- BOOK ONE GENERAL PROVISIONS OF THE CIVIL CODE
- GENERAL PROVISIONS
- TITLE ONE PERSONS
- TITLE TWO TRANSACTIONS
- CHAPTER ONE GENERAL NORMS
- CHAPTER TWO LEGAL CAPACITY AS A CONDITION FOR VALIDITY OF TRANSACTIONS
- CHAPTER THREE FORM OF TRANSACTION
- CHAPTER FOUR VOIDABLE TRANSACTIONS
- CHAPTER FIVE CONDITIONAL TRANSACTIONS
- CHAPTER SIX CONSENT IN TRANSACTIONS
- CHAPTER SEVEN AGENCY IN TRANSACTIONS
- TITLE THREE EXERCISE OF RIGHTS
- TITLE FOUR PERIODS OF TIME
- BOOK TWO LAW OF THINGS (PROPERTY)
- TITLE ONE PROPERTY
- TITLE TWO POSSESSION
- TITLE THREE OWNERSHIP
- CHAPTER ONE CONTENT OF OWNERSHIP
- CHAPTER TWO LAW OF NEIGHBORING TENEMENTS
- CHAPTER THREE ACQUIRING AND LOSS OF OWNERSHIP
- CHAPTER FOUR APARTMENT OWNERSHIP IN MULTI-APARTMENT BUILDINGS [CONDOMINIUMS]
- CHAPTER FIVE LIMITED USE OF PROPERTY BELONGING TO ANOTHER PERSON
- CHAPTER SIX TITLE TO PROPERTY AS SECURITY FOR A CLAIM
- TITLE FOUR PUBLIC REGISTER
- BOOK THREE LAW OF OBLIGATIONS
- GENERAL PART GENERAL PROVISIONS ON OBLIGATIONS
- TITLE ONE CONTRACT LAW
- PART ONE
- TITLE TWO PERFORMANCE OF OBLIGATIONS
- TITLE THREE BREACH OF OBLIGATION
- TITLE FOUR DUTY TO COMPENSATE DAMAGES
- TITLE FIVE ADDITIONAL MEASURES FOR SECURING A CLAIM [ADDITIONAL REMEDIES]
- TITLE SIX TERMINATION OF OBLIGATIONS
- CHAPTER ONE TERMINATION OF AN OBLIGATION BY PERFORMANCE
- CHAPTER TWO TERMINATION OF AN OBLIGATION BY DEPOSIT
- CHAPTER THREE TERMINATION OF AN OBLIGATION BY SET OFF OF COUNTERCLAIMS
- CHAPTER FOURTERMINATION OF AN OBLIGATION BY FORGIVENESS OF DEBT
- CHAPTER FIVE OTHER GROUNDS FOR TERMINATION OF AN OBLIGATION
- TITLE SEVEN MULTIPLE OBLIGEES OR OBLIGORS WITH RESPECT TO AN OBLIGATION
- CHAPTER ONE GENERAL PROVISIONS
- CHAPTER TWO ENTERING INTO A CONTRACT
- CHAPTER THREE STANDARD CONTRACT TERMS
- CHAPTER FOUR CONTRACT FOR THE BENEFIT OF A THIRD PERSON
- CHAPTER FIVE AVOIDANCE OF A CONTRACT
- SPECIAL PART
- PART TWO
- TITLE TWO STATUTORY OBLIGATIONS
- TITLE THREE DELICTUAL OBLIGATIONS [TORTS]
- CHAPTER ONE SALE. EXCHANGE
- CHAPTER TWO GIFT
- CHAPTER THREE RENTAL
- CHAPTER FOUR FINANCE LEASE
- CHAPTER FIVE LEASE
- CHAPTER SIX LEASE OF AGRICULTURAL LAND
- CHAPTER SEVEN FRANCHISE
- CHAPTER EIGHT [GRATUITOUS] LENDING
- CHAPTER NINE LOAN
- CHAPTER TEN CONTRACT FOR WORK [BY INDEPENDENT CONTRACTOR]
- CHAPTER ELEVEN TOURIST SERVICES
- CHAPTER TWELVE CARRIAGE
- CHAPTER THIRTEEN MANDATE
- CHAPTER FOURTEEN ENTRUSTMENT OF PROPERTY
- CHAPTER FIFTEEN FREIGHT FORWARDING
- CHAPTER SIXTEEN BROKERAGE
- CHAPTER SEVENTEEN PUBLIC PROMISE OF REWARD. COMPETITION
- CHAPTER EIGHTEEN BAILMENT
- CHAPTER NINETEEN WAREHOUSE BAILMENT
- CHAPTER TWENTY INSURANCE
- CHAPTER TWENTY-ONE BANKING
- CHAPTER TWENTY-TWO SURETY SHIP
- CHAPTER TWENTY-THREE CURRENT ACCOUNT
- CHAPTER TWENTY-FOUR OBLIGATIONS ARISING OUT OF SECURITIES TRANSACTIONS
- CHAPTER TWENTY-FIVE JOINT ACTIVITY (PARTNERSHIP)
- CHAPTER TWENTY-SIX LIFETIME ANNUITY
- CHAPTER TWENTY-SEVEN GAMBLING. WAGERING
- PART ONE
- BOOK FOUR INTELLECTUAL PROPERTY LAW
- BOOK FIVE FAMILY LAW
- TITLE ONE MARRIAGE
- CHAPTER ONE PROCEDURE AND PRECONDITIONS OF SOLEMNIZATION OF MARRIAGE
- CHAPTER TWO TERMINATION OF MARRIAGE
- CHAPTER THREE VOIDNESS OF MARRIAGE
- CHAPTER FOUR MARITAL RIGHTS AND DUTIES
- CHAPTER FIVE DUTY OF RECIPROCAL SUPPORT OF THE SPOUSES
- TITLE TWO RELATIONS AMONG PARENTS, CHILDREN AND OTHER RELATIVES
- CHAPTER ONE ESTABLISHING THE PARENTAGE OF CHILDREN [FILIATION]
- CHAPTER TWO RIGHTS AND DUTIES OF THE PARENTS WITH RESPECT TO CHILDREN
- CHAPTER THREE DUTIES OF SUPPORT OF PARENTS AND CHILDREN
- CHAPTER FOUR SUPPORT DUTIES OF OTHER FAMILY MEMBERS
- CHAPTER FIVE PROCEDURES OF PAYMENT AND ENFORCEMENT OF PAYMENT OF SUPPORT
- CHAPTER SIX ADOPTION
- TITLE THREE GUARDIANSHIP AND CURATORSHIP
- TITLE ONE MARRIAGE
- BOOK SIX LAW OF INHERITANCE
- CHAPTER ONE GENERAL PROVISIONS
- CHAPTER TWO INHERITANCE BY LAW[INTESTATE INHERITANCE]
- CHAPTER THREE TESTAMENTARY SUCCESSION
- CHAPTER FOUR FORM OF A WILL
- CHAPTER FIVE DESIGNATION OF THE HEIR OF AN HEIR
- CHAPTER SIX FORCED PORTION [LEGITIME]
- CHAPTER SEVEN TESTAMENTARY OBLIGATION (LEGACY)
- CHAPTER EIGHT AMENDMENT OR REVOCATION OF A WILL
- CHAPTER NINE EXECUTION OF A WILL (SETTLEMENT OF THE ESTATE)
THE CIVIL CODE
GENERAL PROVISIONS OF THE CIVIL CODE
Article 1. Concept. Scope of Application
This Code regulates property, family and personal relations of a private nature, based on the equality of persons.
Article 2. Civil Legislation
- The Civil Code, other acts of private law, and interpretations thereof, shall conform to the Constitution of Georgia.
- If legal norms of the same rank are in conflict, the special and the most recent law shall be applied. If general norms provided in this Code are in conflict with special norms, then the special norms shall be applied.
- Sublegislative normative acts shall be applied to regulate civil relations only if they complement the norms of law. If such acts contravene the law, the law shall prevail.
- Customary norms shall be applied only if they do not contravene universally recognized principles of justice and morality, or the public order.
Article 3. Entry of a Civil Law into Force
- A law and sublegislative normative acts shall take effect only after their publication in an official organ for general familiarization according to the established rule.
- Ignorance or misunderstanding of the law shall not be an excuse for not applying the law or for release from the liability stipulated by the law.
- A law loses force if this is literally pronounced by a new law, or if a former law contravenes a new law, or if a new law encompasses the relation regulated by a former law, or if the relation regulated by a former law no longer exists.
- A law of a general nature shall not repeal a special law unless such repeal was the direct intention of the legislator.
- Repeal of a law that repealed a former law shall not reinstate the former law.
Article 4. Denial of Justice in Civil Proceedings Not Allowed
- A court may not refuse to administer justice in civil cases, even if no legal norm exists or the legal norm is vague.
- A court may not refuse to apply a law on the grounds that in its opinion a norm of the law is unjust or immoral.
Article 5. Analogy of Law and Justice
- The legal norm regulating the most similar relation [to the one under consideration] shall apply to regulate a relation not literally prescribed by law (analogy of law).
- In the event that it is impossible to use an analogy of law, then the relation shall be regulated on the grounds of the general principles of justice, as well as in accordance with requirements of fairness, good faith and morality (analogy of justice).
- Norms regulating special relations (norms on exceptions) may not be applied by analogy.
Article 6. Retroactive Force of Laws
Laws and sublegislative normative acts shall not be retroactive except when literally so pronounced by law. A law may not be retroactive if it is prejudicial to or disadvantages a person.
Article 7. Objects of Private Law
An object of private legal relations may be a material or nonmaterial good, of property or nonproperty value, which has not been excluded from [commercial] circulation by law.
Article 8. Subjects of Private Law
- Any natural or legal person may be a subject of private law relations. This rule applies to both entrepreneurial and nonentrepreneurial persons of Georgia and of other countries.
- Private law relations between state bodies and legal persons of public law, on the one hand, and other persons on the other hand, shall likewise be regulated by civil laws unless these relations, in the interests of the state or the public, are to be regulated by public law.
- Participants in a legal relationship shall be bound to exercise their rights and duties in good faith.
Article 9. Purpose of Civil Laws
Civil laws ensure the freedom of civil circulation [activity] on the territory of Georgia, unless the exercise of such freedom hinders the rights of third persons.
Article 10. Independence of Civil Rights from Political Rights. Imperative Norms of Civil Law
- The exercise of civil rights shall not depend upon political rights regulated by the Constitution or by other laws of public law.
- Participants in a civil relation may exercise any action not prohibited by law, including any action not directly foreseen by law.
- Imperative norms of civil laws protect the freedom of others from the abuse of rights.1 Actions that contravene these norms shall be null and void except when the law explicitly defines other effects. Individual interventions [in civil relations] through administrative acts shall be prohibited, unless these acts are applied on the grounds of a specific law.
Article 11. Capacity to Have Rights [Passive Capacity]
- The capacity for right of a natural person – the ability to have civil rights and bear duties – shall arise from the moment of the person’s birth.
- The right to inherit shall arise upon conception; the exercise of this right shall depend upon birth.
- The capacity for right of a natural person shall be terminated by his death. The moment of death shall be the moment at which the brain ceases functioning.
- A natural person may not be deprived of his capacity for right.
Article 12. Legal Capacity [Capacity to Act]
- The ability of a natural person to acquire and exercise his civil rights and duties in full by his will and action (legal capacity) shall arise upon the attainment of the age of majority.
- A person of the age of majority – an adult – is one who has attained the age of eighteen years.
- A person who has entered into marriage before attainment of the age of eighteen years shall be deemed to have legal capacity.
- A minor under the age of seven years (an infant) shall be deemed to be a person without legal capacity [a legally incapable person].
- A person shall also be deemed to be a person without legal capacity when so declared by a court by reason of his mental retardation or mental illness. A statutory representative (guardian) shall exercise the rights of such a person.
- In the event of recuperation or significant improvement in the health of an incapacitated person, a court shall declare him to have legal capacity.
Article 13. Limitation of Legal Capacity by Agreement Not Allowed
Limitation of legal capacity shall be allowed only in instances prescribed by law. In no case may the legal capacity of a person be limited by agreement [or by a transaction].
Article 14. Limited Legal Capacity
- A minor from the age of seven to eighteen years is a person with limited legal capacity.
- An adult over whom a court has established a curatorship shall also be deemed to be a person with limited legal capacity. A person of limited legal capacity and a minor are equal in their legal capacities.
- Limitation of legal capacity ceases when the grounds for limitation of the legal capacity of the person no longer exist.
Article 15. Consent by Statutory Representative in Case of Limited Legal Capacity
A valid declaration of intent by a person with limited legal capacity is subject to the consent of his statutory representative, except when the person of limited legal capacity would acquire a benefit from the transaction.
Article 16. Limitation of Legal Capacity by Reason of Use of Alcohol or Narcotic Drugs
- A court may establish curatorship over an adult who abuses alcohol or narcotic drugs and thereby puts his family in material hardship. He shall be entitled to conduct transactions to dispose of property, or to dispose of wages, pension or other income, only with the consent of his curator, except in the case of petty domestic transactions [which he may do without such consent].
- Restoration of legal capacity in full shall cause removal of the curatorship.
Article 17. Right to a Name
- Every natural person has the right to a name that includes a given name and a surname.
- Change of name is allowed. Change of name shall require the application of the person stating the grounds for change, to be considered by the appropriate body according to the established rule.
- A change of name shall not be an excuse for either termination or alteration of the rights and obligations acquired under the former name. The person shall be bound to undertake all necessary actions to notify his creditors and debtors of the change of his name.
Article 18. Personal NonProperty Rights
- A person whose right to a name is contested, or whose interests are impaired through unauthorized use of his name, shall be entitled to demand that the wrongdoer cease or refrain from such action.
- A person is entitled to demand in court the retraction of information that defames his honor, dignity, privacy, personal inviolability or business reputation unless the person who has disseminated such information can prove that it corresponds to the true state of affairs. The same rule applies to the incomplete dissemination of facts, if such dissemination defames the honor, dignity or business reputation of a person.
- If information defaming the honor, dignity, business reputation or private life of a person has been disseminated in the mass media, then it must be retracted in the same media. If such information is contained in a document issued by an organization, then this document must be corrected and the concerned parties must be informed of the correction.
- A person whose honor and dignity has been defamed by information disseminated in the mass media shall be entitled to disseminate information in answer to the defamation through the same media of information.
- A person may likewise exercise the rights described in paragraphs (1) and (2) of this Article when his image (photograph, film, video etc.) has been disseminated without his consent. The consent of the person is not required when phototaking (video recording etc.) is in connection with his public notoriety, the office he holds, the requirements of justice or law enforcement, scientific, educational or cultural purposes, or when the phototaking (video recording etc.) has occurred in public circumstances, or when the person has received remuneration for posing.
- The protection of the good [i.e. human values such as honor, dignity and privacy] referred to in this article shall be exercised regardless of the culpability of the wrongdoer. And if the violation has been caused by culpable action, a person may claim damages (compensation for harm). Damages may be claimed in the form of the profit that accrued to the wrongdoer. In the case of culpable violation, the injured person may also claim compensation for nonproperty (moral) damage. Moral damages may be recovered independently from the recovery of property damages.
Article 19. Protection of Personal Rights after Death
The rights referred to in Article 18 may also be exercised by a person who, although not the bearer of the name or the right to personal dignity himself, nevertheless has an interest [in it] deserving protection. He may exercise the right to demand such protection of the name and dignity [of the person] which determines the essence of the person and continues to exist as well after death. It shall not be allowed to claim compensation for property damage for defamation of the name, honor, dignity or business reputation of a person after his death.
Article 20. Place of Residence
- The place where a natural person chooses his ordinary dwelling is deemed to be the place of residence of the person. The person may have several places of residence.
- The place of residence of parents having parental rights is deemed to be the place of residence of a minor, and the place of residence of a guardian is deemed to be the place of residence of the ward.
- The place of residence of a person is not cancelled if he leaves this place under compulsion, or for performance of a state duty for a certain period of time.
Article 21. Person Declared to be Missing
- A court, on the petition of an interested person, may declare a natural person to be missing if his whereabouts are unknown and he has not appeared at his own place of residence for two years. Upon the entry into force of the court’s decision, the legal heirs of the missing person shall obtain the power to administer the property of the missing person as property held in trust, including the receipt of profits [benefits] from it. From this property, maintenance shall be paid to the missing person’s dependents and debts shall be paid off.
- If the missing person reappears, or if his whereabouts become known, the court decision on the administration of his property shall be vacated. He shall not be entitled to demand compensation for the benefits received by proper management [of his property during his absence].
Article 22. Declaration of Death of a Person
- A person may be declared dead by the ruling of a court, if for five years there has been no information at his place of residence on his whereabouts, and likewise if he disappeared under circumstances threatening his death, or if his death may be presumed because of some unfortunate accident, and no information to the contrary has been obtained for six months.
- A member of the armed services or other person who disappeared in connection with wartime operations may be declared dead by a ruling of the court not earlier than two years after the day on which war operations ended.
- The day of entry into legal force of the court decision declaring the person dead shall be considered to be the day of his death.
- In the cases referred to in paragraphs (1) and (2) of this Article, a court may declare that the day of a person’s death is the day of his presumed death.
Article 23. Effect of Reappearance of a Person Declared Dead
- If a person who has been declared dead reappears, or if his whereabouts become known, the court shall vacate its decision regarding the person’s death.
- Regardless of the time of reappearance, the person shall be entitled to recover any remaining property that has been gratuitously transferred to another person following the declaration of his death.
- A person who has paid to acquire the property of a person that was declared dead shall be bound to return this property to him, if it is proved that at the time of acquisition of the property the acquirer knew that the person declared dead was in fact alive.
- If the property of the person declared dead was transferred to the [state] treasury and subsequently sold by it, then after revocation of the court decision declaring the person dead the proceeds of the sale of his property by the treasury shall be returned to him.
I. General Provisions
Article 24. Concept. Types
- A legal person is an organized entity, created for the accomplishment of a certain object and having its own property under its ownership, that is independently liable with its own property, acquires rights and duties in its own name, makes transactions and can sue or be sued.
- A legal person may be organized as a corporation, based on membership, dependent or independent upon the status of its members, and engaged or not engaged in entrepreneurship.
- Legal persons of public law participate in civil law relations in the same manner as legal persons of private law. The procedure of their creation, organization and functioning shall be regulated by law.
- The state participates in civil law relations like a legal person of private law. In this respect the powers of the state shall be exercised by its organs (ministries, state departments, etc.), such that they do not constitute [individual] legal persons.
Article 25. Capacity for Right [Passive Capacity] of a Legal Person
- A legal person of public law is entitled to engage in an activity corresponding to the purposes prescribed by law or provided for in its founding documents.
- A legal person of private law (entrepreneurial or nonentrepreneurial) is entitled to engage in any activity not prohibited by law, regardless of whether or not this activity is provided for in its charter.
- A legal person may engage in certain kinds of activities, the list of which is determined by law, only on the basis of a special permit [license]. The right of a legal person to engage in such activity shall arise from the moment the license is received.
- The capacity for right of a legal person shall arise from the moment of its registration and shall cease to exist from the moment that the completion of its liquidation is registered.
Article 26. Name of a Nonentrepreneurial Legal Person
- A nonentrepreneurial legal person shall have a name that includes the indication of its organizationaljuridical form. The firm name of an entrepreneurial legal person shall be regulated by the Law on Entrepreneurs.
- A person who unlawfully uses the name of another legal person is bound to cease such use on demand of the entitled person and to compensate the damage caused by the unlawful use.
- In the case of defamation of honor, dignity or business reputation of a legal person, the rules of Article 18 shall apply.
Article 27. Domicile of a Legal Person
- The place where the administration of a legal person is situated shall be deemed to be the domicile of the legal person. A legal person may have only one domicile (legal address).
- Any other residence of a legal person shall be deemed to be the domicile of its branch.
Article 28. Branch of a Legal Person
- A branch of a legal person − a separate subdivision situated outside the domicile of the legal person − represents and exercises the functions of the legal person in whole or in part.
- A branch is not a legal person. It functions on the basis of an act [charter, legal document] affirmed by the legal person.
Article 29. Entrepreneurial (Commercial) Legal Persons
A legal person whose object is entrepreneurial (commercial) activity must be created in accordance with the Law on Entrepreneurs.
Article 30. NonEntrepreneurial (Noncommercial) Legal Persons
- A legal person whose objective is not entrepreneurial activity may exist as a union (association) or as a foundation. Entrepreneurial activity that is of an auxiliary nature and serves to accomplish a common goal does not alter the [fundamental] nature of a noncommercial legal person. The distribution of profits resulting from such activity among members of a union or among contributors to a foundation shall not be allowed.
- A union is a legal person in which a number of persons set a common goal, and its existence is independent from changes in its membership. At least five founding members shall be required to constitute a union.
- A foundation is a legal person in which one or more founders transfers a special property to the ownership of an independent subject having no membership, for the accomplishment of a useful, common and public purpose.
II. Norms Common to Unions and Foundations
Article 31. Registration of a Union and a Foundation
- A union shall be subject to registration by a court, and a foundation shall be subject to registration by the Ministry of Justice.
- The right to demand registration exists when the charter conforms to the provisions of law, and the objectives of the legal person, filed for the registration, do not contravene the law, recognized moral standards or constitutionaljuridical principles of Georgia. In the case of a foundation the property shall correspond to the objectives set.
- An application and charter signed by all founders and all members of the governing board are necessary for registration. The materials necessary for registration of a union shall be filed with the court [having jurisdiction over] the location of the residence of the union.
- The court shall decide on the registration within one month from the day of filing of the application. If within this term no decision is made, the registration shall be deemed effective. The same rule applies when the registration is to be carried out by the Ministry of Justice.
- The court’s refusal to register [a union] must be grounded on cause and provide for the possibility of appeal and the rule thereof. The appeal against the refusal may be filed with a court.
Article 32. The Charter of a Union and a Foundation
- The organization and structure of a union and a foundation shall be regulated by a charter.
- The charter shall include:
- Objectives of the activity;
- The name [of the organization];
- The domicile (legal address);
- The procedure for property liquidation and distribution;
- The name, surname, date and place of birth, occupation and place of residence of each founder, contributor and member of the governing board of the union or the foundation, procedure for calling board meetings and making decisions at such meetings;
- Authority [powers] of union members.
- The charter may include other information as well, namely:
- The functions of other bodies of management and control;
- The competence of the [General] Meeting of the union members.
- The charter of a foundation, in addition to the information referred to in paragraph (2) of this article, shall include:
- The minimum amount and type of contributions;
- Instructions on use of the amount;
- The charter shall be notarized.
Article 33. Registration Data
- The registration document [record] of a union and a foundation shall include the following information: name and domicile of the legal person, the object of its activity, the date of confirmation of the charter, the identity of the founders, the identity of the members of the governing board, and possible limitations on their representational authority.
- Registration data shall be published.
- Any person may examine the records in the register and demand its written extracts.
Article 34. Registration of Changes
The governing board shall immediately file changes [to the entity’s data] requiring registration with a court (Ministry of Justice) in notarized form. These alterations shall be entered in the register and published.
Article 35. State Supervision Over Activities of Union and Foundation
A court (the Ministry of Justice) shall revoke the registration of a union or a foundation [as the case may be] if it has actually turned to entrepreneurial activity or if accomplishment of the objectives provided for in the charter has become impossible.
Article 36. Leadership and Representation
- The right of leadership [direction] is vested in the members of the governing board and, in individual cases, in special representatives, and this simultaneously becomes their duty.
- Limits on the leadership shall be defined by the charter in accordance with the objectives of a union or a foundation.
- The charter may provide that one person will exercise all authority individually, or it may establish joint direction by two or more persons.
- The charter may provide whether the engaging in some activities requires the consent of other controlling bodies [of the entity].
Article 37. Competence of the Governing Board in Relations with Third Persons
- The governing board represents a union or a foundation in its relations with third persons. The charter shall regulate whether the persons given representational authority may act individually, jointly between some of them, or jointly between all of them.
- Representational authority may be limited by the charter. These limitations shall have legal force visàvis third persons only if the limitations have been recorded in the register, except where the third persons knew of these limitations.
- The charter may establish a special representative of a union or a foundation. The charter shall regulate the limits of his representational authority and the form of representation, which shall also be registered.
Article 38. Compensation for Damage
- A union or a foundation shall be liable for damages sustained by third persons as a result of culpable action by a member of the governing board, or other agent [representative], in the course of performing his duties.
- Persons authorized to represent the union or foundation shall conduct the entity’s affairs conscientiously [in good faith]. If they fail to perform this duty, they shall be liable before the union or the foundation for the damage caused thereby. The union or foundation may not refuse to demand damages if necessary for the satisfaction of the claims of third persons.
- A union or a foundation shall not be liable for the obligations of its members. Likewise, the members shall not be liable for the obligations of the union or the foundation.
Article 39. Reorganization and Liquidation of Union and Foundation
- Reorganization (merger, accession, division, spinoff, transformation) of a union or a foundation shall be carried out according to the procedure prescribed by law.
- Liquidation of a union or a foundation occurs under the circumstances provided for in the charter; as a result of accomplishment of the object of the entity; or upon bankruptcy of the entity or revocation of its registration.
- During liquidation of the entity the current affairs shall be concluded; claims ascertained; remaining property valued in monetary terms; the [claims of] creditors satisfied; and the remaining property distributed among entitled persons.
- The persons entitled to the distribution of the property may be defined in the charter. [Otherwise] court or the Ministry of Justice [as the case may be] shall transfer the remaining property to one or several unions or foundations that promote the same or similar objectives as those of the union or the foundation being liquidated. If no such organizations exist, then a decision may be made on transfer of the remaining property to [another] charitable organization or to the state.
- Information on the liquidation of the entity shall be made public. The property may be distributed one year after publication of the liquidation notice.
- Liquidation is conducted by the governing board of the entity. In extraordinary circumstances, a court (or the Ministry of Justice) may appoint other liquidators. The liquidators are liable in the same manner as the members of the governing board.
III. Special Norms on Unions
Article 40. Governing Board
- The Governing Board shall be elected by the [General] Meeting of the members for a term of four years, unless otherwise provided for in the charter of the entity. After expiration of this term, the powers of the Governing Board remain effective until the election of a new Board. The charter of the union shall also establish rules regarding the remuneration of the members of the Governing Board.
- Decisions on election of members to the Governing Board may be revoked at any time. The charter may provide for significant grounds related to the revocation [of the authority of Board members].
- If the Governing Board has fewer than the minimum number of members required by the charter, then the court may designate members from the same union [to occupy the vacant slots] during a transitional period. In this case, the members of the Board shall call a General Meeting of the members of the union to make the final decision on Board membership.
Article 41. General Meeting of the Members of a Union
- The General Meeting of the members is convened by the Governing Board at least once per year, or when the union’s interests so require. A General Meeting may be convened by the written request of onetenth of the members, which shall indicate the agenda of the meeting.
- Each member shall be notified of the convening of the Meeting either in writing or by the publication of a notice in the printed periodical of the union no later than two weeks before the Meeting.
- The Meeting of the members makes decisions on all matters outside the competence of the Governing Board. A decision of the Meeting is valid only when an entry with respect to that matter appeared on the agenda included in the notice at the time of calling the Meeting.
- A decision of the Meeting is made by a majority of the votes of members present and a decision on alteration of the charter by a majority twothirds of such votes. A majority of fourfifths of the votes of all members of the union shall be required to alter the purpose of the union. Members who cannot be present at the meeting may submit their votes in writing. Such members shall have equal status to the members present at the meeting [i.e. for purposes of quorum and voting].
Article 42. Commissions
The General Meeting of members may establish commissions in accordance with the charter, and delegate to them the powers of the Meeting during periods between the Meetings, especially for supervising the activities of the union. Only members of the union may be members of such commissions.
Article 43. Advisory Bodies
In the process of carrying out the objectives of the union, the General Meeting of the members may establish special advisory boards, if so provided in the charter. A person who is not a member of the union may be a member of such an advisory group.
Article 44. Union Membership
- The Governing Board admits members to the union on the basis of written applications by interested persons, or in other cases provided for in the charter.
- Each member is entitled to withdraw from the union. The charter may provide for a certain period of time for withdrawal, which period may not exceed one year. If a member seeks to leave the union for a legitimate reason, then there is not a requirement for a period of time for withdrawal.
- Membership may not be transferred to or inherited by other persons unless otherwise provided for in the charter.
- In such cases as may be provided for in the charter, or if significant grounds exist, the General Meeting of the members may expel a member from the union. The expelled member may file an appeal against the decision to expel him with a court.
- If a union serves a significant function in meeting the vital social or other needs of a person interested in joining, then such person is entitled to demand admission to the union, unless his admission would contravene the fundamental principles of the union.
Article 45. Nonregistered Union [Unincorporated Association]
- Matters concerning the organization and structure of a nonregistered union [unincorporated association] are defined by the mutual agreement of its members. A nonregistered union shall not be considered a legal person.
- Membership fees or property acquired with such fees constitute the common property of the union.
- A nonregistered union may be represented in court or in extrajudicial relations by its members, or by persons so authorized.
- The claims of creditors may be satisfied from the common property of the [nonregistered] union. In addition, persons who have acted on behalf of the union shall be liable as obligors [debtors] both individually and jointly.
IV. Special Norms on Foundations
Article 46. Foundation for Recipients2
The objective of a foundation, in addition to the objectives defined in paragraph (3) of Article 30, may also be the support of certain persons or specifically defined groups of persons. All persons who are entitled to receive a share from the property of the foundation (recipients) may, subject to the consent of all members of the Governing Board, dissolve the foundation or alter its objective, provided the Ministry of Justice agrees as well.
Article 47. Obligation to Contribute to a Foundation
- A founder (founders) shall assume liability, in the form of a notarized document creating the foundation, to contribute property to the foundation in the amount required to accomplish the purpose of the foundation. If the property is inadequate, the registration of the foundation shall be refused.
- Refusal to transfer the [indicated] property to the foundation may occur at any time before registration of the foundation. Within one month after registration, the property shall be transferred in full; otherwise the registration shall become invalid.
- The objectives of the foundation shall be financed from the income derived from its property, unless otherwise provided for in the charter. If for a certain period of time this income is not sufficient, then the activity of the foundation shall be reduced or suspended, and the income shall be added to the property of the foundation.
- A report on the condition [state] of the property of the foundation shall be prepared annually, in an appropriate form.
Article 48. Supervisory Body
- The charter may provide for establishment of a Supervisory Body (Board of Trustees), the members of which are selected by the Founders of the foundation, for the purposes of appointing, recalling, and supervising the Governing Board and special representatives. After the death of the Founders, new members may be added to the composition of the Supervisory Body, by the Recipients or within the limits defined in the charter (rule of “cooptation”).
- In all other cases the Ministry of Justice ensures that the foundation is administered according to the law and its charter. The Ministry of Justice may obtain information on the activity of the foundation and examine its documentation.