TITLE I

GENERAL PROVISIONS AND THE ESTABLISHMENT AND FUNCTIONING OF LIMITED LIABILITY COMPANIES
CHAPTER IV

Capital maintenance and alteration
Section 4

Rules on companies' aquisitions of their own shares

Financial assistance by a company for acquisition of its shares by a third party
Article 64
1
Where Member States permit a company to, either directly or indirectly, advance funds or make loans or provide security, with a view to the acquisition of its shares by a third party, they shall make such transactions subject to the conditions set out in paragraphs 2 to 5.
2
The transactions shall take place under the responsibility of the administrative or management body at fair market conditions, especially with regard to interest received by the company and with regard to security provided to the company for the loans and advances referred to in paragraph 1.
The credit standing of the third party or, in the case of multiparty transactions, of each counterparty thereto shall have been duly investigated.
3
The transactions shall be submitted by the administrative or management body to the general meeting for prior approval, whereby the general meeting shall act in accordance with the rules for a quorum and a majority laid down in Article 83.
The administrative or management body shall present a written report to the general meeting, indicating:
a
the reasons for the transaction;
b
the interest of the company in entering into such a transaction;
c
the conditions on which the transaction is entered into;
d
the risks involved in the transaction for the liquidity and solvency of the company; and
e
the price at which the third party is to acquire the shares.
This report shall be submitted to the register for publication in accordance with Article 16.
4
The aggregate financial assistance granted to third parties shall at no time result in the reduction of the net assets below the amount specified in Article 56(1) and (2), taking into account also any reduction of the net assets that may have occurred through the acquisition, by the company or on behalf of the company, of its own shares in accordance with Article 60(1).
The company shall include, among the liabilities in the balance sheet, a reserve, unavailable for distribution, of the amount of the aggregate financial assistance.
5
Where a third party by means of financial assistance from a company acquires that company's own shares within the meaning of Article 60(1) or subscribes for shares issued in the course of an increase in the subscribed capital, such acquisition or subscription shall be made at a fair price.
6
Paragraphs 1 to 5 shall not apply to transactions concluded by banks and other financial institutions in the normal course of business, nor to transactions effected with a view to the acquisition of shares by or for the company's employees or the employees of an associate company.
However, these transactions may not have the effect of reducing the net assets below the amount specified in Article 56(1).
7
Paragraphs 1 to 5 shall not apply to transactions effected with a view to acquisition of shares as described in of Article 61(1)(h).