The drawer or holder of a cheque may cross it to cause the effects sct
out in Art. 864.
(2) A crossing is effected by two parallel lines drawn on the face of the
cheque. The crossing may be gcncral or special.
( 3) The crossing is general if it consists of the two lines only or if bet-
ween the lines the term "banker" or some equivalent term is inserted;
it is special if the name of a banker is written between the lines.
( 4) A general crossing ~ay be converted into a special crossing, but a
special crossing may not be converted into a general crossing.
(5) The obliteration ei~her of a crossing or of the name of the banker
shall be regarded as not having taken place.
Art. 864. - Effects.

(1) A cheque whioh is crossed gene!rally can be paid by the drawee only
to a banker or to a customer of the dra'wee.
(2) A cheque whidh is orossed specially can be paid by ,the drawer only to
tihe named banker or, where fhe latter is the drawee, to a customer of
the drawee. T,he named banker may have the oheque collected by an-
other banker.
( 3) A banker may not acquire a. crossed dheque excep,t from one of his
customers or from another banker. He may not collect it for the ac-
count of o~he, persons than t1he foregoing.
( 4) A cheque bearing contradictory or irreconciliahle special crossing may
not be paid.
Art. 865. - Crossed cheque beari.ng the words "not negotiable."

( 1) A crossed cheque may bear the words "not negotiable."
(2) Where a person takes a c1'08lled oheque which bears on it the words
"not ne~tiable" ,he shall not have and shall not be capable of giving
a better title to the cheque than that whidh the person from whom he
took it had.
Art. 866. - Liability of thie banker.

(1) A banker who does not comply with the proV'lslons of Articles 864
and 865 shall be liable for the resulting damage up to the amount of
the cheque.
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COMMERCIAL CODE 189
(2) Where a banker pays a oheque in good faith and without negligence
!he shall not be liable where the crossing has been altered, struck out
or modified contrary to law. He shall be deemed to have Imide pay-
ment to the true owner of the cheque.
( 3) A banker who receives payment of a crossed cheque for a customer's
account in a good faith and without neg-1igence shall not be liaLle
where it is shown that the customer has no right to the instrument or
that his right is subject to a disability.
(4) 'I1he crediting in advance of a customer's account with the amount of
a crossed oheque "hall not deprive the banker from enjoying the pro-
visions of this AmcIe.
Art. 867. - Cheque payable in account.

(1) 'I1be drawer or the holder of a cheque may prohibit its payment in
cash by writing transversally across llhe faee of the cheque the words
"payable in account" or any similar words.
(2) In such a ease the oheque can only be settled by the drawee by means
of book-entry (credit in account, transfer from one account to anoth-
er, set off or elearing-house settlement). Settlement by book-entry shall
amount to payment.
(3) 'I1lre deletion of the words "payable in account" shall be of no effect.
( 4) The draweewlho does not observe the foregoing provisions shall be li-
able for resulting damage as provided in Art. 866.
Section 6. Recourse for non-payment

Art. 868. - Rights 0/ the holder.
The holder may exercise ,his right of recourse against the endorsers, the
drawer and llhe other parties liable where tlhe cheque on p,resentment in
due time is not paid and the refusal to pay is evidenced:
( a) by a formal instrument (protest); or
(b) by a deelru-ation by the drawee dated and written on the cheque
and specifying the day of presentment; or
( c) by a dated declaration made by a financial institution approved
by the Government stating that the cheque has been presented in
due time and !has not been paid.
Art. 869. - Protest. Periods 0/ time.

(1) The protest or equivalent declaration shall he made before t~llC expira-
tion of the limit of time for presentment.
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19() COMMERCIAL CODE
(2) Where the cheque is presented on the last day of the limit of ,time,
lIhe protest may he drawn up or the equivalent declaration made on
the first wurImng day following.
Art. 870. - Notice.

(1) 'TIhe iholder shall give notice of non-paymerut to his endorser and to
lIhe d;rower within the four working days following the day on which
1Ihe protest is draWln up or the equivalent declaration is made or, in
the case of a provision "retour sans Lmis," the day of presentment.
(2) The pubnc officer wlho Ihas dra,wn up the protest shall inform in writ-
ting willhout delay the pel'sons bound by the cheque whose addresses
are specified on the cheque or known to the public officer drawing up
the protest, or specified by the persons .having demanded the protest.
'I1hie expenses arising out of such notice shaH be added to ~e costs of
1Ihe protest.
(3) Every endorser shall, within the two working days following the day
on whiCh he ;receives, in£orm rus endorser of the notice which he has
received, mentioning tJlre names and addresses of t!hose who have given
1lhe previous notices and so on t!h1rongh t!he series until the drawer is
,reached. 'nhe pel1iods mentioned above shall il"Un from tJhe receipt of
the preceeding notice.
( 4) Where in oooo,rdance with rtihe provis!ions of sub-art. (3) notice is giv·
en to a person w1ho has signed a cheque, the same notice Shall be giv.
en wi1lhin rJIhe same limit of time to Ms acceptor for honour.
(5) Where an enckm.er has not specified his address or has specified it in
Jln'illegible manner, it is sufficient if notice is given to the endorser
preceding him.
(6) ~ person Wlho is required to .give notice may give it in any form
wbaitsoever, even by simply ;retllirning ,1Ihe cheque.
(7) He shall show that !he has given lIlotice within the limit of time pre.
scribed. This time·limit mall he regarded as ihaving been observed if a
letter giving tihe notice has been posted within rJIhe said time.
(8) A person who does not give notice :wiItthin tlhe limit of time prescribed
above does not forfeit his ~ts. He shall be liable for the damage, if
any, caused by his negligence, but the amount of his liability mall not
exceed 1Ihe amourut of the clheqe.
Art. 871. - 'Provision "sans protet."

(I) The drawer, an endorser or 8ill acceptor for honour may, by the words
"retour sam fmis," "sans protet" or any other similair words written
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COMMERCIAL CODE 191
on tlhe instrumen,t and signed, release the holder from having a protest
drawn up Or an equiv,alent declaration made in order to exercise his
right of recourse.
(2) These words shall not release the holder from presenting the oheque
witlhin~he prescribed limit of time or from giving the requisite
words written by the drawer, the holedr has the protest drawn up or
equivalent declaration made, he shall bear the eXlpenses thereof.
(3) Where these words are written by the drawer, they shaH be effective
against all persons wlho have signed the cheque; where they are writ-
ten by a,n endorser or acceptor for !honour, they slmJl be effective
against such endorser or acceptor for honour. Where in spi,te of the
word written by the drawer, the holder has the protest drawn up or
equivalent declaration made, he shall bear the expenses thereof.'
( 4) Wlhere the words are written hy an endorser or acce~tor for honour,
the costs of the protest or equivalent declaration may be recovered
from aU the persons (who have signed the cheque.
Art. 872. - loint guarantee of persons bound by cheq:·,j,e.

(1) All ,nhe persons liable on a cheque shall be jointly ,and severally lia-
able to the ihlOlder.
(2) The holder may sue all these persons individaully or collectiveIy with-
out being compelled to observe the order in which they have become
hound.
(3) Any person signing <the ciheque who has taken it up and paid it has
the same right.
( 4) Proceedings against one of the parties liable shall be no bar to pro-
ceedings against the others, notwithstanding that such other parties
may be subsequent to the party :tiirst proceeded against.
Al1t. 873. - Extent of the right of recourse.

The holder may claim from ,the party against whom he exercises his right
of recourse:
(a) the unpaid amount of IJIhe cheque;
(b) interest at nhe legal rate as from 1Ihe da,te of presentment;
( c) tlhe expenses of the Rrotest or equivalent declaration, and of tJhe noti-
ces given and any other expenses;
(d) a commission not exceeding one third per cent.
Art. 874. - Extent of the right of recourse of a party who takes up and pays.
A pa.!'ty who takes up and pays a cheque can recover from nhe parties liable
to him:
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COMMERCIAL CODE
( a) the entire sum wddoh be has paid;

(b) interest on the said sum calculated at the legal rate, as from the
day on WIhWh ibe made payment;
(c) any expenses IWihidh Ire has incurred;
(d) a OOIIlJIIi8IIicm not exceeding two per mille.
Art. 875. - Right to surrender of cheque, protest and receipt acco.unt.
(1) Every party liable against whom a right of recou,rse is or may be ex-
ercised may require against plliYiJDent tlbiat the dheque be surrendered
to him witlh ifhe protest or equivalel1Jt declaration andl a receipt.
(2) Every endorser wiho has taken up and paid a dheque m~ cancel his
own endorsement amd those of suhsequenrt endorsers.
Art. 876. - Force majeure.

(1) Wihere the presentment of tlhe cheque or the draWling up of the protest
or <the marking of the eqUlivalent declaration wilihln the Wescribed li-
mits of time is absolutely prevented by force majeure (legal prohibi-
tion by any State or other cases of force majeure), these limits of time
aWl be extended.
(2) 'I1he holder shiall give notice without delay of the case of force maje-
ure to his endo~ and make a dated and signed declaraliicm of this
notice, on <the oheque or on a slip affixed thereto (allonge); in other
respects, the provisions of Art. 870 shall apply.
(3) Where force majeure has terminated the holder shall withom delay
present the oheque for payment and, where necessaa-y, have a protest
drawn up or an equivalent declaration made.
( 4) Where. force majeure continues to operate beyond fifteen days after the
date on which the holder, even before ·the expiration of the time li-
mit for presenrtment, has given notice of force majeure to his endOl'Ser,
recourse may be exercised amd neitiher .presentment nor a protest nor
an equiV'8l!enrt declaration shall be necessany.
(5) Facts wihioh are purely personal to ,the holder or to the person en-
trusted with the presentment of ,tihe dheque or the drawing up of the
protest or the ID1I1Ilcing of an equivalent declaration shall not be deem-
ed to eonst~tute C8!lIeS of force majeure.
Section 7. Parts of a Set

Art. 877. - Right to several parts.
With the exception of bearer cheques, any cheque issued in one country
and payable in another, or issued and payable in the same country, may be
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COMMERCIAL CODE 193
drawn in a set of identical part. Where a cheque is in a set of parts, each part
shall be numbered in the body of the instrument, or eaoh part shall be
deemed to be a separate oheque.
Art. 873. - Relation between parts of a set.

( 1) Payment made on one part operates as a discharge, notwithstanding
~hat there is no provision that such payment shall render the other
parts of no effeot.
(2) An endorser who has negotiated parts of different persons and the en-
dorsers subsequent to him shall be liable on all the parts heari.ng their
signatures, whioh have not been surrendered.
Section 8. Alterations
Art. 879.- Extent of the obligations of signatories.

In case of alterration of tihe text of a cheque, parties who have signed sub-
sequent to the alteration shall he bound according to the terms of the alter-
ed text; parties who have signed before the alteration shall be hound> ac-
cording to the terms of the original text.
Art. 880. - Alteration of crossed cheque.
(1) In the case of a crossed oheque, any alteration of the crossing made
without authorisation shall invalidate the cheque except as regards
any person who has himself made or oonsented to the alteration, and
towards later endorsers.
(2) Where the alteration is not apparent, the lawful iholder may rely on
the cheque as if it had not been altered and require payment as origin-
al1y provided.
Section 9. Limitation of actions
Art. 881. - Periods of time.

( 1) Actions of recourse by the holder against the endorsers, the drawer
and the other parties liable shall be barred after six months from the
expiration of the limit of time for presentment.
(2) Actions of recourse by the different parties liable for the payment of
a cheque against otlh~r suoh parties shall he barred after six months
from the day on ,whicJh the party liable has paid the cheque or the day
on which he was sued 1lIl1Creon.
(3) Aelions by the holder of the cheque against tJle drawee shall be barred
after three years from the expiry of the time limit for presentment.
14*
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196 COMMERCIAL CODE
( 4) Limitation sba1l run, in the case onegal proceedings, from the date of
1!he conclusion of 1Ih.e last proceedings.
(5) Limitaliion shall not apply where judgement has been pronounced or
the debt has been acknowledged by separate act.
Art. 882. - Interruption.
(1) 'I1he pel1iod of 1imitati()n shall he interrupted hy hringing of an aotion,
by notice being given of~hird party action or by lodging a claim in
bankruptcy.
(2) lnterruption of the period of limitation Slmll be effective against the
person in respect of whom the act interrupting such period was per_
formed.
(3) Where1lhe period of llinitation is interrupted, a further period of the
lI8Dle duration shall begin to run.

Art. 883. - Time limits. Holidays.
(1) 'I1hie presentment or protest of a cheque may only take place on a
working day.
(2) Where the last day of the limit of time prescribed by law for pedorm-
ing any act relating to a cheque, and partioularly for presentment or
for the drawing up of a protest of the malcing of an equivalent decla-
ration, is a public holiday, the limit of time shiaJl he extended until the
first !Working day whiCh follows the expira,tion of that time. Holid8JYS
wibidh ooour during 1Ihe period shall he included in calculamng limits
of time.
(3) Days on which, under the provisions of the laws in force, no paymenJt
can he required nor any protest drawn up, shall be deemed to be pub-
lic holidays.
Art. 884. - Calcuu,tion of time limits.

Legal or contractual limits of time shall not include the day on whioh the
period hegins to run.
Art. 885. - Prohibition of days of grace.
No day of grace may be granted.
Art. 886. - Reference to provisions reu,ting to bills of exchange.

The follow1i.ng provisions relating to bills of eX!\Jhange apply to dheques
lD 80 far as they are not inconsistent !Wi1lh the provisions of this Chapter:
Alit. 781-785 and 788 (protest), Art. 798 (sequestration), Art. 799 (pro-
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(JOMMERCIAL 'CoBB 195
ceedings for unlatwful enridhment), Art. 800 (reeervatiott· of c:ia8_ :(lroce-

edWgs) and Art. 801 (cover).
Chapter 5. Travellers Cheques

( 1) A travellers cheque is a document handed hy a hanker t6 hk client
under which an amount specified in tIhe dooument iii payablew the
payee either at a hranch of ·the bank. issuing 1lhe document' or at any
other bank in co~dence.
( 2) Regulations may detennine tJh~ banks authorised w issue: travellms
cheques.
Art. 888. - Particulars.
No travellers oheque shall he valid unless it oonf.ali.ns tihiefollo.w.in.g p!¥"li-
culars:
( 1) the words "travellers cheque;"
( 2) the name and signature of the bamker issuing the oheque;
(3) the name of 1Jhe payee;
( 4) the promise to pay a specified am.(JIl1lt;
(5) the words "to order" or "not negotiable;"
( 6) the place and date of issue;
(7) the period during which the cheque shall be valid;' provided tJbdt such
period shall not exceed one year.
Art. 889. - Place and conditions of payment.
( 1) Tihe place where lihre cheque will be paid may be speoified in tlIe
cheque or in any other document handed to the pa,.,.,.
(2) The conditions on which the payee may demand payment may be
specified in the cheque or [n aIliY o1lher document handed to tIIre ~.
Art. 890. - Provisions regarding cheques not applicable.
( 1) The provisions relating to cheques shall not apply to travellers
Cheques.
(2) Nothing in sub-art. (1) slmJl affect 1!he provisions of tdre Penal Code
relating to false or falsified dhieques.
Chapter 6. Publicity of protest

Art. 891. - Duty to send list of protests.
Public officials entitled to draw up protests in respeot of aegot:idle
instruments shall every month supply !lJhe registrw of·dIe court within
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196 COMMERCIAL CODE
whose jurisdiction tllhey act willh a list of all protests drawn up during the
preceding month in respect of bills of exchange accepted and not paid,
and unpaidwomissory notes or cheques.
Art. 892. - Duties of registrar.
The registrar shaH keep up to date a nominal roY for every debtor
shoiwing:
( 1) the date of the protest;
( 2) the name, profession and domicile of tIDe payee or drawer;
(3) tihe name or firm-nrone, profession and domicile of the maker of a
promissory note, or drawer of a cheque or acceptor of a bill of
exahange;
(4) the date of maturity, if any;
(5) the value of t!he instrument;
(6) Ihe result of the protest.
Art. 893. - Copies.
After one month and witI»n IlW\1 years from the protest, allly person InIIIY
at his 0WtIl expense require t!he ,registrar ,to deliver to hlim a copy of ,the
roll WOvided in ~:te preceding Amicle.
Art. 394. - Cancellation.
( 1) Where t!he debtor deposits against receipt tIhe instrument or the
protest or a receipt !loowing payment of a <lheque, the registrar shall,
at1lhe debtor's ~, strike off tihe notice of protest entered lin
the nominal roll concerning that debtor.
(2) The registrar's liability in respect of documents deposited "hall cease
aftertlbree yea,rs from ttbe protest.
Art. 895. - Publication not permitted
Publication lin any form of lists and rolls prepared in accordance with
the provisions of lIhis Ohiapter tis pro!hJiibited under pain of damages.
TITLE m. BANKING TRANSACTIONS

Chapter 1. Bank Deposits
Section 1. Deposit of funds
Art. 896.- Nature of the contract.
The contract of deposilt of funds renders the bank owner of the funds
deposited, irrespective of the mode of deposit. 'l1he bank ~ dispose of
these funds :in respect of its professional activity, subject to their repay-
ment under the conditions provided in tihe contract:
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COMMERCIAL CODE 197
Provided that the bank shall not acquire tIhe title to nor ,1Ihe . t to
dispose of coins or otIher individual monetary tokens in :respect of which
there is a provision llruat truey shall he refunded in kind.
Art. 897. - Deposit account.

( 1) The contract of deposit of fwuls results in the opening of an account
in wihich the bank enters by way of credit and debit all transactions
caIlried out wilih tiIre depositor, or on litis behalf willh thinl partics.
( 2) Transactions wihidb lIhe pMlties have agreed to exclude shall not he
entered in the account.
Art. 898. - Forms of deposit.
( 1) Unless otherwise agreed, a deposit of ftmds shaIil he at sight and 1Ihe
iholder of the account may dispose at any time of the Wlhole or pa!'t
of the balance.
(2) J:he . t of disposal as defined in sllilhart. (1) may he made subjoot
to notice or the expiJry of a fixed period.
Art. 899. - No overdrafts.

A contract of deposit of funds shall as of ri'ght give no right to an over-
draft.
Art. 900. - Statements of account.

A copy of the account shall be sent to the depoSlitor once each year or more
frequently, where customary or agreed, showing the balance to he carried
forward.
Art. 9OI. - Place of transactions.
Unless otherwise ~, deposits and drawings shall he effected at the office
of 1Ihe bank lWIhere ,the account was opened.
Art. 902. - Several accounts.

Wihere more than one account has been opened by the S8IIDe person, at a
hank or several branches of 1Ihe eoame bank, each aICOOtmt shalJ, unless other-
wise agreed, opeMte sep¥,ately f·rom the others.
Section 2. Bank Transfers

( 1) A hank transfer is a transaction by whidh a bank debi4s the account of
a depolitor, upon ihis written instructions, and credits by its entry an-
other account with the IllUDe amoUllit.
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198 COMM&BCIAL CODE
( 2 ) The conditions of the issue of transfer ord.tmlshall be as agreed by the

parties. Tranfers to bearer shall not be pel'lDlitted.
( 3) Where the beneficiary under ,the transfer is required to carry the sum
to die credit of a third party, the name of the third party shall appear
in the tNlnsfer order.
Art. 904. - Types of transfer.

A 'transfer may be internal or external depending on whetiher the account
to be debited and the account to be credited have been opened at the same
branch of the bank or at diff~ent branches.
Art. 905. - Sums for which the transfer order is given.

A transfer order is valid either in respect of sums already entered in the
account of Ilhe person who orders transfer or in respect of sums to be enter-
ed therein ,within a period determined in advance in aw:eement with the
bank.
Art. 906. - Transfer of title. Canr~Uation of transfer order.

(1) The beneficiary unuer a transfer obtains title to the sum to' be trans·
fm-red at tile time when the bank debits the account of 'the person
disolainter of tihe
Art. 907. -
.t
who orders transfer.
(2) A transfer order may be cancelled until tllmt time.
(3) The issue of a tranefer otder as. provided in Art. 907 (1) involves final
Special provisions.
of oancellatiQll.
(1) It may be provided that transfer orders shall not be notified direci!:ly
to the bank hut may be presented to it by the beneficiary himself.
(2) It may he provided that certain transfers shall not be entered upon
receipt of the direct orders of the person issuing tihe order or ,the pre-
sentation of the instrument of transfer, but only at tihe end of the day
together with all transfer orders coming within the same catego11J re-
ceived during that day.
Art. !908. - Insufficient cover.
Where there is not sufficient cover, Ilhe bank may refuse transfer.
Art. 909. - Subsistence of causal debt.
The debt 'for tllil settlement of whioh. a transfer order is issued shall subsist
together with all securities and collateral until the account of the benefid·
ary is effectively credited with tihe amount of the transfer.
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Art. 910. - Opposition to transfer order.
The person ordering transfer may validly oppose the execution of a tranSfer
order, notwithstanding that it bas been evidenced by an inIItrumeDt handed
to the beneficiary, from the date of 8 judgment declariDg the ~
of the beneficiary or granting him the benefit of a oompoDtion with
creditors.
Art. 911. - Transfer orders presented before tJJ.e declartrtion of t.he iHrnJc.
ruptcy of the person issuing the order.
A bank may validLy debit the account of dte perIOn iMui.ng the order
with all transfers presented before a judgment declari.ng his bankruptcy
or granting him the benefit of a composition with creditors.
Section 3. Deposit of Securities

Art. 912. - Prohibition of bank handling securities on its own behalf.
Unless otherwise agreed in writing a bank may only handle aeeurities

and exercise tJlre riglhts relating thereto eXIC1wiveiy on behalf of lIhe
depositor.
Art. 913 - Duty to provide Cl'/'stody.
( 1) A hank shall ensure the custody of the securities and act in relation
thereto with .the due care required of a public bailee under the civil
law.
(2) Securities may only be surrendered under a transaction requiring
suob surrender.
Art. 914. - Collection of yields of securities and collateral ~.

(1) Unless otherwise agreed a bank shall eoIleet the amount of int__ •
dividends, capital repayments, IIIDlOrdlation and any oIher eoti~
ments arising under the securities deposj,ted. as lOOn as they can be
claimed.
(2) Sums collected shall be placed at the dispoeal 01 the depoeitor, in
particular by entry to the credit of his deposit account.
( 3) A bank shall collect free scrip issues and join tIhem to the depolit.
( 4) It shaH cany out transaotioDS for the safe-keeping of the riFt-
arising out of the securities. such as regrouping, embange, renewal
of coupon sheets and 8I!amping.
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Art. 915 - Notification to depositor.

(1) Tnmsactiona which involve the exercise of an option by the owner
of the securities shall he notified to the depositor by registered letter,
~ COIIts being borne by him.
(2) Where the depositor does not give his instructions in due time, the
bank shall· transact, on behalf of the depositor, the rights which he
has not exercised.
Art. 916. - DUty 'to re&titute.
(1) A bank aball restore secu,rities at any time, upon the demand of the
depositor, and willhin the periods of time provided in .the conditions
of CUItody and subject to any ripots of retention which the bank may
he entitled ~ claim.
(2) Restitution aball he made at the place where the deposit was made.
It aball relate to ,the titles deposited, unless restitution of different
tides has been agreed by the parties or is permitted hy IIllW.
Art. 917. - Persons to whom. teatitution is to be made.
( 1) RedItutioIi shall only he made to the depositor or those having
rights from him or to ,the person appointed by him or them, even
'W1here the sec~tIies i.n.dWate 1lhat they are the property of third
panics.
(2) Securities in a specific name ;registered in the names of a usufruc-
tuary aDd a bare owner may he valid1Iy !handed to the hare owner
upon prodUction of proof of the death of the usufructuary.
Art. 9.18. - Claims regarding securities.

The hank shall inform the depositor of any claim ;regarding deposited
securities which has heen made in court and of which the hank has notice.
Chapter 2. Hiring of Safes

Art. 919. - Object of contract.
Th.e contract of hire of a safe has as its object to place at the disposal of
the hirer a safe or compartment of a safe for a specified period of time
on .payme~t of a rent.
An. 920. - Obligations of tM bank.
( 1) The hank aball take all necessary measures to ensure the upkeep and
custody of !l8fes.
(2) In the event of any potential risk to the security of the safes, the
hank shall take all necessary steps to enable the hirers to empty their
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COMMERCIAL CODE 201
safes before the risk materiaIises, even outside working days and
hours of business. The bank is not bound to give individual notices
to ,the hirers.
Art. 921. - Access to safes. Keys.
(1) The hank shan only permit the hirer or his agent to have access
to a safe.
(2) The key of a safe shan remain the property of !!he bank.
Art. 922. - Obligations of hirer.
Where the hirer places in his safe anything ,whioh is dangerous in itself,
the bank may f~thwith cancel the contract of hire.
Art. 923. - Termination for failure to pay rent.
(1) In default of payment of the rent for any single 'term, the contract
shall terminate as of right one month after the hank has sent notice
by registered letter and the rent has not heen paid. At the expiry
of this period the bank shall take possession of the Safe after calling
upon the hirer to be present at the safe on a day and time fixed.
(2) Where a ihirer so called upon does not present himself or refuses to
give up his safe open with its contents removed and to return the
key giving the combination, the said safe shall be fo,rced in the
presence of a court official who shall draw up a descriptive report
whioh shall constitute evidence as regards all interested parties.
Art. 924. - Execution levied on a IIO.fe.
Execution may be levied on a safe in accordance with the provisions of
the Civil Procedure Code.
Chapter 3. Contracts for current accounts

Section 1. DeJinition, conditions and duration of current accounts
( 1) A contraot for a current account is a contraot wtbereby named cor·
respondents agree to enter in an account, by reciprocal and simul-
taneous remittances, debts arising out of transactiODS between them
and thus -to substitute for individual and successive settlements of
these transactions a single settlement to be carried to the sole balance
of -the aooount at its closure.
(2) Where it has been agreed that the remittanees of one party shall
only begin when the remittances of the other have terminated, or
where an examination of the account so indicates, the rules govern-
ing current accounts shall not apply.
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202 COMMERCIAL CODE
Art. 926. Debt8 brougl~t illto acco,'lnt.
( 1) All debts arising out of the business relations between the correspon-
dents and which are not guaranteed. by security by operation of law
or under agreement are the subject of remittances into current
account, unless it ,has been agreed that certain of them shall be
excluded by general or particular stip:ulations.
(2) Debts guaranteed by security under agreement, accorded by one-
correspondent or by a third party, may be entered in current account
under a special and formal agreement between the interested parties.
Art. 927. - Debts expressed in different currencies or dealing with non-fungible

th1ings.
(I) Where given debts deal either with sums of money expresesd in diHe-
rent currencies or with non-fungible things, the correspondents may
enter them in current account provided that:
( a) they enter the remittances relating thereto under sepajl'ate heads
within which fungibility is required; and
(b) it is provided that the current account shall retain its unity, despite
the material division into sevel"lll heads.
(2) In this case, all the balances under the different heads must be capable
of being converted, in order to be m.ersed 80 as to !Wow a 101e baiaDce
at a time fixed by the correspondents and in no ease later 1ihan the
closure of ,the current account.
Art. 928. - Duration of current. account.

( 1) A current account which has been opened without specifying its dura-
tion may be closed at any time IiI a correspondent 80 de&irea, eabject
to the time limits for notice provided or, where not provided, cuetomary.
( 2) A current account which has been opeMd for a fixed period shall be
closed at the expiry of the term or earlier by agreement between 1Ihe
correspondents.
( 3) A current account shan be closed in any event by the death of one or
otl:aer of the correspondents, or by his beoomiDg IegaIly incapable or
bankrupt.
Art. 929. - Effects of closure of account.

The closure of a current account converts 1Jhe statements at tihe date of
closure into a balance and this balance is thereupon at call unl_ the cor-
r,
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COMMERCIAL CODE 203
respondents have otherwise agreed or cert'llin transactions gtVIng rise to

remittances and not completed are of such nature as to modify the balance.
Section 2. Effects of current accounts

Art. 930. - Disposal of the credit balance in the books.
Unless othelTWise agreed, either correspondent may freely dispose, at any
time, of the credit balance shown in his favour.
Art. 931. - Extinction or reduc;tion of debt.
Where a debt which has been the subject of a remittance mto cunent account
ceases to exist or is reduced by reason of an act arising after tIhe entry of
the remittance in <the account, <the corresponding ite~ in the account shall
be struck out or written down to the same extent and the account according.
lyamended.
Art. 932. - Carry forward of the product of security.
(1) Unless OIIherwise provided in the agreement made under Art. 926 (2),
the product of the security originally relating to a debt entered in
current account shall Pc carried f~ up to the amount of the
contingent balance of the account, without regard to clumges which
mi~t arise in ,the books until closure.
( 2) Such carny forward may only be set up against Ilhlrd parmes if it has
been published in accordance with the rules of civil law for the
preservation of the said security.
Al'It. 933. - Prohibition of appropriation of one item to anotoor.
No item in 'a current account may be appropriated to an item on the other
side.
Art. 934. - ' Ru1Jes regarding prescription and interest.
( 1) Debts entered in current account shIaJl not be subject to the rules
applying thereto in respect of presonption and in1ere8t.
(2) 'I1he provisions of civil law shall apply toprescrip1lion of the balance
after closure.
(3) Remittances shallbea,r in1erest at "lhe rate provided by the correspon'
dents, or i:n the ahsence of such provision, at <the rate fixed under the
Civil Code.
( 4) Unless oIiherwise agreed and untiJ closure of the, account this interest
shall itself bear interest from, the day .pf its remi.Mmlce into account,
provided that lIMs remittance shall be made in accordance with the
intervals of time fixed under the Civil Code.
,.
I
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204 COMMERCIAL CODE
Art. 935. - Different rales 0/ interest on credit and debit items.

Whenever the rate of interest prol'ided in a current account is not the same
for credit and debit items, interest shan be chm-ged at the time of each
remittance by calcullllling the interest produced from the date of tfhe previous
remittance on the balance following such remittance, and by adding this
interest to that hav,ing already run on the same side, unotil Bet off against
interest on the other side at the ,time of remittance of interest into the
account.
Art. 936. - Security established during suspected period may not be set up
against the estate.
( 1) Wlbere one of the cot;respondents becomes bankrupt, any security under
agreement on ibis property established during the period provided in
Art. 1029 of this Code, by _y of guarantee of the contingent debit
balance of the current aClClO1l.Dt, may ,not be set up against ,the estate
insofar as, at the time the said security was established, the current
account already showed tihat correepondent 86 a' debtor.
(2) This security may be set up agai:DSt the estate as regards the surplus,
if any, of the debit balance of the account on the day of closure over
this debit position, subject to the provisions of ht. 1030 of this Code,
if applicable.
Art. 937. - Sequestration 0/ current account.
(1) The sequestration of a ourrent account may be effected at any time
on the credit balance, in acoordance with the provisions of the Civil
P,rocedure Code.
(2) Such sequestration shall not prejudice suah riBhts as the debtor's
correspondent may enjOy :wi1lh respect to this credit under an agree·
ment by wmch the debtor bas relIinquished the free disposal at any
time of this credit balance.
Section 3. Effects of bankruptcy of remitter where commercial

instruments are discounteCl aDd entered in current account
Art. 938. - Contra trfI1Uler 01 instrumenll.
( 1) Where the yield on discount of oommeroial instru.Iwmts !has been entered
in current account and the instruments have DOt been paid on prelent.
ment, the receiver of IIhe instrumeDts may, even ~ the remiUer is
dec1arod bankrupt, contra tnDIIfer Uaese instrumeDts, that is to say
carry to the debit of the aocouot a sum equal to the DOOJiDal amount
of the mstirUmeDIIs together with the costs provided in Alt. 791.
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(2) In tthe event of the bankiruptcy of die remitter, contra transfer is only
permitted in respect of irimuments unpaid at the da~ of maturity;
any agreement to the oonfa'ary shan he ~rded.
Ant. 939. - Disposal of contra transferred instruments.
('1' Where, after contra transfer, the CUr,reJ1t aecount shows a credit
balance in favour of the remitter who ~ become bankrupt, lIhe
receiver shlllll restore the contra transfe;rred instruments.
(2) Where, after contra transfer, tlie current acoou.nt shows a debit
balance to the remitter who has become bankru.pt, «te receiver may
retain the instruments, inrespective of the date of maturity.
(3) The receiver may, in the case provided in sub-art. (2), -aooumulate
the sums collected hy him from persons jointly IIlJd severally liable,
as a result of his exercise of IIhe . t s and securities aris.mg out of
the contra transferred instruments, with the dividend in -the bank·
ruptcy collected by him for ,the balance owing to his IIICOOUDil drawu
up after contra ItMnsfer, subject however to 1lhe provisions of Art. 940.
Ant. 940. - Extent of right of receiver.
(1) '.l1he receiver may in no ceee take as a result of the accumulation
provided m Art. 939 (3) a total amount 1VflB-
1lhan tIhe debit
halance of the current accotmt after contra transfer, his ri~t to a
dividend in Ilhe bankruptcy of the remitter being thereby as of right
reduced.
(2) Where 1Ihe sta.tus of ,the account is suah that on the date of hank·
ruptcy bre is already a dehit halance to tihe remitter before contra
account before contra transfer, his .t

transfer of the instruments, the receiver may not take by way of
accumulllllion a total amount ~r than the sum contra transferred
together with the dividend caloula.ted on the debit balance of the
to a dividend in lIhe bank·
ruptcy of the remitter being Ilhereby as of right reduced.
Chapter 4. Discount
( 1) Discount is an agreement whereby a hanker undertakes to pay in
advance to the holder the value of commercial instruments or other
negotiable securities thaving a definite time of payment, which ,the
holder assigns to the banker subject to repayment of Ilheir value if
not paid by ,the person principally liable.
(2) This transaction gives to ,the banker the right to charge interest and
further an endorsing or other commission.
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206 COMMERCIAL CODE
( 3) A special a,greement may provide for a fixed discount.

Art. 942. - Calmlation of interest and commission.
(1) Interest shall he calculated on the basis of the time remaining until
maturity of the instruments, or for a shorter period in the case of
so-called pawning transactions or others under which there is reim-
bursement before maturity by the beneficiary under the discount.
(2) Conunission shall be calculated on the basis of the value of the
instruments.
(3) A minimum amount of interest and of oonunission may be fixed.
Art. 943. - Duties 01 beneficiary.
( 1) The beneficiary under a diScount shall reimburse to the banker the
nominal value of unpaid instruments or securities.
(2) Instruments accepted for discount for a pal'tial amount only shall
be ,reimbursed up to that amount.
Art. 944. - Rights of banker.
(1) The banker may, with regard to the principal debtors under an
instrument, the beneficiary under the discount and other persons
jointly liable, exereise all the rights arising out of the instruments
discounted by him.
(2) The banker has in addition, as regards the beneficiary under the
discount, a separte right to reimbursement of sums placed at ,the
disposal of the beneficiary, togethe,r with interest and commission.
This ~t may be exercised up to the amouIIII: of tIhe unpaid instru-
ments, irrespective of the reasons for non-payment, and, in the case
of a current account between the parties, in accordance with the pro-
visions of Art. 938-940.
Chapter 5. Credit Transactions

Section 1. Open Credits
Art. 945. - Object.
(1) An Open credit has as its object to place directly or indirectly at the
disposal of the beneficiary means of payment upto a certain sum
of money.
(2) An open credit may be granted for a limited or unlimited period.
An unlimned credit may be cancelled at any time by the banker.
Art. 946. - Cancellation.
An OPPl1 credit may bc' cancelled by the dcath or incapacity of the
heueficiary or suspension of payment, even where not esta·blished by
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COMMERCIAL CODE 207.
judgment, or on account of gross negligence in the use of the credit

granted.
Section 2. Advances on Securities

An advance on securities is a transaction by which a banker grants a
credit against securities belonging to the benefioiary undertlhe credit or
to a tlhiird party who has l4Weed to the pledge.
Art. 948. - Forms.

(1) An advanee on securities shall be in writing or it shall be null and
void.
(2) It shall contain:
(a) the designation of the securities deposited; and
(b) the name and domicile of the owner or other beneficiary under
the credit; and
( c) the amount of and conditions under whioh !!he credit is graded.
Art. 949. - Selling of securities.

Where~he borrower does not fulfil his undertaking to maintain the
percentage of margin or fails to repay-the loan in accordance with the
terms of the contraot, 1Jhe banker may sell the securities.
Section 3. Pledge of Securities

Art. 950. - Principle.
Any transferable securities, irrespective of their form, may be pledged as
provided in this Seotion.
Art. 951. - Obligations guaranteed.

( 1) Transferable securi.ties may be pledged to guarantee the execution
of any obligation even where, in the case of sums of money, the
amount due is not specified.
(2) The provisions of sub-art. (1) shall apply to a guarantee of obliga.
tions which are only contingent at the time of setting up of the pledge.
Art. 952. - Forms.

(1) A guaranteed creditor who already holds the securities involved in
some other manner shall be deemed to be put in possession as
pledgee from the date of the contract.
(2) Where the secumies pledged are held by a third party already in
possession in sonle other manner, the guaranteed creditor shall be
deemed to be in possession from the time when the third party pos.
\
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208
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COMMERCIAl- CODE
sessor has placed the said

shall open on first call.
secu~~es
\
in a special account whioh he
( 3) In the case of securities in respect of which there is a ce:rttifica,te in

a specific name constituting an entry in the register of the company
issuing the securities, the guaranteed creditor shall be deemed to he
in possesion from the time when the transfer by way of guarantee
has been entered.
Art. 953. - Undertakings of pledger.

Where the pledger is not personally responsilbIe for the obligation guaran-
teed, he shall only be bound as a material surety.
Art. 954. - Security set up by bare owner.
The security set up by a bare owner on securities subject to a usufruct
shall extend as of right to the full title at the termination of the usufruct.
Art. 955. - Rights and obligations of holder of securities.
The hold~r of pledged securmes has the rights and is subject to the
obligations set forth in Art. 897·900.
Art. 956. - Status of a third party possessor.
A third party agreed upon as possesso,r by way of pledge shall be deemed
to have relinquished any right of detainer to his advantage in respect of
aU earlier grounds unless he has expressly reserved thereon in giving his
acceptance.
Art. 957. - Preferred rights of pledgee.
The preferred rights of the pledgee subsist at the date thereof, both as
between the parties and as regards third parties, on the proceeds, amounts
reimbursed or inst,ruments of replacement of the securities pledged.
Art. 958. - Failure of pledger to meet his obligations.
Where the pledger fails to meet his obligations, the debt guaranteed shall
beoome due immediately, unless new securities of an equivalent amount
are produced without delay to replace the secuIity which does no longer
exist or is imperilled.
Section 4. Documentary Credits

Art. 959. - Definitions.
( 1) A dooumentary credit is a credit opened by a bank providing for
payment against presentation of specified documents to the open-
ing bank or to its agent. Goods represented by such docUments may
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COMMERCIAL CODE 209
be held and disposed of by the bank in accordance with the terms

agreed between the bank and its principal.
( 2) A documentary credit is independenJt of any contract of we on
whioh it may be based and to which a hank is not a party.
Art. 960. - Obligations of the bank.
The bank opening the oredit shall honour the conditions as to payment,
acceptance, discount or negotiation.
Art. 961. - Revocable and irrevocable credits.
A documentary credit may be revocable or irrevocable. Unless otherwise
provided, a credit is deemed to he revocable even if it has been opened for
a specific period.
Art. 962. - Effects of revocable credit.
Revocable credits are not legally binding undertakings between banks and
beneficiaries. Such credits may be modified or cancelled at any time
without notice to the beneficiary. When a credit of this nature has been
transmitted to a branch, or to another bank, its modification or cancella.
tion can take effect only lipon receipt of notice thereof by such branch
or other bank, prior to payment or negotiation, or the acceptance of
drawing thereunder by such or other bank.
Art. 963. - Effects of irrevocable credit.
Irrevocable credits are definite undertakings by an iIsuing bank and
constitute the engagement of that bank to the beneficiary or, as the cue
may he, to the beneficiary and bona fide hoIdet'll of drafts drawn there-
under that the provisions for payment, acceptance or negotiation con.
tained in the credit,will be duly fulfilled provided that the documents
or, as tihe case may he, the documents and the drafts drawn thereunder
comply with the terms and conditions of the credit.
Art. 964. - Confirmqtion of irrevocable credit.
( 1) When the issuing bank instructs another bank to confirm ita irre-
vocable credit and when the latter does so, the confirmation implies a
definite undertaking of the confirming bank as from the date on
which it gives confirmation.
( 2) In case of credits available by negotiation of drafts, the confirma·
tion implies only the undertaking of the confirming bank to nego-
tiate drafts without recourse to drawer.
( 3) Such JIlldertakings can neither be m.oddfied nor cancelled without the
agreement of all persons concerned.
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210 COMMERCIAL CODE
(4) When a correspondent is instructed by cable or telegram to notify

a letter of credit, the issuing bank must send the original of the said
letter of credit to the said corresp.ondent if it is intended to put the
document itself into circulation. If any other procedure were follo-
wed, the issuing bank would be responsible for all consequences
which may result therefrom.
Art. 965. - Obligation to verify documents.
'I1he bank Bohall satisfy itself that the documets conform striotly to 11he
instructions contained in the credit. When it refuses documents the bank
shall notify the presenter within as short a time as possible and inform
ibim of the errors found.
Art. 966. - Liability of the bank.
The bank. shall not incur any liability where the documents are on their
face in conformity with the instructions received. It shall not incur any
obHgation in relation to the goods which are the subject of the credit
opened.
Art. 967. - Transfer and division of credit.
A documentary credit is only transferable or divisible where a bank is
authorised to p.ay in whole or in part to one or more third parties on the
instructions of the first beneficiary. A credit is only transferable on the
express order of the bank opening the credit. It is 800 transferable once
only, unless otherwise provided.
BOOK V. BANKRUPTCY ANn SCHEMES OF ARRANGEMENT

Art. 968. - Scope of application.
(1) The provisions of ,this Book shall apply to any trader withln the
meaning of Art. 5 of this Code and to any commercial business orga-
nisation within the meaining of Art. 10 of this Code with the excep-
tion of joint ventures. i
(2) Without prejudice to such provisions as are applicable to physical

perSoOns only or to the provisions of Title IV applicable to business
organisations only, the provisions of Titles I, II, III and V of this
Book shall apply to traders and commercial business organisations.
Art. 969. - Conditions of bankrupecy.

Any trader who !has suspended payments and has been declared bankrupt
shall be deemed to be bankrupt.
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COMMERCIAL CODE 211
Art. 970. - Bankruptcy of fact.

(1) Where no judgment in bankruptcy is given, bankruptcy shall not
result from mere suspension of payments.
(2) A sentence may be passed by a c.riminal court in respect of bankrupt-
cy or any offence connected with bankruptcy notwithstanding that
suspension of payments has not been established by a judgment in
bankruptcy.
Art. 971. - Facts constituting suspension of payments.
Suspellllion of payments shall result from any fact, act or document show-
ing that flhe debtor. is no longer able to meet the commitments related to
his commercial activities.
Art. 972. - Notice of suspension of payments.
Any trader who suspends payment of his commercial debts shall withi;
fifteen days file a notice to iIIhis e1l'ect with the registrar of the court having
jurisdiction under Art. 974 or 1157, witih a view to the institution of
bankruptcy proceedings or the approval of a scheme of arrangement.
Art. 973. - Documents to be anne:ced to the notice.
(1) The following documents, dated and signed, shall be annexed to the
notice given ~ Art. 972:
( a) the balance sheet of the fi.!bl;
(b) the profit and loss account;
( c) a list of commercial credits and debts, with 1lhe names and address
of the creditors and debtors.
( 2) Reasons ahall be given in the notice where any of the documents
required under 81Jb.art. (1) cannot be provided or is incomplete.
TITLE II. BANDUFl'CY

Chapter 1. Judgment in bankruptcy
Art. 974. - Couft having jurisdiction.
(1) The Ethiopian COUrt having jurisdiction in bankruptcy proceedings
shall be the court of the place where the business of a trader who is
a person is situate or, where there is more than one business, the place
where the princiPal business is situate.
(2) Subject to the provisiOllll of international conventions, the Ethiopian
court shall have jurisdiotion notwiJthstandin that the principal place
of busiDess is abroad.and a foreip court has exercised bankruptcy
juriadi.ction.
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212 COMMERCIAL CODE
Art. 975. - Proceedings how instituted.

Bankruptcy ~oceer1.ings shall be instituted by way of petition made by:
(a) the debtor; or ~{1."
(b) one or more creditors; or
«() the public prosecutor; or
(d) the oourt itself.
Art. 976. - Preliminary investigation.
(1) The court may, where it thinks fit, appoint a judge for the purpose
of investigating into the affairs and activities of the debtor.
(2) Any judge so appointed may require the assistance of a tru8tee.
(8) An information oollected shall be reported to the oourt.
Art. 977. - Determination of the date of suspension of payments.
(1) At the first hearing or, where appropriate, on receiving the report
under Art. 976, the court shall:
(a) fix the date of suspension of payments; and
(b) subject to the provisions relating to sooemes of arrangement,
declare the debtor bankrupt.
(2) Where the date of suspension of payments is not fixed, suob date,
subject to the provisions of Art. 978, slhall be deemed to be that of
the judgment declaring the debtor bankrupt.
Art. 978. - Extension of the date of supension of payments.
(1) The date fixed under Art. 977 ( 2) may be extended, after the judg-
ment in bankruptcy, by one or more judgments given on the applica-
tion of:
(a) the trustee or any interested party; or
(b) the p,ublic prosecutor; or
(c) the court itself.
(2) No application under sub-art. (1) may be entertained after the ex-
piry of the period epecified ill Art. 1046 and the date of suspension of
payments may not be altered upon the expiry of such period.
( 3) In no case may the date of suspension of payments be earlier than two
years before the judgment in bankruptcy.
Arl. 979. - Bankruptcy after retirement.
( I) A trader wtho is a person may be declrared baakrupt within one year
from his name being struck off the commercial register where he had
suspended payments prior to suoh striking off.
(2) Where the trader was not registered, he may be declared bankrupt at
any time after having sU8~nded payments.
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COMMERCIAL CODE
Art. 980. - Bankruptcy alter death.

( 1) Where a trader who is a perIOD dieI after having IU8pfII1ded pay:mem..
he may he declared bankrupt within one year alter Lis death.
(2) The petition may be lodged by:
( a) a credi,tor; or
(b) the public prosecutor; or
(c) the court itself.
(3) An heir may lodge a petition for bankruptcy in order to preveat the
IIB88ts of the succession being mixed 'Wi1lh his own property.
(4) Adjudication of bankruptcy after death ehall auspeud the effect of
the separation of estates obtained by the c:reclitora of the deoeMed
under .the provisions of the Civil Code.
Art. 981. - Judgment in bankruptcy.

A judgment in bankruptcy ahall appoint a oommjui'lDft in baDkruptcy
and one or more trustees in bankruptcy.
Art. 982. - Enforcement of judgmenu.

All judgments and ~rders in bankruptey &ball be enforeed protiaiou11yo
Art. 983. - Publication 0/ judgment,.

( 1) EJ&.traets from judgments given under Art. 977. 979 and 980 aba1l be
sent to the debtor, the trustee and the petidcmiag areditor or heir
not later than the day following judgment. The atract &ball give the
names of the parties, the operative part and the date of the jucJsment.
(2) An extract shall be posted by the registrar at the main eDtrauoe of the
court on the day following the judgment and it shall remain 10 pa.tecl
for a period of three months.
1.. 3) The registrar shall send an extract to the public prosecutor.
( 4) The registrar shall send three copies of the em-act totbe official in
charge of the commercial register with a view to varying the entry
in the register. Such variation shall be made in the local ~. no-
tified to the central register and publiahed in the effioial Commeroial.
Gazette in accordance wtih the provisions of Book I, Title IV, of
this Code.
( 5) An extract shall be published in a newspaper empowered to publiah
legal notices circulating at the place where suspension of payments
took place.
( 6) Publication shall also be made at the places wlhere the debtor carries
on business.
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214 COMMERCIAL CODE
Art. 9840. - Application to set aside judgment.

(1) An application to set aside a judgment in bankruptcy shall be mad
within eight days from the date of such judgment. In respect of judf
ments subject to posting and to insertion in newspapers empowered \
publish legal notices or in the official Commercial Gazette, the perio
of time shall run only from the date when the last requirement h~
been satisfied.
(2) An application to set may not be lodged by the p.etitioner.
(3) An application to set aside lodged by the debtor shall not susper
judgment.
Art. 985. - Judgment on application to set aside.
(1) A judgment rejecting an application to set aside shall be notified t
the person having lodged the application.
(2) A judgment setting aside an adjudication of bankruptcy shall be no
tified to the'trustee, the creditor having petitioned and the debtor,
where the' debtor has not lodged an application. Tihe provisions of
Art. 983 shall apply.
Art. 986. - Appeal against judgment.
( 1) An appeal against a judgment in bankruptcy may be lodged within
fifteen days from notification.
(2) The appeal shall be heard summarily within three months and the
judgment shall be enforceable immediateLy.
Art. 987. - Judgments not open to applications to set aside or to appeal.
( 1) The following judgments slhall not be open to applications to set a8ide
or appeal:
( a) those concerning the appointment or replacement of the com·
missioner in bankruptcy, or the appointment or removal of
trustees;
(b) those pronouncing as to requests for discharge and as to requests
for assistance to the debtor and his family;
( c) those authorising the sale of property and goods forming part of
assets;
( d) those by which the court decides upon any application to set aside
orders made by the commissioner in bankruptcy !Within the scope
of his powers;
(e) those authorising the operation of the bnsiness.
(2) The commissioner in bankruptcy may not appear i.a proceeding:> undt',
sub-art. (1) td).
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COMMERCIAL CODE 215
Art. 988. - Setting aside 0/ the adjudication.

( 1) An adjudic&tion shall be set Hide where, between tlbe pronouncement
.. of the judgment and the date of the cmIer given in respect of an ap-
plication to set aside or an appeal, the bankrupt has restored his af·
fairs by repaying his creditors or by obtaining a composition.
(2) The effect of acts taken by perIODS reaponsib1e for OO11dueting bank·
ruptcy p~ shall not he affected.
Chapter 2. Persons responsible for conducting

Banlcruptcy Proceedings
Section 1. The Court
Art. 989. - Powers 0/ the court.
The court whiClh has declared the debto~ bankrupt shall supervise all bank.
ruptcy proceedings and shall make orden on InII>tters which are out·
side the powers of the commissioner. It shall hear appeals from orders of
the commissioner.
Art. 990. - lurisdiction.
The court which has declared the debtor bankrupt shall have jurisdiction
to hear all claims arising in the bankruptllY, unless there be claims in rem
concerning immovable property which remain subject to the ordinary
rules relating to jurisdiction.
Section 2. Commissioner in bankruptcy

Art. 991. - powers 0/ the commissioner.
( 1 ) The commissioner shall have power to supervise and deal with all
matters concerning the ha~pt estate.
( 2) He shall refer to the court any claims which fall within the jurisdic.
tion of the court and the court in its decisions shall mention such
reference.
( 3) He shall take or cause to betaken by the competent authorities all
steps and mel\sures necessary to preserve the assets.
( 4) He shall call the creditors' committee as required by law or where he
considers it to be necessary.
( 5) Where it is in the interests of the estate, he shall authorise the trustee
to appoint 818istan"tyunleu such ,an appointment is reserved to him
,by law. v
( 6) He shall authorise the trustee in writing to enter appearance in legal
proc_~ings.
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216 COMMERCIAL CODE
Art. 992. - Orders of tohe commissioner.

(1) Orders of the commissioner shall be deposited without delay in the
court registry. All interested parties shan be notified by registered
letter.
(2) Any interested party may apply to set aside any such order. Applica.
tion shan be made by notification to ,the registry within ten days of
the date of the sending of the registered letter.
(3) The court shall decide on these applications at the first hearing.
Art. 993. - Replacement of commissioner.
The court may at any time of its own motion replace a commissioner
by another of its members.
Section 3. Trustees
Art. 994. - Appointment of trustees.
( I) Trustees shall be selected from a list of qualified persons of good
repute resident in Ethiopia. Such list shall be prepared at ,the begin.
ning of each year by the Ministry of Commerce and Industry.
(2) The trustees shan not exceed three in number.
( 3) Where several trustees are appointed they shall act jointly and
severally:
Provided that the commissioner may in certain circumstances authorise
one or more of them to act individually. Trustees so authorised shall
alone be liable.
( 4) The following persons may not be appointed trustees:
( a) a person who has been declared bankrup,t; or
(b) a person who has been deprived of civil rights; or
(c) a relative by consanguinity or affinity of the debtor to the fourth
degree inclusive: or
(d) a creditor.
(5) The trustees may not acquire the goods of the debtor.
Art. 995 - Powers of trustee.
(1) The trustee shall lie responsible for the administration of the bank.
rupt estate under the supervision of the commissioner. He shall re-
present the universality of creditors in relation to third parties.
(2) He may not assign ~ fw'tctions but may, with the approval of the
commissioner, delegate them in respect of isolated transactions.
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COMMERCIAL CODE 217
Art. 996. - Depo6it of funds.

( 1) Any funds received by the truatee, less the amOtmta determined by
order of the commissioner to mtlet legal costs and Dl8ll8{4'ement ex-
peDlllll, .ball be depoaited without delay in the State BIlDk of Ethiopia in
an account opened in the wune of the ~pt estate and may not
he ·withdrawn except by written order of the co:mmissiOl1er.
(2) A trustee 8hall he removed where he fails to comply with the provisions
of this Article, without prejudice to suob: civil sanctions or crim~nal
penalties as may he appropriate.
Art. 997 .• - Recourse-against act& of trustees.
The bankrupt or any other interested person may object 10 any act of the
truBteesin respect of the bankruPt estate to the commissioner who shall
decide on the objection within three days.
Art. 998. - Removal 01 trustees.
(1) The commissiOl1er may require the court to remove a tru8tee 011 the
application of the debtor or the creditors' commiuee or of his own
motion.
(2) Where the commissioner has not dealt with such applications within
five days, the applicants may move the cou,rt themselves.
( 3) The court, sitting in chambers, shall coIlloider the report of the com-
missiOl1er, the explanations of the trustee and the opinion of the pub-
lic prosecutor. Judgment shall he delivered in open court.
Art. 999. - Replacement 01 trustees.
The commissioner shall move the court to appoint additional trustees or to
replace existing trustees.
Art. 1000. - Liability 01 trustees.
( 1) Trustees are public officials in the exercise of their functions. They
shall carry out their duties iWith all care and shall show, where neces-
sary, that they have exercised t1he necessary care.
(2) They shall keep a register which has been stamped free of charge by
the commissioner and make CJherein day to day entritls of aob done
by them.
(3) Until the bankruptcy p~ are completed, claims agaiDat •
trustee who ihas been removed shall, 'WIith the prior consent of the
commissioner, he instituted by the trustee Wlho ~1aces him.
( 4) A trustee who retires from office, even during bankruptcy prooeedinp,
shall give a report on ibis activities under Art. 1090.
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218 COMMBRCIAL CoDE
Art. 1001. - Remuneration of trwtee3.

(1) 'DIe costs and feee of hulItees shall he fixed by the omnmJ....oner.
(2) Fees shall be paid af,terb submission of the report under Art. 1090.
An advance may be made to the trUBtees with the oonaent of the com·
mission,er .and for good cause.
( 3) 11he bankrupt and the orediJtors may object to the court against an
order made under sub-art. (1) within ei~t days of the making of the
order. The objection shall be heard in chambers.
( 4) The trustees shall he entitled to no otIher paymellit than costs and fees.
Any amounts paid in contravention of this Article shall be refunded,
without prejudice to such. civil sanctions or criminal penalties as may
be appropriate.
Section 4. Creditors' committee

Art. 1002. - Appointment of committee.
(1) T,he creditors' committee shall be appointed not Illiter than ten days
after the deposit witJh the registrar of the order showing the list of
creditors provided in Art. 1044.
(2) A provisional creditors' committee may be appointed if the commis·
sioner thinks suoh Ii step to be desirahle.
( 3) Three or five creditors chosen by the commi.teioner from among all
the creditors shall form the creditors' collllDiltee. The commissioner
shall appoint the ohair"inan.
( 4) 'Dhe members of the committee may on their request be replaced by
the commissioner. They may only be removed by the court on the
proposal of the commissioner.
(5) No relative by consanguinity or affinity of the debtor, up to the fourth
degree inclusive, may be a member of the creditors' committee.
Art. 1003. - Functions of committee.
( 1) The committee shall give its advice where such is required by law
or ·he considers a meeting desirable.
( 2) 'Dba chairman shall can the committee whenever its advice is requested
or he considers a meeting desirable.
(3) Decisions of the committee shall be by a majo:dty vote.
( 4) 'Dhe CODlDJittee shall have special regard to the verification of the
accounts and lIhe statement of affairs prepared by the debtor and to
the supervision of the acts of the trnstees.
( 5) 'I1he committee may at any time require information on illhe state of
the bankruptcy proceedings and on the position of receipts and
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COMMERCIAL CODE 219
payments. llhe committee shall he consulted by the trustees with

regard to all legal proceedings.
(6) Members of the creditQrs' committee shall be liable only in respect
Qf gross negligence.
(7) The committee is entitled to no remuneration other than the reimbur-
sem~nt of expenses approved in writing by the commissioner.
Chapter 3. Provisional and Conservatory Measures

Section 1. Conservatory Measures
Art. 1004. - Closing of debtor's books.
( 1) The trustees shall summon the debtor to be present at the writing
up and closing of the hooks, the provisions Qf Art. 1011 having been
cQmplied with, where necessary.
(2) Where the debtor does not appear, he shall be summoned by
registered letter to appear within forty-eight hours and to produce
this hooks if they are in his possessiQn.
(3) He may appear by his attQrney if he satisfies the commissioner that
there are substantial reasons preventing his personal appearance.
(4) Where the debtor fails to appear, either in person or by his attorney,
or where he absconds, the cQmmissioner shall infQrm the public
prosecutor who shall take the necessary steps to secure his attendance.
Art. 1005. - Preserving debtor's rights.
( 1) The trustees on assuming Qffice shall take all steps to preserve the
rights of ,the debtor in relation to his own debtors.
(2) They shall enforce registration of mortgages uhere registration has not
not heen enforced by the debtor. Registration shall be made in the
name of the bankrupt estate by the trustees on proof of their status.
Art. 1006. - Mortgage registration on immovable property of debtor.

(1) The trustees shall cause registratiQn to he effected in the name of
the bankrupt estate on all immovable property in the possession of
the debtQr or which may at a later date come into his possession.
(2) ~Qrtgages !ili.all not he 'register( 1 Qn immQvable property acquired
by the debtor after payment Qf the last .dividend under a composition
or, where there is no. composition, after the final closure Qf the
winding-up procedure.
Art. 1007. - Registration of mortgage on business.
(1) The trustees shall registe~ the legal mortgage provided in Art. 172
(1) (b) Qf this Code charging the debtor's business or businesses.
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220 COMMBBClAL CoDa
(2) The entry shall show:

( a) the name and address of the debtor;
(b) the date of the judgment declaring the debtor baalaupt;
( c) the cour:t having declared the debtor bankrupt;
( d) the purposes and address of the business;
( e) the parts of <the business to which <the mortgage extends;
(f) the address of any branch or agency mortgaged with ,the business,
if any.
(3) The provisions of Art. 179-193 of this Code shall apply to a mortgage
underllhis Article.
Art. 1008. - Report to commissioner.
( 1) Within one month ,from assuming office, <the trustees sball send to
the commissioner a report on the affairs of the debtor stating how
they have occurred.
( 2 ) The commissioner ShW.l send the repqrt to the public prosecutor
and his observations thereon. Where he ihas not received the report
willhintlhe prescribed period, he shall inform the public prosecutor,
explaining the cause of the delay in the s~on of the report.
Section 2. Seals
Art. 1009. - Affixing of seals.
( 1) 11he court may wthen declaring. the debtor bankrupt order that seals
be affixed to all stores, pay counters, tills, bill-cases, books, documents,
papers, furniture and chattels belonging to the debtor.
( 2) Where the debtor has absconded or where there has been misap.
propriation of the whole or part of the debtor's assets, the competent
authorities of their own motion or on an application made by a
creditor may, before adjudication, affix seals to the property specifi.
ed in sub-art. (1).
Art. 1010. - Property not subject to affixing of seals.

(1) The commissioner may, on the application of the trustees, dispense
them with affixing, or authorise them to remove seaIs on the pro-
perty specified hereinafter:
(a) such movable property and chattels needed l:Jy the debtor and
his family as have been set out in a list submitted to the com·
missioner;
(b) perishable goods;
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COMMERCIAL CODE 221
( c) property nece&lllll'y for the continued operation of dle bualne.

or undertaking, Wlhere SUdh conti.iJ.ued operation has been
authrorised.
(2) All property specified in sub.art. ( 1 ) shall he liSted and vlllued by
the trustees, in 1ihe presence of the competent aullhori:ties who aIJall
sign the list. '
Art. 1011. - Property removed from under seal.
(1) Where hooks and accounting documents have been lCaled under Art.
1009 (1), the seals shall be removed and the books and documents
handed to the trustees by the competlml: au1ihorities dter baving
been closed by the Sllli.d authorities Wlhich shall repo...""t 0IIl iIIhe II8te of
the books and documents 'W!hen ihanded over. '
(2) T,he competent authorities $hall remove from under seal short term
bills or bills to be presooted for accepliance or in respect of ,wuoo
conservatory steps are required, list tihem and hand th.em to the
trustees for purposes of collection or otherwise. A report 8hall be
prepared and sent to the commissioner.
An. 1012. - Correspondence addressed to debtor.
The debtor has the right to be present when letters addressed to IIWn 8l'e
opened by the trustees.
Art. 1013. - Removal of seals.
Within mv~
days of 4Ihe affWDg of seals, the trustees abal1 ask for tIhe
removal of th4Hleals in order ,to w-epare an inveulol1y of the debtor's
properly.
Section 3. Inventory
Art. 1014. - Preparation and deposito! balance sheet.
Where a balance sheet has not been prepared and deposited by the
debtor, the trustees shall without delay prepare and deposit with the
registrar of the court a balance she~t based on the books, documents,
papers and other information as are available to them.
Art. 1015. - Inventory of debtor's property.
(1) An' inventory of the dehtor's property shall be prepared, the debtor
having been summoned by registered letter requiring an acknow·
ledgement.
(2) All property of the debtor under Art. 1010 (1) shall also he verified.
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222 COMMERCIAL CODE
( 3) The inventory shall he prepard in two originals, ODe being depo-

sited in the registry of the court and the other one being retained by
~he trustees.
(4) 'l1he .trustees may, with the consent of the commissioner, employ
suitable persons in preparing the inventory and valuation of the
debtor's property.
Art. 1016. - Inventory in the event of bankruptcy after de4th.
Where the estate is declared bankrupt after tibe dea1ih of the debtor and
no inventory has heen prepared, or w.here1llre debtor has died before the
inveDJtory has been completed, the heirs shell be duly sUmmoned to be
present at the preparation ~r completion of the inventory.
Art. 1017. - Rights of public prosecutor.
The public prosecutor has the ~t to be present at the preparation of
1!he inventory and to inspect at any ·time any documeuta, boob or papers
in bankruptcy proceedings.
Art. 1018. Handing over to trustees of debtor's property.

On completion of the inventory, all goods, money, securities, boob,
papers and documents, furniture and chattels of the debtOr shall be
handed to the rtruBtees and a note of such handing over shall be made at
1be foot af1fbe mventOl1y.
Chapter 4. Effect of adjudication in banlauptcy

Section 1. Effect as regards the debotor
Art. 1019. - Restrictions on debtor's movements.
'I1he debtor !!ihalJ. not leave 1Ihe area in 'W1hloh !he resides wi11hout ,the per.
mission of 1lhe CODlDli88ioner. The provisions of Art. 433 of tihe Penal
Code shall apply where ttihe debtor hreak.s any such prohibition.
Art. 1020. - AssistGnce to the debtor and his family.
The commissioner may, when :requested to do so by the trustees, permit
part of t!be bankrupt estate to be applied in supporting the debtor amd
his family.
Art. 1021. - Employment of debtor by trustees.
The debtor may be employed by the trustees on such tmms a;nd conditions
as 1Ihe commjaaioner sball fix ,to facilitate <the winding·up.
Art. 1022. - ProhlibitWns and forfeitures.

The bankrupt may be subjected ·to sucfJ. proIdbitiou or forfeitures as are
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COMMERCIAL CODE 223
provided by Iaw. Unless otherwise'provided by Iaw, such prohibitions or

forfeitures shall cease to be effective where the convicted bankrupt is
reinstated.
Art. 1023. - Bankrupt unable to deal with his property.
A bankrupt shall not administer or disp.ose of his property, however'
acquired, from the day he is declared bankrupt until he is ,wsClhafged.
Art. 1024. - Legal proceedin.lls.,
After adjudication, all legal proceedings shall be instituted and all ap-
plications for execution be made by or' against the trustees. The bankrupt
may be authorised to intervene in any proceedings.
Art. 1025. - Universality 01 creditors in bankruptcy.
(1) As from the day ~f the judgment'in bankruptcy, all creditors whose
claims are not secured by a special privilege, a pledge or a mort-
gage, shall bring their claims t~ether in the universality of creditors
in bankruptcy.
(2) The universality is a legal entity. It mlliy acquire rights or incur
liabilities and shall be represented by the trustee.
Art. 1026. - Suspension 01 individual suits.
The judgment in bankruptcy shall prevent any creditor who~e cIaim is
included in the universality from bringing an indivi'dual suit. As from
the day oflbe judgment, such creditor may not attach .the debtor's pro-
perty, whether movable or immovable.
Art. 1027. - Outstanding debts rendered due.
(1) On adjudication all debts owing to I1he debtor shall become due
immediately.
( 2) Debts expressed in filreign currencies shall be converted into local
currency at the official rate of exchange on the day of adjudication.
Art. 1028. - Interest not to run.
Interest on debts, with the exception of debts guaranteed by security in
rem, shall cease to run against the bankrupt estate as from the day of
the judgment. Only sums arising from propetry given as security may
be tued to pay interest on secul'ed debts.
Art. 1029. - Acts prior to adjudication invalid.
(a) GratUitous' assignmeiifs;
(b) payments of debts not due, whether in cash or by assignment, sale,
set-off or otherwise;
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224 COMMERCIAL CODE
( c) payments of debts due otherwise than in cash, by negotiable instru-

ment or by transfer to a bank;
(d) securities set up on the propetry of the debtor in respect of debts
contracted before the setting up of such securities, between fifteen
days before the date of suspension of payments and the date of
adjudication shall be invalid and shall not affect the creditors of the
bankrupt.
Art. 1030. - Other acts prior to adjudication may be invalidated.

Other payments made by the debtor in respect of debtS due and all acts
for consideration entered into by 1ilie debtor after the date of suspension
of payments may be invalidated on the request of the trustees where the
parties 'Who have received payment or have dealt with. the debtor did
so knowing that suspension of payments had taken place.
A.I¢. 1031. - Rights registered prior to adjudication invalid.

(1) Rights arising out of securities in rem validly set up may he register-
ed tip to the date of adjudication.
( 2) Registration effected after suspension of payments or within one
month before suspension may, be invalidated where more than one
month has, elap.sed between thel act creating the security and the date
of registration. .
Art. 1032: - Status of secured creditor ranking' after party whose secured
claim is invalid.
A creditor secured by a mortgage on an immovable or on the business
who is olassed after a creditor whose claim secured by mortgage has, been
invalidated shall substitute himself for such creditor in the distribution
of the price of the immovable or of the business. He shall pay into the
assets in the bankruptcy the difference between the sum distributed to
him and the sum wlhich he would have received, had the prior secured
claim not been invalidated.
Art. 1033. - Negotiable instruments paid after suspension of payments.

( 1) Where negotiable instruments have been paid between the date
of suspension of payments and that of adjudication, proceedings for
reimbursement of sums so paid may only be instituted against the
third party having first received the value of the instrument.
(2) In the case of a promissory note, sucili proceedings may only be
instituted against the first endorser.
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Ci)MMERCIAL CODE 225
(3) The claimant undet suh-al'll:. ( 1 ) or (2) shall prove that· the party
against 'WIhom the, proceedin,gs are instituted kmew of the suspension
of payments at the tinIe of paymeDJt of the instrument.
A,rt. 1034. -:- Limitation of actions.
Proceedings brou~t under Art. 1029, 1030 'and 1031 shall be barred after
,two years from ,the date of adjudication.
Section 2. Management of debtor's property

Art. 1035. - General duties of tr,ustees.
( 1) The trustees shall, with· the pemtission of the commissioner, sell all
depreciable' or perishable goods or propenty the preservation of whieh
lis costly.
( 2) They shall colleot debts and, where authorised, continue business
operations.
Art. 1036 - Sale of goods.
( 1) After hearing the bankrupt, whether he presents himself of his awn
motion or on being summoned by registered letter, the commj...noner
may authorise the trustees to sell other movable pa"operty or goods.
(2) The commissioner shall fix the conditions of sale.
Art. 1037. -; Sale of bankrupt person's business.
The sale of a b\lsiness hy the trustees may only he permitted by the court
and the court shall fix the conditions of the sale. .
Art. 1038. - Compromise and arbitrati.on.
(1) Mter taking tlhe opinion of ,the creditors' eominitteeand after
hearing the bankrupt, whetther ,he presents himself of ihtis own motion
or on being summoned by registered lettier, the commissioner may
authorise the trustees to compromise and arbitrate in respect of any
claim concerning the bankrupt estate.
(2) Where the value of the subject matter of the compromise or arbitration
is not determined or exceeds the jurisdiction of tlhe trustees, the
compromise or arbitration shall be ratified by the court.
(3) The bankrupt shall be summoned to attend the ratification pro-
ceedi~gs and may make an applicatiOn to set aside the compromise
or arbitration.
Art. 1039. - Continuation. of operation of business.
( 1) The trustees may continue operating the b1.lsinesa or industry where
authorised by the court after a report by the coDlllliesioner and a
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226 COMMERCIAL CODE
recommendation of 1Ihe creditors' committee, .and au1lhorisMion shall

not be given unless it is in rthe public or ~tors' interest.
(2) Where 1Ihe buainess continues to operate, creditors ·whose claim has
arisen out of such operation shall be creditors of ~e universality.
'Vhey eball not he suhject to the provisions regitrding bankruptcy and
shall be paid from 1Ilre assets of 1Ihe bankruptcy before1Jhe crediltors
whose claims are included m the universali.ty.
( 3 ) Instead of o~rating the business himself, rtlhe trustee may he aulihorised
by the commissioner to appoint a receiver to carry on the business.
Art. 1040. - Continuation 01 leases.
( 1) Leases of immovable property used for the business or industrial ope·
rations of the debtor, i.ncluding premises forming part 'llhereof and
occupied by him or his family, shall not be cancelled by reason of
the lessee's bankruptcy.
(2) The trustees may either cancel or continue the lease and shall give
notice to the lessor of 1Iheir decision !Within fifteen days from deposit
of the inventory as provided in Art. 1044. Where the trustees continue
flhe·leee, 1!hey shall carry out r\lhle duties of a lessee.
(3) Notice may not be given except on the recommendation of the oredi.
tors' com.mittee and 'With tlhe aulihorisaltion of the commissioner.
( 4) Until the expiry of tJhe period mentioned in sub...art. ( 2 ), movable
property used for 1Ihe business or industry shall not be distrained
upon nor shall leases be cancelled, wd,thout prejudice ·to provisional
measures and ·the right of the lessor to take possession of the pre-
mises. Wlhere the lessor takes possession of 1Ihe premises, distraint
is effected.
( 5) W,here 1Ihe trustee has informed tJhe lessor of. his mteutionto continue
the lease, the lease shall continue unless the lessor applies for a
cancellation of the lease wilthln fifteen days.
( 6) A clause in1Jhe lease providing for immediate cancellation of a lease
in the event of a bankruptcy shalll be of D'O effect.
(7) Nothing in ·flhis Article sha:ll affect bhe provisions of Art. 1061
and 1062.
Chapter 5. Proving of debts

Section 1. Procedure for proving
Art. 1041. - Production 01 prool by creditors.
( 1) After adjUdIDatiOll, the creditors shaiIl produce to tIlre <trustees proof
of dieir debts, showi~ the sums claimed.
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COMMERCIAL CODB
(2) The trustees shall issue :reoei.pts for proofs produced. They "1
return the proofs a&er die bankruptcy proceerIi!nga are closed ad
shall ceue to be &.ble !for such retum after one year.
Art. 1042. - Notice to creditors.

(1) Creditors who appear on the balance sheet and who have not pro.
duced proofs i\Wthlu fiiteen days £rom tJbe adjudicati.OII1 shall be request-
ed :by the trustees to produce CIbeir proof••
(2) Such request shall he made by notice in a newapeper empowered to
receive legal Dot:Wes and lin the official Commercial Gazette. Such
nollice in the Gazette shall :refer to tJbe issue number of the newspaper
COllItaining the legal notice issued unde,rlihis Article. Nollice to creditors
by letter shall also be sent.
(3) Proofs shall be produced 'Within fif·teen days of tIbe pub1icatiOll1 in the
Gazette.
Art. 1043. - Verification of debts.
( 1) Debts shall be verified by the trustees in the pm!6Ilce of the credi-
tors' committee or its representative, where sudh committee bas al-
ready been formed. and of the dehto!r. wIbether he presents himself
of ihis own motion or on being 81lDlD1OIIled by regUitered letter.
(2) The inventory of debts when finalised ahaiIl be CO\mter.aigDed by the
commissioner.
(3) Where a debt is queried by the trustees in IWIhole or in part,the
trustees shall inform the oreditor by registered letter, and he ahall
reply to the queries orally or in writing within eight days.
Art. 1044. - Deposit of inventory in registry.

(I) Where rllhe debts have been proved, the flruetees sball depoeit lihe in·
ventory of debts with the regist,ry, showing the proofs admitted and
the proofs rejected.
(2) They sball also send to the commissioner a liBt of crediIton oJabnin,g
special preferences over movables.
Art. 1045. - Notification of deposit.

(I) The registrar shall inform the creditors of the deposit of the inven-
-tory of debts as provided in Art. 1042 (2).
(2) He shall give notice by registered letter of rejected ·debts to the cre-
ditors concerned.
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228 COMMERCIAL CODE
Art. -1046.' - Claims.

(1)' Any creditor who ap.pears on the balance sheet or w1)o has proved
has the right, either in person or through his agent, to lodge a
claim with the registry by way of entry 011, 1liIe sc.hedule, within eight
days following the notice in the official Commercial Gazette.
(2) The bankrupt may'also lodge a claim.
Art. 1047. --.: Final drawing-up of inventory of debts.

(1) Upon the expiry of the aforementioned period of dme, the com-
missioner shall prepare the final inventory of debts, subject to any
claims lodged with tlhe court.
(2) The ~stccs shall accordingly enteron the list of uncontested proofs
the admis&ion of proof of the creditor and the amount of the debt
proved.
Art. 1048. - Judgement upon contested debts.

Contested debts shall be referred by ~he registrar to the first hearing to be
judg~ upon the report of ,vILe commissioner, after having duly notified the
parties by registered letter five da~s prior to thc hearing.
Art. 1049. - Provisional admission.

( 1) The COUN may grant an interlocutory order aHowing a creditor whose
claim is contested to join in bankrup.tcy proceedings in respect of such
amount as the court may decide.
( 2) Th~ registrar tiliall ,inform by registered letter the parties concerned
within three days.
Art. 1050. - Stay of proceedings or disallowance of objection.
(1) Where an objection contesting a debt is lodged and such objection
'may cause delay, the court ~1iall decide wlhether to stay bankruptcy
proceedings until the objectiOn is decided on by the ordinary civil
court !having jurisdicdon or to disallow the objection. Whert' the court
disall~ the objection, it malY at tihe same time make an order
under Art. 1049.
(2) Where a debt gives rise to criminal proceedings, the coUl'lt may order
a stay of bankruptcy proceedings. Where ,the court disallows the objec-
tion, it may not make an interlocutory order andtilre creditor holding
the contested debt may not join in tihe proceedings until judgement in
criminal procCC'lings has been given.
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COMMERCIAL CODE 229
Ad. 1051. - Creditora whose security is contested.

Where a creditor holds a secw·ity in rem and only the security is oontested,
such orediJtor may join in the proceedings 88 an UD8ecured creditor.
Art. 1052. - Creditors not having lodged prool wit,hin the specified period 01
time.
( 1) Creditors failing to lodge ~r claim within 1Ilre specified period of
mme shall not share in any distribution bUit they may lodge an objec-
tion until final distrilmtion of the residue and ehall bear the costs aris-
ing OUt of such objection.
(2) Any such objection shall not suspend any distribution ordered by the
commissioner.
( 3) Where further distribwtions are made, such creditors shall share the,re-
in to the eEent of an amount provisionally fixed by a!he court and re-
tained in reserve until adjudication upon their objection.
Art. 1053. - Creditors subsequently admitted.
Creditors admitted dter distributions OIl'dered by the 00IIllW8Sl0Der shall
have no claim in such distributions, but they may deduct from nndistribut-
ed 88Setsthe dividends relating to their cladms ion tIbe fint distributions.
Ad. 1054. - Period of time for proving debts.
All proceedings for proving debts shall be concluded not later tlban five
months from the date of the judgement in ban.k.ructy. Sudh, period may be
extended by the commissioner in exceptional oases.
Section 2. Parties jointly and severally liable and guarantors

Art. 1055. - Proof 01 claims jointly and severally guaranteed.
A creditor Wihose claim has been endorsed OIl' guaranteed joinJtly and sever-
ally by .the b8lIlkrupt and other persons who bave suspended payments may
prove in all the estates for the iIloomnM value of ibis claim and abm'e in tlhe
distributions until his cladm is fully satisfied.
Art. 1056. - No claim as between bankrupt estates..
No bankrupt guarantors, joiIlltly and severally Uable, may cladm. agaiDst one
anol1herin ~pect of dividends paid under Art. 1055, unless the total
amount of 1lhe dividends paid in the several bankruptcies ~xceeds the total
amount of ,the claim. Any such excess shall devolve upon tJhe persons hav-
mg tlhe otllrers as gttam'IID'tors, in the order of their liabili.ty.
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230 COMMERCIAL CODE
Art. 1057. - Creditor having received payment on account before swpensum

of payments.
( 1) Any amoUIllt paid prior to suspension of payments to a ereditor !Whose
claim is jointly and severally guaraDJteed by the bankrupt and. other
persons shall be deducted in paying his claim. He shall retain, for
what remains due to him, bis rights against suclh otlher persOlllS or
guarantors.
(2) Any person jointly and severally liable or any guarantor /Woo has paid
;urr amount on account towards tIhe claim, shall be eDJtitiled to prove
his claim to the eJlitent of Ilhe amount so paid.
Section 3. Rights of creditors secured by a guarantee on movables

other than business
Art. 1058. - Guaranteed creditors.
Creditors whose claim is secured by pledge shall be entered in Ilhe inventory
for purposes of information only. Wi1lh the authorisation of the commis-
siner, the trustees may at any ·time pay fOil' and redeem the property pledg-
ed, for the benefit of the estate.
Art. 1059. -" Sale by pledgee.
Where the property pledged has not been redeemed by the tru:rtees, and it
is sold by the pledgee for a sum exceeding the amoUIllt of llhe debt, 1Ihe ex-
cess shall be collected by the trustees. Where the price of sale is less than
; ,the amount of the debt, 1ilre pledgee may prove his claim for ,the differen-
ce, as an unseeu,red creditor. '
Art. 1060. ~ Extent of lessor's preference.
(1) Where a lease is lerminlllted under Art. 1040, 1Ihe lessor shall have a
preference in respect of all ·elaims arising out of 'llhe perfOrmaIWe of
the eontraQt of lease and contingent damages f~the two years of the
lease prior to1lhe adjudication of bankruptcy and for C1he current yeu'.
(2) If·11he lease is not terminated,the lessor who bas been paid all reDJts
due may not claim paY\lllent of any rent for the current period and of
any rent to fall due, if the guaraDJtees given on the making of 1Ihe con-
tract are still in force or if those given ttince the adjudication of hank-
ruptcy are COIIISidered to be sufficieu.t.
AN. 1061. - Removal 01 movables furnishing premises leased.
Where movables furnishing the premises leased are sold and removed,
the lessor may exf'!'ci~ Ihlis preference as in the case of termination of a
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COMMERCIAL CODE UI
lease as p,rovided in Art. 1060 (1), and such preference shall eDtmd to
a further period of one year to run from the end of the current oyear.
Art. 1062. - Continuation or assignment of lease by trustees.

The trustees may continue or assign a lease for the unexpired pepod,
provided that they or the assignee shall keep the premises furnished with
movables of sufficient value and carry out at the expiry of each letting
period all obligations arising out of the 18/W or the agreement, and
provided further that the purpose for whicll the pr!mlises are utilised
may not be changed.
Art. 1063. - Seller of movable property.

(1) Without prejudice to the proviSiions of Art. 1075-1078, the gull1'8Gteee
provided in the Civil Code .wiJth regard to' the seller of movable pr0-
perty may not be set up against the bankrupt estate.
(2) Any prowsion contrary to me provisions of suh-art. (1) shall be of
no effect.
Art. 1064. - Payment of creditors Iwlding preferences over 1fU)vables.

(1) On presentation of the list prescribed in Art. 1044 (2), the c0mmis-
sioner shall, in appropriate cases, auth~ lt1he payment of eredi.tors
listed ,~herein from ,the funds first collected;
( 2) Any question of contestation of a preference shall be decided by the
court.
Section 4. Rights of mortgagees and creditors secured by immovables

Art. 1065. - Sale price of immovables distributed before that of movables.
Where the distribution of the proceeds of sale of immovables takes place
before or at the same time as that of the p.roceeds of sale of movables,
preferred or secured creditors not fully paid out of the proceeds of sale
of IJihe immovables shall (provided their debts were admitted to proof in
accordance wi~h the provisions of Art. 1041 et sq.) rank equally wiflh the
unsecured creditors for. lt4e amounts still due 110 them in respect of Iihe
residue of the estate.
Art. 1066. - Proceeds of sale of movables distributed before that of immowrbles.

Where one or more distributions of the proceeds of sale of movables takes
place before the distribution of the proceeds of sale of immovables,
preferred and secured creditors duly admi.tted to proof may participate
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COMMERCIAL CODE
in suoh distributions in proportion to the Wihole of their debts, subject

o1ihenwise to iIlhe approprillltions set forth in Art. 1067.
Art. 1067. - Deduction 0/ amounts collected from estate not subject to
security.
(1) After sale of immovables and the final establishment of the order
of priority of secured and preferred creditors, creditors entitled to
claim on the proceeds of sale of the immovables for the whole of
their debt shall receive their secured dividend only after deduction
of amounts collected by them from the estate not subject to security.
(2) Amounts thus deducted shall not remain inNIe estate subject to
, security but sbJall be transferred to the estate not subject to security
to tlhe benefit of which they shall be distrained.
Art. 1068. - Partial payment 0/ secured creditors.
The follOWling procedure shall a~ply in respect of secured creditors who
have received partial payment from the distribution of the proceeds of
tlhe sale of immovables:
( a) the rights of such creditors witlh: respect to the estate not subject
.to securl.1ly shall be finally settled on the basis of the amounts
for W'hicili tiheyremain creditors after .the dividend received by
them h~ the immovabJes;
(b) any residue wlhlich they have received over such amount in the
prior distribution shall be withheld from the amoullit of their
secured dividend and allocated to the estate not subject to
security.
Section 5. Rights of creditors secured

by a mortgage on ule business
Art. 1069. - Proceeds 0/ sale 0/ business distributed before proceeds 0/ sale
0/ other movable property.
Where tihe proceeds of the sale of a business are distributed before or to·
gellher Wtiththe . proceeds Of tihe sale of other mov,able property, the
creditoo:s secured by a mortgage on the busi.ness who !have not been fuHy
paid from- the proceeds of ,the sale of such business shall rank together
with ~ creditors rto the extent of their unpaid claim, provided
the4" claim has been admitted in accordance wi~h ~he provisions of
Art. 1041 et .q.
Art. 1070. - ProCeeds of sale0/ other movable property distributed before
proceeds 0/
sale 0/ business.
Where the proceeds of .the sale of other movable p~ty are distributed
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COMMERCIAL CODE 233
before the proceeds of the sale of the business, secured crediJtors whose
claim has been admitted shall share in the distribution to dIe full extent of
their claim, without prejudice to the provisions of Art. 1067.
Art. 1071. - Deduction of sums paid from pl'oceeds of sale of property not
subject to security.
(1) After a business has been sold and the manner of distributing the pro-
ceeds of the sale has been fixed, creditors wlhose claim is fully secured
by the business shall be paid from the proceeds of the sale of the busi-
ness, subjeot to the deduction of sums paid to them from the proceeds
of the sale of property not the subject of security.
( 2 ) Sums deducted under sub-art. (1) shall be repaid ,to the estate not sub-
ject to security to the benefit of which they shall be distrained.
Art. 1072. - Deduction of sums paid from proceeds of sale of business.
The following procedure shall apply to secured creditors who have been
partially paid from the proceeds of the sale of tihe business:
(a) the rights of such creditors in respect of the unsecured estate shall be
finally settled on the basis of the amount for which they remain
creditors after having shared in tlhe distribution of the proceeds of the
sale of the busimess;
(b) any residue which they have received in excess of suoh amount in the
prior distribution sihall be deducted from the amount of their secured
dividend and repaid to the unsecured estate.
Section 6. Recovery
Art. 1073. - Recovery of negotiable instruments.
Negotiable instruments or other securities W1hich have heenhanded to the
debtor for purposes of collection for· ,HIe benefit of the owner and which,
not having been collected, are in possession of the debtor attihe time of ad-
judication of bankruptcy may be claimed by the owner. The same shall ap-
ply to remittances specially made by the owner to be appropmated to speci-
fied p~ents.
Art. 1074. - Recovery of goods in deposit or handed to an agent.
( 1 ) Goods consigned to the debtor for deposit or for sale on behaH of the
OWlller may, ,jf tihey exist in kind, in whole or in part, be recovered
from the debtor.
( 2) The price or part of the price of the said goods may furt'hermore be
recovered, where it ibas not been paid in cash, nor settled for value
given, nor set off in current account between the debtor and the pur-
chaser.
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234 COMMERCIAL CODE
Art. 1075. - Recovery of goods t.he sale of which has been cancelled before
bankruptcy.
(1) Goods, the sale of whioh has been cancelled prior to adjudication
either by a decision of tlhe court or by operation of the terms of We
contract, may, if they exist in kind, be recovered from the debtor.
(2) Where the cancellation of sale \has been ordered or confirm.ed. by a
court after adjudication, goods may be recovered notwithstanding ~hat
proceedings for recovery or for oancellatiion were brought prior to ad-
judication by «he unpaid seller.
Art. 1076. - Recovery of movables sold with ownership reserved.
Movables sold to tlhe bankrupt rwith reservation of ownership may be re-
covered where, before ~he judgement in bankruptcy, such reservation has
been registered in accordance wLth the provisions of Art. 2387 of the Civil
Code.
Art. 1077. - Recovery of goods in transit.
( 1) Possession of goods transmitted to the debtor may be recovered where
such goods have not been delivered to the debtor's warehouse or to
that of an agent entrusted rwi1lh their sale on the debtor's behalf.
(2) Recovery is not admissible where prior to their arrival the goods have
been sold with no intent to' defraud to a transferee in good faith on
iIIh~ basis of documents signed by the consignor.
Art. 1078. - Right of retention.
The seller shall be entitled to retain goods sold by rum where such goods
have not been delivered to the debtor or they have not been consigned
either to him or to a third person on Ih~s behalf.
Art. 1079. - Right of trustees to require deii'lJery.
(1) In the cases contemplated in Art. 1077 and 1078, the trustees may,
upon authorisation by the com~oner, demand delivery of goods by
paying the agreed price to the seller.
(2) Where the trustees do not exercise suoh rigiht, tlhe seller repay ,to the
estate any instalments received by him as well as any advances receiv-
ed from the bankrupt in respect of frcigilllt or transpolit costs, commis-
sion, insurance or other expenses and to pay such arnoun,ts himself:
Provided that the seller may claim damages in respect of such non-
performance of the contract.
Art. 1080. - Admission of claims for recovery.
Claims for recovery may be admitted by the trustees with the authorisa-
tion of the commissioner.
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COMMERCIAL CODE 235
Chapter 6. SeJtlement of the Bankruptcy

Sec~o;n 1. C;omposition
Art. 1081. - Proposal for composition.

(1) At any time after the ~iry 9f lIhe period of time provided in Art.
1046, the bankrupt maJy propose a composition M"idlh 'tIhe eredi.tors and
submit the proposed composition to ,1ihe commissioner.
(2) The proposed composition shall specify the persentajge oHe,red 1lp Wl-
secured creditors and the pel.'iod of time required for payment. I~ shall
show the guarantees to cover the payment of debts, legal costs and tIhe
remuneration of the trustees.
(3) The winding-up is suspended by a proposal for a composition.
Art. 1082., - Examination Df proposal and notification to creditors.
(1) On receipt of the proposal for a composition, 1!he commissiner sha1l
take lIhe advice of the trustees and tlhe'creditors' comm.i,ttee.
(2) Where he considers the proposal ihas merit, he shall cause 1ihe creditors
to he notified.
( 3) Such notification shall be by registered letter. sent by lIhe registrar of
the court to each creditor. If the number of creditors makes, such
form of ,notifiCartit.n Dnp:raotical, theooUrt may, after ihearimg 1!he trus-
tees and ,the public prosecutor, order the propoSal for oomposition to be
published by the commissioner m: a nawspaper empowered Ito publish
legal notices and in tlhe official Commercial GazeI!le.
( 4) In addition to the proposals made by the bankrupt, ,the notification
shall refer to rtlhe recommenda,tions of the 'trustees and 1ihe creditors'
committee together with a report by the trustees showing 1lhe state of
the bankruptcy proceedings and what ihas been completed.
( 5) The notification to the creditors shall state a period not less tihan
twenty days nor more ,than thirty days within iWlhich the dissenting
creditors may file with the registry their refusal to accept the proposed
composition.
Art. 1083. - Creditors' vote.
( I) Votes Shall he recorded in the minutes signed by the commissioner
and the regis~ar of the court.
(2) All duly admitted ~tors ihave t!he l'Iight to vote, including those ad·
mitted provisionally or subject to a reservation.
( 3) Votes of crec:liJtors enjoymg special securities !fuan not be oounted in
respect of their debts in the transactions relating to tho composition
unless they forego their guarantees •. 'J1he resu1ts of such renunciation
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236 COMMERCIAL CODE
shall cease to have effect ,W'h~ ,the composition is not finalised, or is

not l1atified, or is revoked or widl(lrlllWD~
( 4) The following may not vote: t!he debtor's spouse, Ihds relatives by cons·
anguinity or affinity io the fourth degree mclusive, and parties who
have become assignees or purchasers with respect Ito these persons with.
in less than one year before the declaI'lMion of bankruptcy.
(5) Assignments of debts made after tihe declaration of bankruptcy )give no
voting rights.
Art. 1084. ~ Approval of composition.

( 1) The composition sh~ll he of no effect unless it he approved by two.
thirds of the creditors representing two-thirds of tihe debts. The claims
of creditors who do not take part in the voting shall not be tIIken into
account in calculating the majo,r1ty under ~his Article.
(2) Creditors who have not notified their dissent from the proposals of the
bankrupt within tJhe period of time provided in Art. 1082 (5) slmll he
deemed to he in agreement.
(3) No subsequent decision regarding the number of creditors or the
amount of rthe debts ihas any effect on rthe app~oval of ~he composition.
(4) The provisions of Art. 1083 (1) shall apply to tihds Article.
Art. 1085. - Application to set aside composition.

(1) All creditorswIlO were entitled ,to a vote or wlho have been accepted as
creditors subsequently may apply to set aside the composition.
(2) Sucih application to be of effect shall be sent together Wirth the reasons
therefor to the debtor and trustees wi1hin eight dars after the vote
and shall summon them to appear at tlhe next hearing.
Am. 1086. - Confirmation by the court.

(1) Application for the confirmation by the court may he made hyany in·
terested party. The court may give no decision thereon before the ex·
piry of 1!he period of eigihit days provided in Art. 1085.
( 2) Wlhiere an application to set aside has been InaI® during this period,
the cou,rt shall decide upon both '!he application to set aside and the
application for confirmation at ,the same time and ~baU deliver one
judgement.
(3) Before delivering judgement, the court shall consider:
(a) the report oft11re commissioner and Ihds recommendations on fihe
proposed composition;
(b) the report of tlhe trustees provided in Art. 1082 (40);
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COMMERCIAL CODE 237
(c) the observations, if any, of parties jointly and severally liable

with the debtor.
( 4) W·here the application to set a~;ide is sustained, an order shall be made
revoking the composition and suoh order shall be effective as regards
an interested par!ies.
Art. 1087. - Refusal to confirm composition.
The court shall not confirm the composition:
(a) where the provisions of the proceeding Articles have not been complied
with; or
(b) where confirmation of the composition is contrary to the public interest
or the interests of the creditors.
Art. 1088. - Supervising carrying out of composition.
(1) After confil'matioll, the commissioner, the trustees and the creditors'
committee shall ensure the carrying out of the composition, in accord-
ance with the detailed i!lstruetions contained in the judgement confir-
ming composition.
(2) The creditors' comm1ttee may cause the mortgages on the estate to be
struck out wlhen the terms of the composition ,have been completed.
Art. 1089. - Results of composition.

(1) Confirmation of the composition shall be binding on all crecHtors other
than those holding security in rem which they have not relinquished
and unsecured creditors wlhose claims ihave arisen during the bank-
ruptcy proceedings.
(2) Confirmation sihall not affeet the creditors' mortgage on the debtor's im·
movable propel'ty registered in the name of the estate under Art. 1006
and tlhe mortgage regiSitered on the business in the name of the estate
under Art. 1007, unless rIIhe composition otIherwise provides. To ,this
effect the trustees shall register the judgement confirming the composi-
tion wih the competent authority.
(3) The composition shall notafi"ect the creditors' rights in respect of per-
sons jointly and severally Iiable with the debtor.
Art. 1090. - Suspension of effects of bankruptcy.

(1) Af·ter confirmation the effects of the bankruptcy shall be suspended,
subject to the provisions of Art. 1022 and 1088.
(2) The trustees shall hand to the debtor a final account after it has been
discussed and finalised in the presence of the commissioner and the
creditors' com.mittee. T'hey shall ibJand to the debtor all \his hooks,
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238 COMMERCIAL CODE
papers and property, fur Wlhich the debtor shall give a recliept.
The ,trustees shall cease to he liable after two years from the firuilising
of <the accoun1: wthere the debtor has failed ,to take possission of his
books, papers and property.
( 3) When the provisions of 1lhis Article have been complied IWith the com·
missioner shall cause a report ,to he drawn up,. Where there is 8IJly dis·
~sreement as ro its contents, the matter shall be referred to the court
for decision.
Atr. 1091. - Setting aside of composition after confirmation.

( 1) No proceec:lings to set aside a composition W1hich has been confirmed,
except on grounds of fraud, founded either on a concealment of assets
or 8Ill oversta1lement of liJahllit,ies, may beinst.iJtuted by IlllIY creditor
after five 'Years from the discovery of the fraud.
(2) Where Ifhe dehtor is convicted of rlle offence or fraudulentt bankruptcy,
the composition shall be revoked and all sureties, otiher than those in·
valved in the fraud, shall be discharged.
Art. 1092. - Provisional measures on prosecution for fraudulent bankruptcy.

(1) Where the debtor is prosecuted for fraudulent bankruptcy after confir·
mation of the composition, the court may make such provisional orders
as appear to be necessary.
(2) These orders shall cease to be of effect where a nolle prosequi is enter·
ed or the debtor is disdhaa.-ged.
Art. 1093. - Cancellation of composition.

(1) Wh~ the debtor fails to carry out the terms of the comPOSitiOlll, an
application may be made ,to the court to set aside the composition, the
guarantors, u any, having been duly summoned to be present at the
hearing of t!he application.
(2) Where the composition is set aside, tihe sureties shall not be discharge.
ed.
Art. 1094. - Re.opening of bankruptcy proceedings after setting aside of com·

position.
(1) Wihere the composition is set aside, the trustees shall prepare without
delay a freSh inventtory of assets and papers on the basis of ,the former
inventory and, if necessary, consult the authority who affixed the seals.
They shall prepare, if necessary, supplementary inventories and balan·
ce sheets.
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COMMERCIAL CODE 239
( 2) They shall publish a notice cOllitaining the operative part of the

judgment and a request for ne,w creditors to prove lIheir claims under
the conditions set forllh in Art. 1043.
Art. 1095. - Verification of new debts.

(1) The trustees shall verify the proofs of dehts under Art. 1094.
( 2) T:here shall not he further verification of debts admitted to woof
earlier, !without prejudice to :the refusal or reduclli.on of ~hose paid
in whole or in part in the meantime.
Art. 1096. - Acts of debtor subsequent to confirmation of composition.

Acts of the debtor hetween the date of the confh-mation of the composi.
tion and the setting aside of the composition may only he invalidated
where ~here has he~n {Mud on the creditors.
Art. 1097. - Rights of creditors prior to composition.

Creditors prior to composition ~Ih:all he restored to their original rights
in respect of the dehtor and of :the estate:
( a) for the whole of lIheir dehts wlhere they have received no part of the
di,idend; or
(b) for that part of the deht w'h~ch remains to he paid where lIhey have
received part of ~he dividend.
Art. 1098. - Opening of second bankr.uptcy proceedings.
Where second bankruptey proceedings are opened at the instance of new
creditors wlho did not share in a oomposrtion which has not been set
aside or cancelled, lIhe creditors in the first bankruptcy shall he creditors
in the second hankruptcy proceedings without preferential rights over
new creditors and shall be subject to ~he provisions of Am. 1097.
Art. 1099. - Composition by way of surrender of assets.
(I) Where a composition involving total or partial surrender of assets is
approved, lIhe procedure rela,ting to ordinary compositiOlIlS shall apply
includirg Ilhe ordinary provisions relating to the effects and setting
aside of compositions.
(2) Surrendered assets shall he Liquidated as provided in Art nOl et sq.
(3) A composiltion by way of surrender of assets shall not affect any
property not included in the composition and any p;roperty sub-
sequently acquired.
(4) Tthe composition shall not affect the rights of creditors in respect of
persons jointly and severally liahle with lIhe debtor.
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240 COMMERCIAL CODE
Art. HOO. - Entry in commercial register.

The registrar shall ensure that any judgment confirming, setting aside or
cancelling a composition be entered rn the commercial register in accor-
dance with~he provisions of Art. 983 (4).
Section 2. Compulsory winding-up

Art. HOI. - Refusal to approve composition.
Where a composition is not approved under Art. 1084, the bankruptcy
shall continue until compulsory winding-up and complete distribution of
the assets to the creditors entitled.
Art. H02. - Assistance to debtor.
Where the creditors' committee agrees tlltat assistance be given to the
debtor and his family from the bankrupt estate, the commissioner shall
fix $eamount of assistance to he given in accordance with the proposals
of the trustees.
Art. llOO. - Sale of assets.
(1) The trustees shall sell the debtor's movable and immovable property
in accordance with tlhe Code of Civil Procedure without requir!ing the
presence of the debtor.
( 2) The proceeds of the sale shall be deposited rn accordance with
Art. 996.
(3) T,he trustees may com~omise and arbitrate under Alit. 1038 without
requiring the presence of the debtor.
Art. 1104. - Sale of immovables.
Where no proceedings for expropriation of immovables have taken place
before ,the opening of ~he winding-up, only 1Jhe trustees shall proceed to
sell withrn one week, with the permission of the oommissiontV.
Art. 1105. - Sale of bankrupt person's business.
Where no proceedings for expropriation of immovables rhave taken place
before the open!ing of the winding-up, only the trustees shall proceed to
sell with the permission of rtlhe commissioner and subject to ,tJlre provisions
of Art. 1106.
Art. 1106. - B.usiness carried on during winding-up.
(1) T,he unsecured creditors may authorise the ,trustees to continue business
operations during the windrng-up.
(2) T,he commissioner Shall consu1t each creditor by registered letter on
the request of the creditors' committee. The provisions of Art. 1082
(3) shall apply in appropriate cases.
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COMMERCIAL CODE 241
(3) Creditors shall be notified that within fifteen days tlhey shall submit
their vote to the court registry.
( 4) The resolution of the creditors shall specify the duration and scope
of the powers of the trustees and the amount .fo be retained by them
for costs and expenses. The resolution shall be approved by three-
quarters of thc creditors representing ~hree-quarters of thc debts
and confirmed by order of the commissioner.
Art. 1107. - Lump sale of assets.

(1) On the recommendahion of the commISSIOner, the court may authorise
the trustees to disfKJse of the assets, movable or inImovable, by lump
sale.
(2) Such authorisation may be granted on the request of the creditors'
committee or of the debtor.
(3) The creditors shall be consulted as provided in Art. 1106 (2) and !!he
resolution approved as provided in Art. 1106 (4).
( 4) The terms of the sale shall be confirmed by the court.
( 5) Where the sale is approved, the debtor shall be discharged of his
liabilities to the creditors.
Art. 1108. - Dealings involving liabilities in excess of the assets.

Where dealings by the trustees involve liabilities in excess of the assets
in the winding-up, creditors who approved such dealings shall be per-
sonally liahle beyond their share in the assets willhin the limits of the
authorisation given by them, and in proportion to their debts.
Art. 1109. - Scheme of distri.bution.

(I) After thc expiry of the period specified in Art. 1046, the trustees
shall send to the commissioner every two mon~hs a report on the
state of the bankruptcy and an inventory of the amounts deposited
under Art. 996.
(2) They shall suhmit to tlhe commissioner their prOfKJsals for distribution.
(3) On the recommendation of the creditors' committee, the commis-
sioner shall make such changes in the profKJsals as he thinks fit and
shall order t:hedepo~it of the amended proposals in the registry. He
shall cause the creditors to he informed of such deposit.
( 4) Within ten days the creditors may submit their comments thereon.
The commissioner, taking into account any observations of thc
creditors, shall fix the amount to he distributed.
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242 COMMERCIAL CODE
Art. 1110. Distribution of proceeds of winding. up.

Mter the deduIJtion of:
(a) oogts and expenses;
(b) sums applied ,for the support of the debtor or his family; and
( e) sums paid .to prefe,rred creditors,
the net proceeds of the winding-up shall be distributed to all Vhe creditors
in proportion to theil' debts proved and admitted, sL'bject to the provisions
of Art. 1065, 1066 and 1063.
Art. 1111 - Setting aside of share corresponding to contested debts.

A share corresponding to those debts on the admission of which a final
decision has not been taken shall be set aside as a reserve.
Art. 1112. - Method of payment.

(1) The trustees shall send to each creditor entitled to a dividend a
cheque to his order, drawn on the distribution account opened in the
name ofrhe bankruptcy under the p.rov,isions of Art. 996.
(2) A note of uhie amount paid shall he made on the proof of debt. Where
1lhe proof of debt cannot he produced, the commissioner may autho·
rue payment on sight of the minute of deposit of the inventory of
debt~.
Chapter 7. Bankruptcy Proceedings closed

Art. 1113. - Grounds for closing banckruptcy proceedings.
Subject to the provisions of Art. 1081-1100, bankruptcy prolJeeuings are
closed:
(a) by the final distribution of the product of thewli.nding-up:
(b) by reason of insufficiency of assets;
(c) by reason of absence of any claim against the estate.
Art. 1114. - Closure by reason of insufficiency of assets.

(1) Where at any time ~he bankruptcy proceedings cannot cDntinue
owing to insufficiency of asset.3, the court may on a :wport by the
commissione,r or of ~ts own motion order rthe closure of the proceed-
ings.
(2) 'I1he judgment has llhe effect of restoring to each creditor the exercise
of his personal rights.
( 3) The bankrupt shall remain dispossessed of the adminJisrtrllltion and
distribution of his property and any new debts contracted by him
may not he set up against the estate in which no further creditors
may prove.
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COMMERCIAL CODE 243
Art. IllS. - Revocation of closure order given by reason of insufficiency of

assets.
(1) The debtor or any other interested party may at any time apply to the
court for setting aside the order upon showing that trhere are sufficient
funds to meet the 005ts of the proceedings, or upon depositing Wlith
the trustees a sufficient amount to meet the 008ts.
(2) He shall first pay tlhle costs arising from proceedings under Art. 1114.
Art. Il16. - Proofs not claimed by creditors.
Tlhe Hahility of trustees to hand back proofs shall be barred after five years
from the adjudieation of bankruptcy.
Art. 1117. - Olosure by reason of absence of claim against the estate. •

( 1) After the deposi t of tbe inventory of debts specified ,in Art. 1044, the
court may on the application of the dehtor order the bankruptcy pro-
ceedings to he closed, where the debtor proves thalt ihe has paid all the
creditors w!ho have proved or thart he has deposited 'With the trustees
an amount necessary to pay all the creditors :having proved and all
costs including the fees of the trustees. 11he court shall make its deci-
sion upon a report hy the commissioner slhowing thalt the debtor has
satisfied ,the ahove-unentiQned requirements.
(2) 11he judgement Jllas the effect of hringing the bankruptcy proceedings
to an end and of restoring the dehtors to his full rights.
Art. 1118. - Entry in commercial register.

11he registrar shall ensure that a,IlY judgement closing hankruptcy proceed-
iillgs hy reason of insuffioiency of assets or of absence of any claim against
the estate he entered in the commercial register in accordance with the pro-
visions of Am. 983 (4).
TITLE III. SCHEMES OF ARRANGEMENT

Art. 1119. - Application for scheme of arrangement.
Any trader who has or is 31><>:lL LO suspend payments and hlas not heen dec-
lared bankrupt may apply to the court fur the opeying of a scheme of ar-
rangement, in accordance with tJj:Ie p.rovisions of this TiNe.
Art. 1120. - Admissibility of application.

( 1 ) The applioation shall not he oons~dered unless it is p.repared in the
form of a declaration whioh shall he deposilted in 11he court registry.
(2) The debtor shall file ,the documents specified iJn Art. 973 togelilIer with
a report giving the reasons for his suspe1lS,ion or impending suspension
of payments, and the reasons for his proposing a scheme of arrange-
ment.
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244 COMMERCIAL CODE
(3) Tohe debtor shall also show:

( a) that 'he has been registered wWth the commercial registry from the
opening of his business or for not less than two Yelml;
(b) tbrt during llhis period he bas kept proper accounts;
(c) that he has not been adjudicated bankrupt nor made a SClheme of
¥rangement within the preceding five years;
(d) that he has not been convWted of offences under Art. 680-688 of
the Penal Code.
Art. 1121. - Proposals rontained in application.

( 1) The application Shall contain the fullowing requiremenlts:
(a) an undmaking to pay not less clum 50% of tIhe capmu value of
unsecured debts within one year from the date of confirmation of
the sdheme, or 75% within a period of eighteen moIllllhs or 100%
within a period of w,ee years;
(b) a promise to furnish material or ~rsonal guarantees to secure the
undertmngs made under paragraph (a) and giving details of
the guarantees.
(2) The debtor may propose to assign to his creditors all assets held by
him at the date of rthe applica,liion for a scheme of arrangement Where
the assets are suffiment ,to meet payments as provided in sub-art. (1)
Art. 1122. - Refusal to consider application.

Mter hearUingthe public prosecutor, the court may refuse the application
wbere any of the conditions laid down in Art. 1120 is not present.
Art. 1123. - Additwnal reasons for refusing to consider application.
( 1) The court may refuse the application, notwithstanding that it is
made in pro~r form, Wlhere it is of opinion Vhat the debtor is not in
a position to comply with the undertaking required under Art. 1121.
( 2) The court shall refuse ,the application where the debtor has abscon-
ded closing Ms place of business, or has misappropriated or fraudu-
I lently reduced the value of part of his estate.
(3) Where rthe application is refused under Art. 1122 or under this Article,
the court shall make an order for adjudication of the bankruptcy
where the debtor has susp,ended his payments.
Art. 1124. - Application to set aside.

(1) No application shaJJ. be made to set aside judgments given under
Art. 1122 and Art. 1123 (1) and (2).
(2) An application to set aside an order under Art. 1123 (3) may be
entertained in accordance willh the relevant provisions of Art. 984-988.
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COMMERCIAL CODE
Alii:. 1125. - Judgment opening proceedings under scheme 01 arranpment.

(1) Where the court considers ,that there are merits in the application,
it shaH order rlte scheme of anangemeDt to be opened and no appli.
cation to set aside such an order shall be made.
(2) In ·the decision on ,the application, !he court shaH;
( a) appoint a delegate judge and a oom.missioner in accordance 'With
Art. 994 (1), (4) and (5);
(b) order the calling of tdre creditors' meeting within not more than
.thirty days £rom rlte judgment and determine the period !Within
'Which the judgiment shall he puIilished and notiied to the
creditors;
( c) determine a period of time not exceeding eight days within whidt·
the debtor shall complete t!he lIist of his creditors where IIhe debtor
has given reasons in h[s application for not haV1ing submitted
such list;
( d) fix a period of time not exceeding eight days within which dIe
debtor shall deposit in the court registTy an amount sufficient
to COver tlhe costs.
(3) Where the dehtor fails to comply with rIlhe provisions of pal'll@l'aphs
(c) and (d), the provision of Art. 1123 (3) shall apply.
Art. 1126. - Orders of delegate judge.
Any interested party may apply to set aside orders of the delegate judge
in accordance with Art. 992.
Art. 1127. - Commissioner.
The provisions of Art. 997·1001 shall apply to t!he co~()ner carrying
out a scheme of arrangement.
Art. 1128. - Publication of judgment.
( I) The judgment shall he published by the registrar by means of notices
posted at the entrance of the ;:~t and by anieXltrac.t published in a
newspaper empowered to publish legal notices. !
(2) 11he registrar shall ensure thnt the judgment lhe entered in the com·
mercial register in accordance IWIiI1h the provisions of Art. 983 (4.).
(3) The delegate judge and t1he registrar sihall enter and sign a note of
the judgment at tlhe end of tfhe entries !in the debtor's hooks, and the
hooks shall he handed back to the debtor.
Art. 1129. - Notice to creditors.
(1) The delegllite judge shall fix the place and time for the creditors'
meeting.
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246 COMMERCIAL CODE
(2) Within the period of time fixed 'hy the court under Art. 1125 (2)
(h), the registrar shall send to each creditor, hy registered letter or
cable as 'appropriate, a notice containing:
(a) the names of the dehtor, the delegate judge and the commissioner;
(h) the date of the judgment calling the credllitors and the place, date
and time of ,the meeting; and
(c) a summary of the p,roposals of the debtor.
Art. 1130. - Documentary evidence.
Documentary evidence showing that the publications required have been

made and that notice has been given to the creditors shall be inserted in
the applicatilln file of the proceedings.
Art. 1131. - Effect of application for scheme of arrangement.
(1) After the application has been made and until final confirmation
of 1ihe scheme, no creditor holding a claim arising prior to judgment
may distrain, acquire a prl"ferred right over the debtor's property or
register a mortgage.
(2) Prescriptions, p,ere:-~pt:ons and forfeitures shall be suspended.
(3) Unsecured debts enjoyimg no preferred rights shall he deemed to he
due but interest shall he suspended as regards the creditors.
( 4) Amounts due in respect of taxes are not subject to the I\rovisions of
this Al'mcle.
Art. 1132. - Administration of debtor's property.
During ,the course of proceedings under a scheme of arrangement, the
dehtor shall retain the admini&tration of his property and the manage-
ment of his husiness under the supervision of the oommrssioner and the
guidance of the delegate judge. The commissioner and judge may at any
time inspect the books and accounts.
Art. IIU3. - Acts of debtor not to affect creditors.
~l) Gifts and other gratuitous acts or acts by WIllY of guaran'tee done hy
tIhe debtor during the p;roceedings shall not he set up, against ,the
creditors..
(2) Acts by wlhiob the debtor has contracted loans, even hy bill of ex-
change, or compromised or arbitrated, or agreed to assignments not
falling wi~hin the exercise of the husiness, or to mortgages or the
setting up of pledges, wi,thout the written approval of the delegate
judge, rwlho shall not give approval unless lIhe necessity !is clear, shall
not he set up against the Cl'editors.
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COMMERCIAL CODE 247
Art. 113'1. - Adjudication bankruptcy d.uring proceedings under scheme 0/

arrangement.
Where the debtor fails to comply with the provlSlons of ~t. 1132 and
1133, or he is shown to have concealed p.art of his assets, fraudulently omit-
ted ccrtain creditors, increased h,is liabilities or committed fraudulent acts,
the delegMe judge shall refer tlhc matter ,to the COUl"t on the recommenda_
tion of the commissionel' and the court shaH adjudge the debtor bankrupt,
without prejudicc to Auch criminal penalties as may be appropriate.
Art. 1135. - Duties of commissioner.

The eonmlissioner ~hall prepare an inventory oftha debtor's estate. He shiall
check the list of creditors and debtors and prepare a detailed report on the
affairs and conduct of the debtor, on the proposed scheme and the guaran-
tees offered to creditors. Such report shaH be deposited in the registry not
less than five days before ~he creditors' meeting convenes.
Art. 1136. - Creditors' meeting.
(l) The delegate judge shall preside at creditors' meetings.

(2) Any credit~r may be represented by an attorney appoimed by am entry
made on the notice calling the creditor to the meeting.
(3) The debtor or his attorney shall appear in person. The dehtor may be
represented by a spe!\ial agent 'W1here it is proved to the delegate judge
that he cannot be present.
(4) After the commissioner's report has been read, the debtor shall submit
his final proposals.
Art. 1137. - Consideration of proposals for scheme.

(I) Any creditor may give reasons for not accepting the scheme and dis-
cuss the concurrence of dehts.
(2) The debtor may reply and discuss the debts. He shall give suob infor-
mation as may be required.
(3) The discussion shall be summarily recorded in the minutes and tJhe
documents, if any, shall be annexed ,~hereto.
Art. 1138. - Extension of meeting.
Where the business of the meeting cannot be finished on the day fixed, ~t
shall be adjourned to the next working day without further notice to credi-
tors, even though not present at the meeting.
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248 COMMERCIAL CODE
Art. 1139. Provisional admission of debts in dispute.
(1) The delegate judge may grant provisio~al admission of debts in dispu-
te in whole or in part, for the purpose of voting and calculation of the
majority, but such admission shall not affect the final deei,ion on the
standing of suoh debts.
(2) Creditors who have not been admitted may, at the time of confirma-
tion of the sdheme, appeal against Vheir not having been admitted,
where the majority would have been different, had they been admit-
ted.
Art. 1140. - Majority required for approval of scheme.

(1) The sohemc of arrangement shall be approved by a majorIty of credi-
tors represbnting not less than two-thirds of all non-preferred or un-
secured debts.
(2) Secured creditors may not vote, unless they give up their security. Suoh
surrender may be partial but shall not be less than one-third of the full
value of the debt.
(3) Where a secured creditor has voted without having made a partial sur-
render under sub-art. (2), he shall be deemed to ,have made a full
surrender where he accepts the soheme under Art. 1141.
(4) The court, when confinning the scheme, ~hall take into account the
increase in the debtor's assets which has occurred under sub-art. (2)
and (3).
(5) W,here a scheme is not completed or confirmed or is set .::-::!:: or can-
celled, the surrender of a secur";, even tlhough partial, shall cease to
have effect.
( 6) The provisions of Art. 1083 (4) and (5) shall apply to voting under
this Article.
Art. 1141. - Acceptance of scheme.

(1) 'the names of the creditors, Vhe value of their debts and the way each
of them voted shall be recovered in the minutes of the meeting, which
shall be signed by the delegate judge, the commissioner and the regis-
trar.
(2) Creditors notifying their acceptance of the sclheme by cable or letter
within ten days after the minutes have been prepared shall be entered
in Vhe margin of the minutes by the regis~ar and included in the cal-
culation of the majority.
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COl\l:\IERCIAL CODE 249
Art. 1142. - NUIl·ajJJ!lUl'a{ uj scheme.
Where the scheme of arrangement is not approved in accordance with Art.

1 HO and 1141, the delegate judge shall without delay inform tlle court,
which shall of its own motion adjudgl' the debtor bankrup.t.
Art. 1143. - Procedure for confirmillg scheme,
T[le delegate judge shall in the minutes and hefore such minutes are sign-
ed, make an Ol'der in writing for the parties to appear before the court with-
in the next twenty days when the scheme will be confirmed.
(2) The commissioner shall deposit his reasoned order in tJhe registry not
less than three days before the application for confirmation of the
schemc is heard by the court and the delegate judge shall suhmit a re-
port at the hearing.
(3) 'I1he debtor and the creditors may be heard on the dJearing of the ap-
plication.
Art. 1144. - Confirmation of scheme by the court.
(1) When the court is satisfied that the provisions of this Tide have
been complied with, it shall:
(a) consider the financial advisahmty of the sdheme Wlith respect
to the creWtors, having regard to the eXiisting activities and po-
tentialities of the firm; and
(b) seek the majorities required hy 18JW. To this effect, the court
shall provisionally estimate the impo:rtancc and amount of dIe
dehts declared with a view to estab1ishing whether there is a
majority, without prejudice to the final judgments to be
given; and
( c) e:mmine whether the securities offered are suffioient to guarantee
the enforcement of the sclheme and, in the case provided in Art.
1121 (2), whether the property assigned by the debtor is suffi-
oient to meet the claims to ~he exctent prescribed by Al't. 1121
(I); and
( d) consider whether the dehtor deserves to be granted approval of
the scheme, taking into acrount tlhe ~ for h~ failure.
(2) The court shall adjudge the debtor bankrupt where it does not con-
firm the scheme.
( 3) In its judgment confirming the scheme, the court shall make an
order for:
(a) the deposit of the dividend due in respect of doolared debts;
(h) the amount to be sct aside to cover debts in dispute; and
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250 COMMERCIAL CODE
(c) the procedure for payment of amounts due at successive inter-

vals under the sc:heme, unless this matter is referred to the
delegate judge.
Art. 1145. - Assignment of property.
\Vhere the scheme provides for the assignment of t1he debtor's property
under Art. 1121 (2) and subjeot to different stipulations, the court shall
in its judgment:
( a) appoint liquidators and a committee of the three or five creditors to
supervise the winding·up; and
(b) fix the details therof.
Art. 1146. - Prohibitions as regards debtor.

(I) Unless otherwise provided in the scheme or in a resolution adopted
under this Title and confirmed by the court, the debtor shall not
dispose of or charge his immovable property, agree to rights of pldge
or set aside any part of ihtis assets OItherwise than as required by the
nature of his business, until he has fully carried out in duties under
the soheme.
(2) Any act done in violation of the provisions of suh.am. (I) shall not
be set up against creditors prior to the confirmation of the scheme
of arrangement.
Art. 1147. - Pulilication of judgement.
Judgments confirming or refusing confirmation of a soheme shall be
published inacoordance iwtith tlhe releVaIlft provisions of Art. 983.
Art. 1148. - Application to set aside jud;:ment confirming the scheme.
(1) 'nhe creditors who dissent and any interested paNy may apply to the
COUN to set aside the judgmel1Jt confirming the scheme within five
days after the minutes have been prepared.
(2) The reasons for the application shall be given and the ~pplica tion
notified to the debtor and the commissioner.
Art. 1149. - Appeals against judgment confirming or refusing to confirm

the scheme.
The debtor and the creditors who have made an application under Art. 1148
may appeal against th~ judgment confirming or refusing to confirm the
scheme wtithin fifteen days from the publication of the judgment, notice
of appeal being served on the debtor, lIhe commissioner and all parties to
the proceedings.
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COMMERCIAL CODE 251
Art. 1150. - Effect of judgment confirming the scheme.

( 1 ) The judgment confirming tlhe scheme of arra!llgement shall bind all
creditors prior to the opening of the proceedings for the scheme, but
their rights. against persons jointly and severally liable with the
debtor, sureties and assignees, s1hall not be affected.
( 2) Such persons may be heard on the hearing of tlhe application for
confirming the sCheme.
Art. 1151. - Supervision of carrying out of scheme.

( I) 1ihe carrying out of a 8Ciheme 'Which has been confirmed shall be
supervised by lIhe commissioner, in accordance wi<tJh the procedure
laid dawn in the judgment.
(2) The commissioner shall inform the delegate judge of any fact lik.ely
to prejudice tthe creditors.
(3) 11he delegate judge shall pay ,the costs IIil1d fees due to ,the commis-
sioner during his term of office, notwithstanding any provision to the
COllItrary•
Art. 1152. - Setting aside of scheme of arrangement.

(1) 'I1he provisions of Art. 1091 and 1093 shall apply where a sdheme of
arrangement is set aside but tthe duties of ,the tiustee Shlall be carried
oUIt by tJhe commissioner.
(2) Where a scheme of arrangement provides for an assignment of pro-
perty under Art. 1121 (2), the scheme shall not be set aside where the
proceeds of the assignment are sufficient to meet 50% of the debts.
Art. 1153. - Clause of return to good fortune.

The appliCIIIllion of a clause in a saheme of II!I'Mngement providing that
tJhe debtor shall only be discharged where his fortune remains bad shall
be limited ,to a period oIfive years and to cases where 1Ihe debtor's assets
exceed his liabilities by not less than 25%.
TITLE IV. SPECIAL RULES CONCERNING BANKRUPTCY

AND SCHEMES OF ARRANGEMENT WITH RESPECT TO
BUSINESS ORGANISATIONS
Art. 1154. - Application of general provisions.
Save as is otIherwise provided in tthe preceding Titles, <I1he provisions of
this Title shall apply to business organisallions.
Art. 1155. - Business organisations whick may be adjudged bankrupt.

( 1) All commercial business organisations, other rtha.n a joitnt veiliture,
may be adjudged bankrupt or he granted a scheme of /ll11'UDgemeIlil.
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252 COMMERCIAL CODE
(2) A ImEiness organisation in liquida1ion rna-y be adjudged bankrupt.

( 3) 1Ihe prO\-isions of ~his Art-ide shall apply to bus~ness organisations
which have been declared null and void but which exist in fact.
Art. 1156. - Notice of suspension of payments.
Notice of suspension of payments by a bw,iness organization under Art.
972 shall be made by the firm's legal representatives and, in the case of
a firm in liquidation, by the liquidator.
Art. 1157. - Court having jurisdiction.
(I) The Ethiopian court in whose area of jurisdiction the head office of
the business organisation is situate shall have jurisdiction in ban·
kruptcy proceedings.
(2) Without prejudice to the provisions of international conventions, such
cow,t shall have jurisdiction notwithstanding 1hatk !head office is
abroad and a foreign court has exercised bankruptcy jurisdiotion.
Art. 1I58. - Bankruptcy of business organisation comprising partners jointly,
severally and fully liable.
( I) Each partner in a general partnership and general partners in a
limited partn~hip shall make tihe notice under Art. 1I56 within
twenty days a£ter the company having suspended payments.
(2) The bankruptcy of a firm comprising partners jointly, severally and
fully liable shall cause 1Ihe bankruptcy of suoh partners.
Art. 1159. - Institution of liability proceedings.
Proceedings under Art. 365 and 366 of this Code shall be instituted by
-the trustee wi1lh 1Ihe permission of the commissioner, -tihe creditors' com·
mittee having been heard.
Art. 1160. - Adjudication of bankruptcy in common.

(1) Where a share company or private limited company is declared
bankrupt, the adjudication may declare bankrupt any person who
has carried OUt commercial operations on Ihis awn behalf and disposed
of company funds as thou.g\h they were his awn and concealed his
activities under the cover of suoh company.
(2) The provisions of sub·art. (1) shall apply to limited partners who
have carried out acts of management in a limruted partnership.
Art. 1I61. - Retired partner with joint and severalliamlity.

(1) On request, a partner jointly and severally liable may be declared
bankrupt within one year following his name being struck off the
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COMMERCIAL CODE 253
commercial register wthere payments were suspended by the partner!lhip.

prior to the striking off.
(2) Where ~he partner ·was not registered, he may be declared bankrupt alt
any trme after his retirement.
Art. 1162. - Claim for payment of rontributions.

The trustee may order the members or partners of any business organisation
to complete the payment of their contributions, mnlwut regard to tlhe time
fixed by the articles of association.
Art. 1163. - Ballkmptcy proceedings in respect of partners jointly and several·
ly liable.
( 1) The court shall in one judgement declare both the firm and paTtneTS
jointly and severally liable bankrupt and shaUnormally appoint one
commissioner and trustee. The assets of the firm and of the partners
shall he dealt wi~h separately and tthe bankruptcy proceedings of I\lhe
two, kept separate.
(2) Debts proved in the firm's bankruptcy by the creditors of ",he firm shall
he deemed to be proved in each of the par.tner's bankruptcy.
(3) 11he firm's creditors may participate in all distrihllltions uIJJtiI they are
fully paid, without prejudice to claims as between the various bankrupt
estates regarding over payment of contributions.
( 4) Personal creditors of the partners may only claim in tilie estate of .liheir
debtors.
(5) Any creditor may contest priority with other creditors.
Art. 1164. - Proposal for composition.

( I) A proposal for a compostion by a bankruPt firm shall he signed by the
legal representatives of such firm.
(.2) In the case of a geneml or limited p8l'tnership, tIle !¥'O'posals for and
the terms of ~hQ composition shall he approved by pll1'tners represent.
ing an absolute majority o£the capital.
(3) In the case of a share company or private lim~ted company, proposals
for a cOtnp!)Sition shall he approved by an extraordinary- general meet.
ing, unless sueh approval has been delegated to tlhe direntors.
Adt. 1165. - Compostition in respect of firm with partners jointly and severally
liable.
(1) Where a firm comprlsmg partners jointly, severally and fully liable
requests a composition, the creditors may approve such composition in
favour of one or more p81'tners.
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25' COMMERCIAL CODE
(2) In sUJdbicaBeS, all1lhe firm'S' assets shall remain subject Ito a oornpulsory
lWi.nding-up. The personal property of .partners with 'WIhom rtlhe composi-
tion has been approved' shaihl. he excluded iIihere£rom and dIe composi-
tion sball. onily contain an unde:rllJaking to pay 8i dividend on those se-
cuniJties wmoh are OUItSide 1Jhe firm's assets.
(3) Wihiere a composition 1WIi<th one paI'ltner is approved, ihe shall he discharg-
ed &om joint and several LiJahi1iJty.
TITLE V. SUMMARY PROCEDURE
Art. 1166. - Terms of application when applied.

(1) Where 1Ihe balance sheet suhmiltted by tlhe debtor or subsequent infor-
mamon shoWs tlhat rtlhe assets in tihe bankruptcy- do not exceed one
~hnusand Eithiopi:an dollru-s, or wihere t1he dividend to he distributc:d
cannot exceed ten 'per cent, the court may, either of its own motion or
on tIhe applWoation of Ibhe orediJtors, order 1Jhat 1Jhe bankruptcy proceed-
ings sbaill he by IW8Jy of BlUnD:n.aIiy procedure.
(2) Whe,re in tithe course of sudh proceedings it is shown tilmt the assets in
the banlm-uptcy eXlCCed one 1Jhousand Ethiopian dollars or t1he dividend
exceeds ten perCent, tihe court shall order tlhat the proceedings i.n bank-
ruptcy shall continue under the normal procedure, but such order shall
not affect 1lhie V'3lidi1!y of any act III1ready done.
(3) 'I1he nmmal bank,ruptcy rules shall be applied rw<here tlhey are applica-
ble to SUfIIlIll:8:11y p.rocedure.
Art. 1167. - Special rules applicable in summary procedure.
In B 8limIDlBi'y procedu,e:
( 1) sea1s shall not he fixed;
(2) the appomtment of a oreditors' commitMee shall he optioDllll;
(3) the' eomm.issionelr !iball decide on debts in dispUJte unless an applicattion
is made to iI!he court;
( 4) the oommis<Ooner may authorise BDI)" negotiations;
( 5) tIhere Shall be .)Ie diSliliibuJtion only;
(6) dift'enmoos relating to 11be trustee's accounts and his remuneration shall
be decided by the COD1lIIliissione;r.
Art. 1168. - Proof of debts.

( 1) 'I1he trustees shaH ~e the list of creditors on <the basis of the ac-
OOUDts, ,1Ibe~ems' of dle debtor and 8IIly other dnfo1"DliMion avail-
able.
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COMMERCIAL CODE 255
(2) The list, togetiher witih documentary evidence, shaM be sent to 1!he rom-
missioner w\ho shall ascel1l:a1in the liabiJ1ities amd ordtlil' emorcemeDit. The
list of debts and the decree shall be dep.osiJted in t1he registry and shan
be open to inspection by any mterested partly.
( 3) Within three days {rom sudh depos~t, ,the trustee shtaJl mform each
credictor by registered letter of the decision taken regarding &,is debt.
( 4) Within fifteen days £rom such deposit, creditors not admitted may lodge
a claim wic~h the commissioner. WiJt!hinthe same period of ,time,. objec-
tions ,with regard to cred~tors having proved may be lodged by otiher
creditors.
( 5) The commissioner shall fix the date for Ihearing objootions and, where
they cannot be settled by agreement he shall make ibis final decision
thereon.
Art. 1169. - Demands for recovery.

The l;rovisioDS of Art. 1163'1:lhall apply ,to demands for recovery and restItu-
tion of movable ~ in 'tihe debtor's possession.
Art. 1170. - CompositixJn.
( 1) A proposal for a composition shall be approved ,by a majemity yore of
the creditors representing a majOl'iJty of the debts.
( 2) 'nhe commissioner shaH approve 'Ilhe composition IW'heretihtf6 is !he re-
quired majority and the composition is acceptable. He sba1l enforce 1!he
composition aga~nst w\hlah ,there is no appellll of any kind.
BOOK VI. TRANSITORY PROVISIONS

Chapter 1. General provisions
Art. 1171. - Periods of time.
( 1) Where periods of time have expired prior to the coming into fo~" of
t:his Code, no,thing in ,tills Code Sihall revive tihen.
(2) Where vhis code liays down periods of time for the doing. of E._ ... or the
fulfilment of formalities in respect of lWIhiJdh no ~ of time !W8re
laid down prior to llhe coming iDlto foree of this Code, suoh peiuods shall
run from tihe comiJng into £oree of tJhis Code.
( 3) Wi1rere periods of time have been eXltended by tIbis Code, tIhe provisions
of this Code shall apptly and the period M'ibich has l'IlIl p!"Wr to the com-
ing into force of this Code shall be deducted.
( 4) Where pel'iods of time lhave been shootened by this Code, t!he period
provided by t!he law repealed by dUs Code shaR apply and Ilhe period
which has run prior to the coming !into force of I\Ibis Code shall be de·
ducted.
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256 COMMERCIAL CODE
Art. 1172. Vemd riB"'"

Unless oIIherwJse expressly provided, any legal situa,tion created prior to the
meots for tihe creation of the situation concerned as a,re laid down in this
Code modifies the conditions governing the creation of such situation.
Art. 1173. - Legal situations rwt finally created.
Unless oIlberwise expressly provided, legal situations not finally created on
the coming into force of 11his Code shall be governed hy SUM further require-
ments for the creation of l1he situation concerned as are laid down in this
Code.
Charter 2. Traders: Businesses. Business Organisations
Art. 1174. - Commercial Register.
(1) The provisions of Art. 86-122 of this Code shall come into force on
suoh a day as shall be notified by Order publiAhed in the Negarit Gaze-
tao
(2) Whenever a provision of. this Code imposes the obligation to make en-
tries in the Commercial Register, suoh entries shall be made in aocord-
8nre wi.th the practice followed prior to the coming into force of thlis
Code.
(3) On the coming into force of ,bhlis Code, the Ministry of Commerce shall
~rve on every business organisation registered in the Ministry of Com-
merce a fonn requiri:ngthem to supply the particulars required under
Art. 105 and 108 of :tIhiis Code and on receipt of the cmnpleted form
shall enter such particulars in the Register.
Art. 1175. - Register of mortgage on businesses.
(1) The provisions of Art. 179 of this Code shall come into force on such
day and on suob conditions as shall be notified by Order published in
the Negarit Gazeta.
(2) Whenever a provision of this Code imposes tlhe obligation to register a
mortgage on a business. the particulars required by thUs Code shaH be
filed in the Awraja Guezat court in whOSe jurisdiction lIhe business con-
cerned is situate.
Art. 1176. - Official Commercial Gazette.
( I) The official Commercial Gazette shall be established on suoh da) as
shall he notified by Order published in the Nega,rit Gazeta.
( 2) Whenever a provision of .rthis Code imposes t:he obligation to make puh-
licati()IJ. in the official Commercial Gazette only, slWh publication shall
be made in a newspaper entitled to puhlish legal notices.
(3) Whenever a provision of ~hiis Code imposes lihe obligation to make puh-
lication in the official Commercial Gazette and in a newspaper entitled
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COMMERCIAL CODE 257
to publish legal notices, publication made in such newspaper shall be

sufficient.
Art. 1177. - Business organisations.
Business organisations created prior to the coming into force of this Code
",h,all comply with the provisnos of this Code within not more than six
months from its coming into force.
Chapter 3. Negotiable instruments and banking transactions

Negotiable instruments issued p.rior to the coming into foree of vhis Corle
.
I shall remain valid notwithstanding that they do not conform to the
requirements of this Code.
Art. 1179. - Protest.

Where a protest requires to be drawn up under the provisions of this Code
and there is no court registrar readily available, such protest shall be drawn
up in the presence of two witnesses in the manner provided by this Code by
any preson having capacity under the Civil Code.
Chapter 4. Bankruptcy

(1) Bankruptcy proceedings opened prior to the coming into force of this
Code shlall continue in ac,cordance with the provisions of this Code,
(2) Commissioners and trustees appointed prior to the <:Dming into force of
this Code shall remain in office notwithstanding that they would not be
eligible for appointment under vhis Code.
Art. 1181. - Acts of bankruptcy,

Aots of bankruptcy committed prior to the cilllling into force of this Code
shall be deemed to have been committed under ~his Code.
Art. 1182. - Certificates.
Nothing shall affect the validity of certificates issued when, pr>" to the com-
ing into force of this Code, bankruptcy proceedings have been closed by rea-
son of insufficiency of assets.
18*

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Commercial Code Book I. Traders and Businesses Title I. General Provisions Applicable To Traders

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COMMERCIAL CODE 259

TITLE II. AUXILIARIES AND AGENTS

TITLE III. ACCOUNTS

TITLE IV. THE COMMERCIAL REGISTER

BOOK II. BUSINESS ORGANISATIONS

TITLE III. JOINT VENTURE 53

TITLE IV. GENERAL PARTNERSHIP 55

TITLE V. LIMITED PARTNERSHIP 58

TITLE VI. COMPANIES LIMITED BY SHARES

Chapter 1. General provisions 59

TITLE VII. PRIVATE LIMITED COMPANIES

BOOK m. CARRIAGE AND INSURANCE

TITLE II. CARRIAGE BY Am

Chapter 1. General prov/,Swns 130

TITLE ITI. INSURANCE

Chapter 1. General provisions 140

Chapter 1. General provisions 156

BOOK V. BANKRUPTCY AND SCHEMES OF

TITLE III. SCHEMES OF ARRANGEMENT 243

h-til hOq "t11l1 n +'

nh~ "''I'C lif~/IlInl ,. IJ". fClJllJ fh,:,·r-kl ,.,.", ~.,,..:,. tID''''''':''

COMMERCIAL CODE OF THE EMPIRE OF ETlUOPIA

CONQUERING LION OF THE TRIBE OF JUDAH

WHEREAS the progress of Ol.l,r Empire in the field of commerce requires

WHEREAS a Commercial Code has been prepared under Our supervisioll

NOW, THEREFORE, in accordance with Articles 34 and 88 of Ou,r Revis-

1. This Proclamation may be c~ted as the "Commercial Code Proclamation,

2. The Commercial Code of 1960, as published in a separate volume ap-

Done at Addis Ababa this 5th day of May, 1960.

TSAHAFE TAEZAZ AKLILU HABTE WOLD

Art. 5 .. - Persons to be regarded as, traders.

( 6) Exploitation of swt pans;

Art. 6. - AgriClJ.ltural or Forestry undertakings.

(6) Exploitation of 8Mt pans;

AN. 10. - Business Organisations.

Chapter 3. Persons Capable of Carrying on a Trade

" COMMERCIAL CODE

Art. 12. - Tutors.

Art. 13. - Emancipated Minors.

Art. 14. - Effect of }J.1inoril)" in relation to thin' J.Hlrties.

Art. 15. - Publication of incap<,,.ity.

Chapter 4. Carrying on a Trade by Married Persons

Any married person may carryon a trade as though he were unmarried

Art. 17. - Notification of object;{)n.

(1) As between spouse, an objection L1lldn Art. 16 ma\ he notified to lht'

Art. 18.- Setting aside of objection.

Chapter 5. Right to Act as a Trader

.Art. 26. - Bruiness orsanisationll camns on tracie.

TITLE II. AUX1LIARIES AND AGENTS

Art. 28. - Definition.

Art. 32.- Powers of Employee in charge of sales.

Art. 33. - Definition.

Art. 42. - Compensation in case of termination of contract.

Chapter 4. Commercial Agents

Art. 44. - Definition.

Art. 46. - Duties of commercial agent. ,

Art. 47. - Prohibition from carrying on private trade.

Art. 49. - R~payment of expenses.

Art. 5'0. - Remuneration.