๐ทโโ๏ธ๐ทโ ๐ทโ ๐ทโ ๐ทโ ๐ทโ Company Law
Preliminary
This Law shall govern the Status of Companies and other entities possessed of legal personality apart from those of their Owners in Liberland, their Incorporation, their Legal Form and their Transfer and Dissolution.
Definitions
Articles of Incorporation shall be the Company's founding document, describing its core bylaws, functions, institutions, operations, and purpose.
Bylaws are rules that the Shareholders of a Company agree upon that govern the operations of the Company, especially towards themselves and towards third persons.
Capital shall be wealth in the form of money or other Assets, such as the promises of Persons to regularly perform work owned by a person or organization or available for a purpose such as starting a company or investing. In the sense of this Law, Capital shall be held by a Company or another entity with Legal Personality and shall constitute its operating assets and the means by which it acts in the world. The sum of all Capital of a Company is its Total Registered Capital.
Charitable Organization shall be a legal person, domestic or foreign, the main or the only purpose of which shall be to serve as a charity, mutual aid or conservation organization.
Company is an association of Persons and Capital formed by Persons or by other Companies for the purpose of business or another kind of undertaking.
Cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned enterprise.
Corporate Governance is how the Founders and the Shareholders decide the Company should be managed. Corporate Governance consists of the Persons acting in the capacity of Corporate Governance, the rules by which they are bound, and the processes they must follow. They might work in that capacity themselves or hire professionals who are not the Company's Owners.
Company Name is the primary name of the Company, which uniquely identifies it and under which it is registered in the Company Registry. There shall be not more than one Company Name to one Company, and no two Companies shall have the same Company Name.
Creditors shall be the persons or entities to which an entity is a due debt or other obligation.
E-Residency is a status where one undergoes the Know Your Customer (KYC) process and commits certain resources to gain access to Liberland Company Services, including the ability to Found, Own and be the Ultimate Beneficiary Owner or the Shareholder of a Liberland Company.
Foundation is an organisation that does not aim to make a profit. The money raised by a foundation consists of donations, loans, subsidies and legacies. Its primarily purpose is to support a social or non-profit cause. It may also be a business, but its profits must be allocated to the foundation's cause or purpose.
Legal Personality means that the Law of Liberland and the State Courts of Liberland treat a fictitious entity as if it was a real person of a specific type, as defined in this Law. Given that this entity is not "real" in the sense of the natural world, it can't make decisions on its own and, therefore, must have owners and (ultimately) Ultimate Beneficiary Owners (i.e. Natural Persons) who decide in its stead. This is a sharp distinction from the obligatory self-ownership of Natural Persons, who may not be owned in Liberland by anyone else but by themselves.
Owners are, for this Law, the Persons or entities who have property in an entity possessed of Legal Personality.
Founder shall be a Person or another entity which approaches the Company Registry.
Incorporation is the process prescribed by this Law whereby an entity gains Legal Personality apart from that of its owners.
Principal shall be a Person or entity designated according to the Articles of Incorporation to represent a Company in matters of regular management and act in its name towards third persons. Together or apart where stipulated in the Articles of Incorporation, the Principal form the Statutory Organ of the Company.
Person means a human being or another entity possessed of Legal Personality in Liberland. A human being shall also be known as a Natural Person.
Registrar of Companies is an Agency under the Ministry of Interior designated to operate, set up and maintain the Liberland Company Registry; an information system used to record Liberland Companies and other entities possessed of Legal Personality other than those of their Owners.
Registered Office is the address under which the Company stands registered in the Company Registry. It must be, in fact, reachable at that given address.
Trade Name is one of the names by which a Company presents itself. Trade Names shall be registered in the Company Registry for transparency's sake.
Ultra Vires is where a person of whom the third person may rationally assume that they act in the name of a Company either has no right to perform the given act or acts beyond their mandate from the Company.
Ultimate Beneficiary Owner (UBO) shall be the owner or the person who is effectively in control of an organization. Who is a UBO of a company shall be determined using internationally accepted standards and is in itself beyond the scope of this Law.
Shares are the proportional division of the ownership of a company. Shares are denominated in a currency and are fungible, but there could be different types of shares as defined in the Articles of Incorporation.
Shareholder is a person or an entity holding Shares of a Company or another entity possessed of legal Personality apart from its Owners.
In addition to the above, this Law uses terms defined in the Constitution, such as Liberland, Property, Citizenship, Law or Administration.
Section 1: Legal Personality
Art. 1 Legal Personality
ยง 1
Liberland shall have the power to grant to certain entities that are not Natural Persons a Legal Personality of their own apart of the Legal Personality of their Owners or Founders. This power shall be exclusive and reserved for the State of Liberland within Liberland's jurisdiction.
ยง 2
All entities to which Liberland grants a Legal Personality apart from their owners shall be written in the Registry as prescribed by this Law.
A Liberland entity not written in the Registry or not written according to the process prescribed by this Law shall not possess a Legal Personality apart from its owners.
ยง 3
Where a Law speaks of Persons, it shall also mean Legal Persons, unless it speaks of Natural Persons specifically or unless it is otherwise clear from the text that other than Natural Persons should be excluded.
Art. 2: Ownership
Unlike Natural Persons, an entity possessed of a Legal Personality shall be owned by other Persons or other entities who shall, in fact, make decisions for the entity. This shall not be interpreted as slavery but as a necessity, as these Legal Persons lack a natural will and ability to make decisions for themselves.
Art. 3: Resctriction on Form
Given that the granting of Legal Personhood to an entity which is not a Natural Person is an act that doesn't correspond to nature, Liberland shall restrict this by Law. There shall only be those types of entities incorporated with Legal Personhood distinct from their owners as are enumerated by this Law.
Art. 4: Foreign Entities Posessed of Legal Personality
ยง 1
Liberland shall acknowledge the existence of similar entities incorporated in other States by similar means, where this incorporation or the existence of the entity is neither illegal nor immoral.
There shall be a presumption of their Legal Personality made contingent to the correctness of their incorporation and of their registration in their home country.
ยง 2
There shall be no mandate to register these foreign entities in the Registry of Liberland, unless they choose to do so or unless they incorporate as a Liberland entity.
ยง 3
The Administration and, in particular, the Judiciary shall interpret the properties of those foreign entities analogically according to this Law.
Art. 5: Mandatory Incorporation
For an entity that is not a Natural Person to be granted the privilege of a Legal Personality by Liberland, the Founders must incorporate the entity using the process described in this Law. The entity shall acquire its Legal Personality in Liberland upon its Incorporation.
Upon completing the Incorporation, the Founders become the first Owners of the new Legal Person.
Art. 6: Subsidiary Use of the Company
Where the Founders do not choose the entity's form, the Incorporation shall result in their entity becoming a Company. What applies to Companies in this Law shall also apply to other entities with Legal Personality as described in this Law, unless the specific provisions regarding those entities stipulate to the contrary.
Section 2: The Company
Art. 7: Company
A Company shall be an association of Persons and Capital possessed of its own Legal Personality apart of the Legal Personalities of its owners, formed for the purpose of business or another kind of undertaking.
Art. 8: Trade Name
ยง 1
A Company shall act under the Trade Name or Trade Names under which it is registered during the Incorporation or under the names which shall later be registered for it.
ยง 2
A Company shall identify itself by one of its Trade Names in all its dealings.
Should the Owners decide to change a Trade Name of the Company, remove it, or add a new Trade Name, they shall submit the new or changed Trade Name to the Registrar of Companies.
ยง 3
No new Trade Name shall be registered that is too similar to an already existing Trade Name of an existing company, to a name of a Person, of another institution and the like.
Trade Names shall likewise not be fraudulent, hence they shall not be clearly in conflict with the nature or the purpose of the Company or made for the express purpose of commiting fraud.
Art. 9: Company Name
ยง 1
The Founders shall choose one of the Trade Names as the Company Name.
When issuing accounts, invoices and other documents where certainty is expected according to established business practice, a Company shall always communicate using its Company Name.
A Company shall always have only one Company Name.
ยง 2
Each Company Name in the Register shall be unique and no Company name shall be registered twice.
Art. 10: Principals
ยง 1
A Company is not a Natural Person and is incapable of acting independently. The Owners shall decide which Persons or entities will be mandated to act on behalf of the Company. They shall then apply by the Registrar of Companies to be registered as the Principals of the Company.
ยง 2
When a Person or an Entity acts in the capacity of the Principal, their actions performed ostensibly in the name of the Company shall bind the Company as if the Company itself performed these actions.
Art. 11: Fiduciary Duty
Each Principal is responsible to the Company by an implicit duty to:
a) perform the task pertaining the regular management of the Company as described in their job description or in other documents such as the Articles of Incorporation; they must perform this duty with proper prudence of a motivated and rational person and in a professional manner;
b) act in good faith, meaning being sincere in one's business dealings and without a desire to defraud, deceive, take undue advantage, or in any way act maliciously towards the Company, its Shareholders or others.
Art. 12: Registered Office
ยง 1
A Company shall register one address as its Registered Office. The Registered Office shall be an address where it and its Principalsare regularly available for personal visits and correspondence.
A Company shall have the option to register other addresses as its other offices and places of work besides the Registered Office. The Company needs not to be available there for third Persons, but these addresses must be either owned or hired and must be, in fact, used by the Company.
ยง 2
When it makes sense given the Company's scope of activity, a Company is at liberty to realize its availability at the Registered Office using electronic communications. The Company must ensure that this does not diminish the quality of that availability and that the visitor shall have the full access to the Company they would have should they be able to come in person.
The Company shall ensure that it is available at the Registered Office at times that such availability should be expected according to established business practices.
Art. 13: Actions on behalf of the Company before its Incorporation
The Founders acting on behalf of a future Company before its incorporation shall be personally liable for their actions and entitled themselves for the benefits of these actions, unless and until the Company is Incorporated.
On the Incorporation date, the rights and obligations stemming from those actions shall transfer to the Company.
Art. 14: Acting Ultra Vires
ยง 1
Should the Principal act in a way not conform with the mandate given to them by the Owners, the Principal's action shall still bind the Company concerning a third Person.
The exception is when the third Person knew that the Principal had exceeded the boundaries of its mandate while acting and at the time of the action.
ยง 2
The Owners shall retain the right to demand the restitution of any damages resulting from an act of the Principal which has overstepped the boundaries of their mandate.
Art. 15: Liability
ยง 1
A Company shall be liable for fulfilling its obligations with its entire property.
ยง 2
A shareholder shall be liable for the obligations of their Company by their Share and further only up to the amount of the unpaid nominal value of their Shares unless the Owners stipulated otherwise in the Articles of Incorporation.
ยง 3
The Principals shall have fiduciary duty towards the company and shall be responsible by their entire assets for the losses they cause in breach of this duty. The Fiduciary Duty shall entail:
a) Duty of loyalty, whereby the Principal must put the interests of the company and its stockholders their own personal interests in making decisions for the Company and evaluating opportunities. This includes and is not limited to not taking opportunities that arise for themselves before offering them to the company, and not divulging or using company confidential information for personal gain.
b) Duty of care, whereby the Principal must exercise care in making decisions as a director, based on adequate information and a good faith belief that their decisions are in the best interest of the company and its shareholders.
Art. 16: Capital
ยง 1
The Company shall be composed of its Capital, which shall be the economic factors used as the means by which the Company acts. The Owners shall decide which economic factors will form the Capital of the Company.
ยง 2
The Capital shall be registered in a currency, fiat or crypto, or commodities habitually used as a currency. The Owners shall denote the currency by every mention of the Capital. The minimum registered Capital shall be equivalent to one LLD.
ยง 3
The Capital shall be divisible into Shares, regardless of its nature. The Founders or later the Owners shall bear the responsibility for the division to be based on the real valuations of the given Capital.
2) Shares shall measure the ownership of the individual Ownerืฅ
Art. 17: Mandatory KYC Requirements
A Principal, a Shareholder who is a Natural Person and all the Universal Beneficiary Owners, including those who own the Company through foreign entities, must be E-Residents of Liberland or Citizens of Liberland.
Where the E-Residency or Citizenship status is lost, the Person in the Company must ensure succession to another Person or entity which fulfils this requirement. If this is not achieved without unnecessary delay, at the latest 6 months from having lost the capability, the Registrar shall sell the Share in the Company on behalf of the Person in a forced auction.
Section 3: Registrar of Companies
Art. 18: Registrar of Companies
The Registrar of Companies, henceforth "the Registrar", shall be an Agency under the Ministry of Interior to operate, set up, and maintain the Liberland Company Registry.
The Company Registry shall be an information system holding records of all the Companies and other Liberland entities posessed of Legal Personality apart of their Owners or Founders.
Art. 19: Registered Information
ยง 1
The Registrar shall keep the following set of data about each Company in the Company Registry:
a) the Company Name;
b) the Identification Number, a unique alphanumeric identifier given to the Company upon its Incorporation by the Registrar;
c) the truthful scope of the business of the Company;
d) the registered office of the Company;
e) the total registered Capital of the Company and the Currency in which the Capital is to be counted;
f) the total number of Shares and the value per Share;
g) the name, surname, date of birth, address and passport number of each member of the Statutory Organ;
h) the Articles of Incorporation or any similar document or documents which factually govern the functioning of the Company and which set up its Corporate Governance and its workings;
i) the list of Ultimate Beneficial Owners (UBOs) of the Company, their dates of birth, addresses and passport numbers;
j)
i. the name, surname, date of birth, address and passport number of each Shareholder and the number of shares to their name;
ii. the Company Name, the registration number and the country of registration for Shareholders who are Companies and the list of their UBOs with their dates of birth, addresses and passport numbers.
k) the rights of third Persons regarding Shares;
l) the history of transfers of Shares, baring shares that are publicly traded; and
m) other types of information which shall not be mandatory to Register.
ยง 2
Certain Company Data in the Registrar shall be made publicly available to Third Persons for reasonable Remuneration. The Remuneration shall be set in such a way so as the amount of which should not discourage repeated attempts to view the information in the Registrar.
ยง 3
The Company Data in the Registrar shall enjoy the presumption of correctness vis a vis the Public Administration and vis a vis Third Persons before the Law in Liberland.
Art. 20: Data Maintenance
A Company shall be responsible for actively maintaining its Company Data. In the event of any change to that Data, the company shall send a written Notice of Change of Company Data to the Registrar containing the new Data and any information which should replace the previous Data and the date on which it should be replaced.
Art. 21: Registrar Fee
Each company which is incorporated under this Act and has not been removed, deregistered or struck off shall pay to the Registrar an annual fee prior to the 31 December of the current year.
The Registrar shall draft and maintain a Regulation stating the current fee rate. The fee shall be based on the actual expenses of the Registrar and on its regular functioning.
Section 4: Incorporation
Art. 22: The Articles of Incorporation
The Founders shall begin the Incorporation of a Company by drafting up the Articles of Incorporation of the Company, which shall be the founding document of the nascent Corporation. It shall define at least the following about the Company:
a) the intention that the entity described in the Articles of Incorporation should be a Company registered in Liberland;
b) the Company Name and its Trade Names;
c) the purpose of the future Company and the main object or objects of its actions;
d) the basic decision processes within the Company;
e) the Corporate Governance of the Company when applicable;
f) the total Registered Capital of the Company, including the currency in which it is to be counted; and
g) the total number of Shares in the Company.
Art. 23: Company Registration Form
The Registrar of Companies shall draft the Company Registration Form template which shall be used for the purpose of Company Registration. The Company Registration Form shall be based on the data registered in the Registrar according to this Law.
The Founders shall fill the Company Registration Form based on the data in their Articles of Incorporation and on the objective reality; the data on the Form and in the Articles of Incorporation have to agree completely with each other or the Company will not be registered.
Art. 24: Filing the Registration
The Founders shall deliver the Company Registration Form to the Registrar of Company along with the following documents in the Attachment:
a) the Articles of Incorporation;
b) the Sanctions Declaration Form for the members of the Statutory organ and the UBOs of the company, where they inform Liberland as to whether to their knowledge
they are politically exposed persons (PEPs) as understood by the modern standards of KYC;
there are sanctions in force against them;
they appear on an offshore leaks list;
they have been accused of financial crimes in any country; or
they have been convicted of financial crimes in any country.
c) The Public key of the KYC-collected Wallet of each Founder, Owner, Shareholder and Ultimate Beneficiary Owner; or their ID number, the QR code from their identification document or their name, surname and birthdate.
Art. 25: Due Diligence
ยง 1
The Registrar shall perform a KYC (Know Your Customer) procedure on the Founders, the Shareholders, and the Ultimate Beneficiary Owners based on the documentation delivered and on other sources of information.
ยง 2
Where the Registrar should require more information from the Founders to complete the KYC procedure, the Registrar shall specify which information is missing and shall set a reasonable time limit to deliver the required information and documents.
Art. 26: The Incorporation
After the KYC procedure is completed and the data verified, the Registrar shall publish the data in the Company Registry. The Company shall be thereby Incorporated. It shall acquire its Legal Personality by the moment the Registrar publishes its data.
Section 5: Shares
Art. 27: Shares
ยง 1
A Share in a Company shall represent the proportional participation of an Owner at the Company. It shall count as the relative weight of their Ownership for decision-making and asset an when the Company is co-owned by more than one Owner.
Shares shall be Movable Property for Law.
All shares of one Company shall be of equal nominal value.
ยง 2
Shares shall always be issued in money or money-like instruments, including and not limited to cryptocurrency and commodities habitually used as money.
The nominal value of each issued share shall be an integer number.
Art. 28: Dividend
The Shareholders shall have the right to their equal share in the Profit of the Company, henceforth 'Dividend'.
The Company might decide to distribute profits in other forms than the Dividend. The Court will set aside any such scheme built, in effect, at the cost of or before fulfilling the Company's obligations regarding the regular Dividend.
Art. 29: Shareholder Meeting
ยง 1
All Shareholders shall have the right to participate in the management of the Company. The Shareholders shall collectively be able to decide democratically the details of how to exercise this Participation.
ยง 2
The ownership of a Share in a Company gives the Shareholder the right to participate in the Shareholder Meeting, the assembly of all the Shareholders, which shall be the company's highest decision-making organ.
The Shareholder Meeting shall make its own rules of proceedings, but it shall not exclude any Shareholder from its decision-making unless that Shareholder decides to be excluded themselves; the Shareholder may always take this decision back.
Art. 30: Voting at the Shareholder Meeting
Each shareholder shall have a right to vote at the Shareholder Meeting proportional to the number of their shares.
The Shareholder Meeting can stipulate other rules for voting, including setting up the rules for supermajorities required for certain types of decisions but never excluding certain Shareholders completely from the decision-making.
Art. 31: Share Classes
Besides the ordinary shares as described above, the following Share Classes are permissible:
a) Non-voting Shares, which entitle the Owner to Dividends, but not to a voice at the Shareholder Meeting; regardless, the Company shall establish channels by which even those shareholders might be heard;
b) Preference Shares, which entitle the Owner to a fixed amount of Dividend each year, paid out preferentially before the other Shareholders are satisfied.
c) Redeemable shares are issued on the terms that the Company will/may buy them back at a future date.
Art. 32: Tokens
Tokens issued as cryptocurrency to the customers of the Company shall not be seen as Bearer Shares under the following conditions:
a) the owners of the Company have regular Share next to their tokens and they register the real Shares in the Company according to this Law; and
b) The Company uses in fact those registered Shares as opposed to the tokens as the real instrument to determine relationships of the Ownersin the Company.
Art. 33: Registration of Shares
ยง 1
All Shares of Companies registered in Liberland must be registered by the Registrar of Companies in Liberland or they shall be null and void.
ยง 2
A Share shall contain at least the following information upon the moment of its Registration:
a) the Company Name, its Registered Office and a unique Registration Number;
b) the Nominal Value of the Share and the Currency in which it is Issued;
c) the designation of the Shareholder, including their legal name, address and birth date and the Company name and the Registration Number for a Shareholder who is a Company;
d) the amount of the registered capital and the number of all Issued Shares of the company as of the Date of Issuance of the Share;
e) the Share Class;
f) the designation of special rights or obligation with the share; and
g) the date of issuance of the Share.
Art. 34: Publicly Traded Company
ยง 1
A Company that registers a part of its Share at a reputable exchange or other such institution and follows the rules of reporting given out by such institution might waive the Shareholder of the publicly traded Shares to be a Liberland E-Resident or Citizen.
A Publicly Traded Company shall also have no duty regarding the Publicly Traded Shares to register their owners by the Registrar, as the exchange has already registered the Owner.
ยง 2
Where the Court deems an exchange as not reputable by failing to provide equal or higher levels of transparency than Liberland's standard requires, the provisions of this Article shall not apply. The Company shall have three months to register all its shares, after which the Publicly Traded portion of its Shares becomes null and void.
Art. 35: Prohibition of Bearer Shares
No Company shall issue Bearer Shares or similar instruments. All Shares shall have their Owner registered either in the Company Registry or at the reputable exchange in case of Publicly Traded Shares.
Any such instruments which might have been issued elsewhere shall be subject to Registration as Name Shares before they might go into legal effect in Liberland.
Unregistered Bearer Shares shall be null and void.
Section 6: Transfer of Companies
Art. 36: Transfer of Companies
A Company shall be transferrableby its Shares; in order to fully Transfer a Company, the current Owners have to transfer all their Shares to a new Owner or Owners.
Shares can be likewise transferred on a by-share basis; both Transfers shall be handled in the same manner by Law in Liberland.
Art. 37: Transfer of Shares
ยง 1
A Share in a company shall always be transferable, despite any stipulation to the contrary.
ยง 2
In order to transfer a Share, the Transferer and the Transferee shall draft a Contract of Transfer. This Contract shall always have a written form and shall be signed by the Transferor and Transferee. This written form may include blockchain-based smart contracts or similar forms; if so, it shall also include a translation into human-understandable language.
The Transferer and the Transferee shall then submit the Contract for Registration by the Registrar of Companies. The Transfer shall gain legal effect by the moment it is published in the Company Registry.
ยง 3
The Transferee must become an E-Resident or a Citizen of Liberland before the Transfer of Share can be realized.
Art. 38: Transfer of Shares in Foreign Companies
ยง 1
Transfer of shares in foreign Companies according to foreign Law shall generally be recognized as valid before the Law in Liberland.
ยง 2
The Court may declare null and void a Transfers of Shares performed according to Foreign legislation, which should offer mechanisms clearly less transparent than those of Liberland and where it is supported by evidence that the Transfer was performed predominantly using these mechanisms.
Art. 39: Right of First Purchase
Before issuing new Shares or before transferring existing Shares, the Statutory organ shall offer the Shares to all the current Shareholders at such price and on such terms as those that the prospective buyer would have offered.
The prospective Seller shall send this offer to all the other Shareholders. It shall stand open for a period of at least one week after the receipt of this communication by the last Shareholder.
Should the offer not be accepted, the Shares may be offered to the third person as originally intended.
Art. 40: Register of Shareholders
A Company shall keep its own internal register of Shareholders, which shall contain at least
a) sufficient personal information for third parties to be able to identify and find the Shareholders; and
b) the information as to how many Shares each Shareholder holds.
The internal register shall also contain historical data about the past Shareholders and data indicating the date upon which the Shareholders gained their Shares and the date upon which they divested themselves of their Shares.
Section 7 Dissolution
Art. 41: Winding Up
The Shareholder Meeting may pass the motion to wind up the Company and voluntarily terminate it. Upon passing this motion, the Company shall authorize a Liquidator to carry on the business of the Company before it can be dissolved.
Art. 42: Satisfying Obligations
The Liquidator shall work to satisfy all the obligations of the Company to its creditors until they have been fully satisfied or until it becomes clear that there are not enough Assets to meet all the obligations.
All the activities of the Company, which is in the process of winding itself up, shall be ultimately aimed at fulfilling this goal without unnecessary delays.
Art. 43: Dissolution
ยง 1
Should the obligations of the Company be all satisfied, the Liquidator may continue running the Company only to preserve as much of the Company's worth in Assets as possible to divide those between the Shareholders after the Winding up is completed and to make sure this happens without unnecessary delays.
This division of all the remaining Assets of the Company shall be proportional to the Share of each Shareholder and shall commence upon the dissolution of the Company.
ยง 2
Upon completion of a winding-up, a liquidator shall submit to the Registrar a written Statement that the winding-up and dissolution have been completed and that there are no more Assets left to the Company.
Art. 44: Striking Off
Upon receiving the written Statement, the Registrar shall strike the Company off of the Registrar. The Company shall thereby be Dissolved, and it shall no longer possess a Legal Personality separate from its Owners.
Art. 45: Indebtedness
Should
a) the obligations of a Company have more value than its assets for three or more consecutive months; and/or
b) the Company shall not be able to fulfil its obligations for a longer time, no less than six months; and
c) the Company should fail to provide a satisfactory solution despite persistent good faith attempts of its Creditors at a consensual resolution of the issue;
a Creditor of the Company may make a motion at a Court to declare the Company Bankrupt.
Art. 46: Declaring Bankruptcy
The Registrar of Companies might likewise make such a motion at a Court in situations where the company:
a) no longer satisfies the requirements of this Act for the functioning of Companies;
b) no longer functions as a real Company; for example, it seems to be defunct in fact, or its owners are repeatedly failing to respond to attempts at contact at their Registered Address;
c) fails to pay fees imposed by the Registrar under this Act;
d) refuses to submit to KYC procedures where required by this Act or fails to correct the issues which stemmed from those procedures;
e) acts against the Law; and/or
f) conducts business for fraudulent purposes as Law or the international community defines these.
This motion shall not be the first way the Registrar shall try to resolve this situation. Such a motion shall be made only after all the other, more consensual attempts to resolve the problem will have repeatedly and persistently failed, and if there shall be no more realistic chance that any other such measures might succeed in the future.
Art. 47: Halting the Company
Should the motion for Bankruptcy be sustained, the Court shall declare the Company Bankrupt. The Statutory Organ shall lose their right to represent the Company, and the rights of the Shareholders over the Company shall be suspended.
Art. 48: Appointing a Liquidator
The Court shall without delay appoint a Person of well-known skill in Law and Business Management, a known Person of integrity, as the Liquidator for this Company.
While appointing the Liquidator, the Court shall consult the Creditors who shall offer their candidates, but the Court shall not be obliged to accept them and may instead choose a different Person. In case of a rejection, the Court shall provide detailed reasoning.
Art. 49: Enforced Liquidation
ยง 1
The Liquidator shall aim to satisfy the obligations of the Creditors of the Company. Only after the obligations of the Creditors have been met and if there are remaining Assets, these Assets might be divided amongst the Shareholders. This division shall be proportional to the number of Shares held per Shareholder.
ยง 2
The Court shall agree with the Liquidator upon a reasonable remuneration for their services conforming with the market-based salary of a manager on a similar level. This reward shall be paid out of the Company's Assets; the Liquidator shall pay themselves the remuneration before paying out the Creditors.
ยง 3
Should there be insufficient Assets to pay a Liquidator and at least the two largest Creditors in full, the remaining Assets shall be auctioned out, and the proceeds shall be divided amongst the Creditors. The Liquidator shall receive no remuneration.
ยง 4
Art. 50: Annulment of Liquidation
ยง 1
Should it be found that there were enough Assets in the Company to satisfy all Creditors and to continue the normal functioning of the Company, the Liquidator or a Shareholder shall be entitled to a motion to the Court to annul the Bankruptcy. This shall apply to both the Winding-up and the Enforced Liquidation.
ยง 2
Should the motion of the Annulment of Liquidation pass, the Company may resume its normal functioning. The Shareholders regain full control of the Company.
Shareholders and the Liquidator shall be entitled to damages wherever the Court should find that a Creditor didn't make the original motion for Bankruptcy in goodwill or damages from Liberland should the motion be made in bad faith to declare the Company bankrupt have originated by the Registrar.
ยง 3
The Liquidator shall receive their remuneration, and it will be paid by the Creditors who had not acted in goodwill or by Liberland if it was the Registrar who had not performed in goodwill; if there was no such acting not in goodwill, then the remuneration will be paid by the Company.
Art. 51: Dissolution
ยง 1
After the Liquidator has completed their duties, they shall submit a written Liquidation Report to the Registrar of Companies. The Report shall contain the truthful confirmation that no Assets are left to the Company.
ยง 2
Upon receipt of the Report, the Registrar shall examine it for possible inconsistencies, which would be factual or formal problems with the Report, with the facts presented therein or any other issues regarding the Liquidation.
the Registrar shall
a) return the Report to the Liquidator for corrections should inconsistencies be found therein. Should this repeat more than once per Liquidation, an administrative fee will lower the Liquidator's remuneration; or
b) if there are no inconsistencies found, write the Company off the Register.
ยง 3
Upon being written off, the Company shall be Dissolved and shall no longer possess Legal Personality separate from its Owners.
Section 8: Cooperative
Art. 52: Cooperative
The Cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned enterprise.
Art. 53: Ownership
The Cooperative shall be owned by persons and entities called Members who shall each own exactly one ownership Share. The Members shall pay the amount of the Share in addition to any other contributions the Cooperative might require for joining.
Art. 54: Capital
ยง 1
The Cooperative shall have Capital divided into a Share structure such as it is with a Company.
In a Cooperative, each Member shall have exactly one Share. The per-Share value shall be the division of the Capital by the number of all Members.
ยง 2
There shall be no Share Classes in a Cooperative, and a Cooperative shall not be Publicly Traded.
Section 9: Foundation
Art. 55: Foundation
A Foundation is an organization that does not aim to make a profit. The money raised by a foundation consists of donations, loans, subsidies, and legacies. Its primary purpose is to support a social or non-profit cause. It may also be a business, but its profits must be allocated to the foundation's cause or purpose.
Art. 56: Articles of Association
The Articles of Incorporation of a Foundation shall be known as Articles of Association. They should include
a) Foundation Name, including the word 'Foundation'
b) Purpose/cause;
c) Procedures for appointing and removing officers;
d) Location;
e) Decision-making procedures; and
f) Procedures and payments in the event of dissolution.
Art. 57: Registered Capital
A Foundation shall have Registered Capital, a Foundation's Capital still needs to be registered. A Foundation's Capital shall, however, not be divided into Shares but will be registered as a whole.
Art. 58: No Members and No Shareholders
A Foundation shall have no Members and no Shareholders. Consequently, this Law regarding Shares, Shareholders, registration of Shares, Shareholder register, etc., shall not apply to such an organization.
Art. 59: Directorate
A Foundation shall have a Board of Directors as the highest organ. This organ shall be comprised of the highest managers as defined by the Articles of Incorporation of the Foundation and shall have the powers a Shareholder Meeting would have in a Company.
Art. 60: Pseudo UBOs
A Foundation shall not have UBOs, as the beneficiaries of its operations are those in need or members of the general public. Instead of Owners, the members of the Board of Directors and the persons who have, in fact, the power to influence the operation of the Charitable Organization will register in place of the UBOs.
Art. 61: Registration
The following items shall be registered in the Registry on behalf of a Foundation:
a) Foundation Name, including the word 'Foundation'
b) Purpose/cause;
c) Procedures for appointing and removing officers;
d) Location;
e) Decision-making procedures;
f) Procedures and payments in the event of dissolution;
g) the name, surname, date of birth, address and passport number of each member of the Directorate;
h) the Articles of Association or any similar document or documents which factually govern the functioning of the Foundation;
i) the list of Ultimate Beneficial Owners (UBOs) of the Foundation where they are other than the Directorate members, and
j) other types of information which shall not be mandatory to Register.
Art. 62: Foundations for the Purpose of Doing Business
A part of the purpose of the Foundation may also be doing some kind of business, but its profits must be allocated to the foundation's cause or purpose.
Section 10: Charitable organization
Art. 63: Charitable organization
ยง 1
A Charitable Organization shall be a legal person, domestic or foreign, the main or the only purpose of which shall be to serve as a charity, mutual aid, or conservation organization.
A Charitable Organization shall use its own profits to fund and expand its own operation only. It shall not distribute its profits amongst its Shareholders.
ยง 2
Upon Registration of a Charitable Organization, the Founders shall present to the Registrar sufficient documentation to prove that their organization fulfills the requirements of this Section.
The Charitable Organization shall keep those records in its own administration, continuously maintaining it and ensuring that the requirements are always met.
ยง 3
To present itself as a charitable organization, or in a way similar to this appellation, the organization needs to fulfill the following criteria:
a) at least one-third of its total support must come from donations from the public, that is, individuals, charitable entities, corporations, or government and membership dues; or
b) public support from individuals, organizations, or government must equal at least ten (10%) percent of total support; and
c) it must show by facts and circumstances that it operates as a public charity in fact:
serving those in need, and
making its services available to the general public.
Art. 64: Legal Form
The Charitable Organization shall have the possibility of registering as a Company or as a Foundation.
Besides presenting itself as a Charitable Organization and not as a Company, the rules for establishing, dissolving, and running a charitable organization shall be the same as those for a Company or a Foundation.
Art. 65: Charities without legal personality
Organizations which should not have legal personality and whose operator(s) should want to name them as charities shall likewise ensure that their purpose shall be to provide help or raise money for those in need and to benefit the general public.
Art. 66: Fraudulent charities
Entities possessed of Legal Personality presenting themselves as Charities to others that should not fulfill the requirements according to this Section shall be considered fraudulent. The Court shall order them without unnecessary delay to restructure themselves according to the general provisions of this Law regarding Companies.
Art. 67: Changing the purpose of an existing Company into a Charitable organization
Where the Shareholders of a Company should decide to turn their Company into a Charitable Organization, they shall inform the Registrar of this decision and declare its purpose. They shall also present the documents and the information sufficient to prove that the organization fulfills this Section's requirements.
Where the Registrar considers the documentation sufficient, they shall write the entity into the Registry as a Charitable Organization.
Section 11: Decentralized Autonomous Organization
Art. 68: Decentralized Autonomous Organization
A Decentralized Autonomous Organization (DAO) is an organization constructed by rules encoded as a computer program, whose decisions are made electronically through a written computer code or via the vote of its members. In a DAO, hard-coded rules define all the actions that take place in the organization.
Art. 69: DAOs Without Legal Personality
Where these organizations don't wish for a Legal Personality apart of its owners, they may operate as Partnerships between the Token Holders.
Art. 70: DAOs With Legal Personality
ยง 1
Where the DAOs wishes to acquire a Legal Personality, they shall register according to this Law. Where this Law mentions a DAO, it shall henceforth be the DAO with a Legal Personality distinct from the Legal Personality of its owners.
ยง 2
An organization that wishes to register as a DAO in Liberland shall be required to maintain the characteristics of a DAO during the time of its registration. These include and are not limited to:
a) being based on open-source software;
b) making all of its decision by means of a blockchain transaction;
c) issuing tokens that represent membership;
d) members being represented by their blockchain address to hold the specific tokens, and
e) not having a parallel structure that would in fact make the decisions in the DAO instead of the token holders.
ยง 3
Upon finding that an organization has failed to meet the criteria of a DAO, the Registrar shall give it three months to correct the situation. Where the situation is not corrected, the organization shall be given a choice between
a) becoming a Company, or
b) losing its Legal Personality.
Art. 71: Tokens
ยง 1
Instead of having Shares or Shareholders, the DAO issues Tokens, freely trade on decentralized and centralized platforms, to represent membership in the DAO. Token Holders are typically anonymous and only identified by their blockchain public keys.
ยง 2
Instead of the Shareholder Meeting, the Dao shall set up processes that allow for regular decision-making of the Token-Holders. These processes shall have the powers the Shareholder Meeting would have in a Company but also might assume the role of the Principals.
Art. 71: Registered Principals
The Persons who, in fact, habitually act in the name of the DAO, no matter their Token-holder status, shall be Registered as the Principals of the DAO. The Registered Principals shall be E-Residents or Citizens of Liberland.
Art. 81: UBOs
The DAO shall register any token holder who accrues more than 25 % deciding power over the organization or who owns more than 25 % of the Tokens despite a lack of sufficient deciding power as the UBOs of the DAO. These UBOs shall be E-Residents or Citizens of Liberland.
Art. 82: Liability
All DAO members shall be liable for the losses of the DAO. up to the number of unpaid Tokens they hold.
Art. 83: Registration
The following items shall be registered in the Registry on behalf of a DAO:
a) DAO Company Name, including the word 'DAO', "Decentralized Organization" or "Decentralized Autonomous Organization"; DAO Trade Names;
b) True scope of Business;
c) Procedures for appointing and removing Principals;
d) Address is applicable or webpages where the DAO is in fact reachable for effective human-to-human communication with the Managing Directors;
e) Decision-making procedures;
f) Procedures and payments in the event of dissolution;
g) the name, surname, date of birth, address and passport number of each Principal;
h) the White Papers or any similar document or documents which factually govern the functioning of the DAO;
i) the list of Ultimate Beneficial Owners (UBOs) of the DAO where they are other than the Principals, and
j) other types of information which shall not be mandatory to Register.
Art. 84: Compliance
ยง 1
The DAO shall set up internal processes which allow it to ensure effective compliance with the norms of this Law.
ยง 2
A DAO found in non-compliance with this Law or lacking in internal processes to ensure effective compliance shall be given three months to rectify the situation at its own expense and to prove it actively to the Registrar.
Where this is not done, the DAO shall be struck out of the Registry and lose its Legal Personality.
Section 10: Transitory and Final Provisions
Art. 85: Transitory Provisions
All Companies registered before this Law shall gain Legal Force shall be Companies Incorporated according to this Law.
If Documentation is missing or if the KYC procedures have not been done or have not been done fully at the time this Law gains Legal Force, the Registrar shall contact those companies and ask them for the required Documentation or information.
Companies that should fail to comply upon repeated queries from the Registrar shall be Resolved.
Art. 86: Final Provision
This Law shall gain Legal Force on ... and it shall remain in force in perpetuity or until its legal effects should be terminated or until it should be replaced by another Law governing the same or a similar subject matter.
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