Libro III · Título Primero Capítulo VIII. De las obligaciones de las sociedades debentures

Bonds are negotiable instruments that incorporate an aliquot part of a collective credit constituted as a charge on a public limited company. They shall be considered movable property, even when they are secured by rights in rem over immovable property.

Bonds may be registered, to order or to bearer and shall have equal nominal value, which shall be one hundred quetzales or multiples of one hundred.

Bonds may be created in different series, but within each series they shall confer equal rights on their holders. The act of creation that contravenes this precept shall be null, and any holder may demand its declaration of nullity.

Bonds shall be issued in order of series. New series may not be issued while the previous one is not totally placed.

In addition to the provisions of article 386 of this Code, the bond instruments shall contain:

1º.The denomination of corporate bond or debenture.

2º.The name, purpose and domicile of the creating company.

3º.The amount of the authorized capital and the paid part of the same, as well as that of its assets and liabilities, according to the result of the audit that must be carried out, precisely in order to proceed to the creation of bonds.

4º.The amount of the issue, with expression of the number and of the nominal value of the bonds.

5º.The indication of the amount effectively received by the creating company, in the cases in which the issue is placed below par or by means of the payment of commissions.

6º.The interest rate.

7º.The form of amortization of the instruments.

8º.The specification of the special guarantees that are constituted, as well as the data of their registration in the corresponding registry.

9º.The place, the date and the number of the deed of creation, as well as the name of the authorizing notary and the number and date of the registration of the deed in the Mercantile Registry.

10.The signature of the person designated as common representative of the holders.

It may not be established that the instruments be amortized by means of drawings for a sum higher than their nominal value, or by premiums or prizes, except when the interest that they accrue is higher than six percent (6%) per year. The creation of the instruments in contravention of this precept shall be null, and any holder may demand its nullity.

The total value of the issue shall not exceed the amount of the accounting capital of the creating company, with deduction of the distributable profits that appear in the balance sheet that has been prepared previously to the act of creation, unless the bonds have been created to destine their amount to the acquisition of property by the company. In this case, the sum exceeding the authorized capital may be up to three fourths of the value of the property.

The creating company may not reduce its capital, except in proportion to the reimbursement that it makes of the instruments in circulation, nor may it change its purpose, its domicile or its denomination, without the consent of the general meeting of bondholders.

The creating company shall publish its balance sheet annually, reviewed by an authorized accountant or auditor, within the three months following the close of the corresponding corporate fiscal year. The publication shall be made in the Official Gazette and in another of those of largest circulation in the country where the company has its domicile.

If the publication is omitted, any holder may demand that it be made, and if it is not made within the month following the request, they may declare the instruments corresponding to them to be due.

The creation of the bond instruments shall be formalized in a public deed, by unilateral declaration of will of the creating company. The certified copy shall be registered in the Mercantile Registry and in the registries corresponding to the specific guarantees that are constituted.

The deed of creation shall contain:

1º.The data referred to in items 2º., 3º., 4º., 5º., 6º., 7º., 8º., 9º. and 10., of article 548 of this Code.

2º.The insertion of the following documents:

a)Record of the extraordinary general meeting of shareholders that has authorized the creation of the instruments;

b)General balance sheet that has been prepared previously to the creation of the bonds;

c)Document that proves the authority of those who must sign the instruments in the name of the creating company.

3º.The specification, where appropriate, of the special guarantees that are constituted.

4º.Where appropriate, the detailed indication of the property that is to be acquired with the amount of the placement of the instruments.

5º.The designation of the common representative of the holders of the instruments, the amount of their remuneration, the record of the acceptance of their position and the following declaration:

a)That they have satisfied themselves, where appropriate, of the existence and value of the property that constitutes the special guarantees;

b)Of having verified the accounting data manifested by the company;

c)Of constituting themselves as depositary of the funds that the placement of the instruments produces until verifying the exact fulfillment of the purposes of the issue, if said funds are dedicated to the construction or acquisition of property and until the moment in which said construction or acquisition is carried out.

If the instruments are offered for sale to the public, the corresponding announcements or advertising shall contain a summary of the data referred to in the preceding article.

The property that constitutes the specific guarantee of the bonds shall be insured against fire and other usual risks, for a sum that is not inferior to its destructible value.

Even if specific guarantees, mortgages or pledges are constituted, the issuing company shall be liable without limit with all its assets for the value of the issue.

The guarantees of the issue may only be cancelled, when appropriate, with the intervention of the common representative.

The common representative shall act as agent of the group of bondholders and shall represent them before the creating company, and where appropriate, before third parties.

Each holder may exercise individually the actions that correspond to them, but the collective proceeding that the common representative initiates shall draw to itself all the individual proceedings.

Bondholders may meet in general meeting, when they are convoked by the debtor company, by the common representative, or by a group of not less than twenty-five percent (25%) of the group of bondholders, computed by capital.

The common representative may only resign for serious causes that the judge of the domicile of the issuing company shall qualify.

In the event that the common representative is lacking, any bondholder, as well as the issuing company, may request from a judge of First Instance of the domicile of the latter, the designation of an interim representative, which must fall on a banking institution. The interim representative, within the fifteen days following their appointment, shall convoke a meeting of bondholders that shall be occupied in designating a common representative.

The judge is empowered to issue by themselves the convocation of that meeting of bondholders.

The meeting may freely remove the common representative.

The common representative shall have the right to attend, with voice, the meetings of the debtor company, and shall be convoked to them.

The meetings of bondholders shall be governed by the norms established for those of shareholders and by the provisions expressly set forth in this chapter. The attributions that correspond to the administrators with respect to the meetings of shareholders shall be performed by the common representative.

The rules of the extraordinary meetings of shareholders shall be applied, whenever it is a matter of removing the common representative and of consenting to the modification of the deed of creation.

If the meeting adopts, by majority, agreements that breach the individual rights of the bondholders, the dissenting minority may declare their instruments to be due.

The administrators of the debtor company shall have the obligation to attend to inform, if they are required for it, the meeting of bondholders.

If the instruments are redeemable by drawing, the drawing shall be held before a notary, with the attendance of the administrators of the debtor company and of the common representative.

The results of the drawing shall be published in the Official Gazette and in another of those of largest circulation in the country.

In the publication the date set for the payment shall be indicated, which shall be after the fifteen days following the publication.

The date on which the payment of the drawn bonds begins shall be comprised precisely within the month following the date of the drawing.

The debtor company shall deposit in a bank the amount of the drawn instruments, no later than one day before the one set for the payment.

If the deposit has been made, the drawn instruments shall cease to accrue interest from the date set for their collection.

If the holders have not appeared to collect the amount of the instruments, the debtor company may withdraw its deposits after ninety days from the one set for the payment, but this shall not exempt it from its obligation to pay them upon their presentation.

The remuneration of the common representative shall be borne by the debtor company.

To incorporate the right to the collection of the interest, coupons may be attached, which may be to bearer, even in the case that the bonds have another form of circulation.

The actions for the collection of the interest shall prescribe in five years, and for the collection of the principal in ten. The prescription of the instruments amortized by drawing shall run from the date of the first publication required by article 569.

Once the prescription periods have elapsed, the debtor company shall place the amount of the prescribed bonds at the disposal of the University of San Carlos, which shall have executive action to demand said amount.

Bonds may be created that confer on their holders the right to convert them into shares of the company.

The instruments of the convertible bonds, in addition to the general requirements that they must contain, shall indicate the time limit within which the right of conversion may be exercised and the bases for the same.

During the time limit in which the right of conversion may be exercised, the creating company may not modify the conditions or bases for that conversion to be carried out.

Convertible bonds may not be placed below par.

The shareholders shall have preference to subscribe the convertible bonds. The creating company shall publish in the Official Gazette and in another of those of largest circulation in the country, a notice informing the shareholders of the creation of the bonds. During thirty days from the date of the notice, the shareholders may exercise their preference for the subscription.