Estonia Commercial Code - Alteration of Share Capital

Chapter 21 ALTERATION OF SHARE CAPITAL

Division 1 Increase of Share Capital

§ 192. Resolution on increase of share capital

 (1) A resolution on increase of share capital shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the case specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

 (2) If the articles of association must be amended due to the increase of share capital, amendment of the articles of association shall be decided before share capital is increased.

 (3) A resolution on increase of share capital shall not be adopted before entry of the private limited company in the commercial register.

§ 1921. Resolution on increase of share capital

  The following shall be set out in a resolution on increase of share capital:
 1) the number of new shares and their nominal values and the amount of increase of share capital;
 11) the name or business name, personal identification or registry code, address and nominal value of the shares of each new shareholder. Section 62 of this Code applies to the addresses and personal identification codes or registry codes;
 2) if the nominal values of the shares are increased, the new nominal values of existing shares;
 3) specifications for the rights attaching to the new shares;
 4) the time and place for payment for the new shares and whether and to what extent the shares are to be paid by a monetary or non-monetary contribution; in the case of a non-monetary contribution, the item of the contribution;
 5) if the shares are issued at a premium, the amount of the premium;
 6) in the case of a bonus issue, reference to the underlying balance sheet and equity categories, and the amount of each equity category used to carry out the bonus issue.

§ 193. Pre-emptive right of shareholder

 (1) Upon increase of share capital, a shareholder has the right to acquire issued shares in proportion to the shareholder’s share unless the resolution on increase of share capital prescribes otherwise. The pre-emptive right of shareholders to acquire shares may be excluded by a resolution of shareholders supported by at least three-quarters of the shares represented at the meeting or, in the case specified in subsection 174 (2) of this Code, by at least three-quarters of the votes of the shareholders, unless the articles of association prescribe a greater majority requirement.

 (2) If a shareholder does not wish to exercise the right specified in subsection (1) of this section, the other shareholders have the right to acquire the new shares.

 (3) If the shareholders do not wish to exercise the right specified in subsections (1) and (2) of this section, the new shares may be acquired by third persons.

§ 194. Application of foundation provisions

  The provisions of § 140, §§ 141-143, subsection 144 (2) and subsections 520 (2), (4) and (5) of this Code shall apply to an increase of share capital unless this division prescribes otherwise.

§ 1941. Set-off of claim

  Upon an increase of share capital, payment for a new share or for a share increasing the size of a share may, pursuant to a resolution of shareholders, be set off against a claim of the shareholder or the person acquiring the share against the private limited company if this does not harm the interests of the private limited company or of its creditors. A claim shall be valuated as a non-monetary contribution.

§ 195. Bonus issue

 (1) A private limited company may increase share capital from the shareholders’ equity of the private limited company without making contributions (bonus issue).

 (2) After approval of the annual report and passing of the profit distribution resolution, the shareholders may decide on a bonus issue based on the annual report and the profit distribution resolution. A bonus issue may also be carried out on the basis of the interim balance sheet which must be prepared and approved pursuant to the procedure for the preparation and approval of the balance sheet included in the annual report. Increase of the share capital need not be entered in the commercial if the petition for increasing the share capital and the corresponding resolution are submitted to the registrar of the commercial register within eight months after the date as at which the annual report or interim balance sheet which was the basis for the share capital increase was prepared.

 (3) Upon a bonus issue, the share of a shareholder shall be increased in proportion to the nominal value of the shareholder’s share. Any resolution contrary to the above is void.

 (4) Upon a bonus issue, the private limited company’s own share shall also be increased.

§ 196. Submission of petition to commercial register

 (1) If share capital is paid in full or a bonus issue is conducted, the management board shall submit a petition to the commercial register for entry of the increase of share capital in the commercial register. The following shall be appended to the petition:
 1) the resolution of the shareholders;
 2) the new text of the articles of association if the articles of association are amended;
 3) the minutes of the meeting of shareholders or, in the case provided for in § 173 of this Code, the record of voting;
 4) upon increase of share capital by new contributions, a bank notice concerning payment of the share capital;
 5) upon a bonus issue, the annual report or interim balance sheet on which it is based;
 6) upon payment by a non-monetary contribution, documents certifying the value of the contribution and its transfer;
 61) if the shares are entered in the Estonian Central Register of Securities, a notice from the Estonian Central Register of Securities confirming that the management board has notified the register of the increase in share capital;
 7) other documents prescribed by law.

 (2) The members of the management board shall certify the transfer of a non-monetary contribution to the private limited company by their signatures. If the non-monetary contribution is an immovable, an extract from the land register shall be appended to the petition.

 (3) The management board shall submit a petition for entry of the increase of share capital in the commercial register within six months after adoption of the resolution on increase of share capital.

 (31) In the case of increase of share capital by bonus emission, the petition submitted to the registrar shall include a confirmation that the members of the management board who signed the petition are not aware of a decrease to the assets of the private limited company, during the time between the date of preparation of the balance sheet which was the basis for the increase of the share capital and the date of submission of the petition to the registrar, to an extent which could hinder the making of the decision on the increase of the share capital on the date of submission of the petition.

 (32) The registrar need not check the conformity of the content of the balance sheet which was the basis for the increase of the share capital with the law.

 (4) Share capital shall be deemed to be increased and the rights arising from the newly issued or increased portion of shares shall be deemed to have arisen as of the making of such entry in the commercial register.

§ 1961. Liability of members of management board upon entry of increase of share capital in register

 (1) The members of the management board of a private limited company are solidarily liable for damage caused to the private limited company by submission of incorrect or inaccurate information or incorrect valuation of contributions upon the increase of the share capital unless a member of the management board proves that he or she was not aware and did not have to be aware of the circumstances which caused the damage.

 (2) An agreement which derogates from the provisions of subsection (1) of this section shall only be valid with respect to the creditors of a private limited company if such agreement was entered into in the course of bankruptcy proceedings of the private limited company.

 (3) The claim provided in subsection (1) of this section expires after five years of the date on which the increase of the share capital was entered in the commercial register.

§ 1962. Participation in profit distribution

 (1) The resolution on increase of share capital may prescribe a date as of which the new shares or the shares whose nominal value was increased grant the right to receive a dividend. Such right does not arise with respect to a dividend payable for a later financial year than the financial year following the year of increase of the share capital.

 (2) If the date specified in subsection (1) of this section is not prescribed in a resolution on increase of share capital, the right to receive a dividend shall arise during the financial year in which the entry on increase of share capital is made.

Division 2 Reduction of Share Capital  

§ 197. Resolution on reduction of share capital

 (1) A resolution on reduction of share capital shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the case specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

 (11) If upon a reduction of share capital there is a desire to reduce the nominal values of shares or to cancel shares other than proportionally with regard to each share, the corresponding resolution shall be adopted if, in addition to the provisions of subsection (1) of this section, the resolution is supported by the shareholders whose shares are disproportionately cancelled compared with other shares, or the nominal values of whose shares are disproportionately reduced.

 (2) If the articles of association must be amended due to the reduction of share capital, amendment of the articles of association shall be decided before share capital is reduced, except if share capital is reduced in the case specified in subsection 198 (2) of this Code.

§ 1971. Resolution on reduction of share capital

  The following shall be set out in a resolution on reduction of share capital:
 1) the reason for the reduction of share capital;
 2) the extent and method of reduction of share capital;
 3) the new nominal values of shares.

§ 198. Extent of reduction of share capital

 (1) Share capital shall not be reduced below the amount of share capital specified in § 136 of this Code or any other minimum amount of share capital provided by law.

 (2) The provisions of subsection (1) of this section shall not apply if an increase of share capital at least to the amount of share capital specified in § 136 of this Code is decided concurrently with a reduction of share capital. The provisions of § 199 shall also not apply if an increase of share capital at least to the current size of the share capital is decided concurrently with a reduction of share capital. Shares which are issued concurrently with a decrease of the share capital shall only be paid for in money. A resolution on increase or reduction of share capital shall be entered in the commercial register.

§ 199. Notification of creditors

 (1) The management board shall, within fifteen days after adoption of a resolution on reduction of share capital, send a notice concerning the new amount of share capital to the known creditors of the private limited company who have claims against the private limited company which predate the adoption of the resolution on reduction of share capital.

 (2) The management board shall publish a resolution on reduction of share capital in the publication Ametlikud Teadaanded and invite all creditors to submit their claims. The notice shall indicate that creditors are to submit their claims within two months.
[RT I 2006, 55, 412 - entry into force 01.01.2007]

 (3) The private limited company shall guarantee the claims of creditors if they are submitted within two months after publication of the notice. If the due date for fulfilment of a claim has arrived or if a claim is not sufficiently secured, the creditor may demand satisfaction or guarantee of the claim. The creditor may demand a guarantee of the claim if the creditor provides proof that decrease in the share capital endangers the satisfaction of the claim.

§ 1991. [Repealed - RT I 2007, 67, 413 - entry into force 28.12.2007]

§ 1992. Simplified reduction of share capital

 (1) Share capital may be reduced in order to cover a loss of the private limited company without applying the provisions of § 199 of this Code (simplified reduction of share capital).

 (2) Simplified reduction of share capital may be applied if the profit of the private limited company and the legal reserve are not sufficient to cover a loss and if the private limited company has no other reserves.

 (3) The resolution on reduction of share capital shall indicate the loss for the coverage of which the share capital is being reduced.

 (4) Available capital which arises upon a simplified reduction of share capital may only be used to cover the loss of the private limited company.

 (5) In the case of simplified reduction of the share capital, no payments shall be made to the shareholders and no dividends shall be paid to the shareholders during the financial year on which the decrease of the share capital was decided and for the two subsequent financial years.

§ 200. Submission of petition to commercial register

 (1) The management board shall submit a petition for entry of a reduction of share capital in the commercial register not earlier than three months after publication of the second reduction of share capital notice, unless a notice on reduction of the share capital need not be published. The following shall be appended to the petition:
[RT I 2006, 55, 412 - entry into force 01.01.2007]
 1) the resolution of the shareholders;
 2) the new text of the articles of association if the articles of association are amended;
 3) the minutes of the meeting of shareholders or, in the case provided for in § 173 of this Code, the record of voting;
 31) if the shares are entered in the Estonian Central Register of Securities, a notice from the Estonian Central Register of Securities confirming that the management board has notified the register of the reduction of share capital;
 32) reference to the dates on which notices to the creditors were published in Ametlikud Teadaanded;
 4) other documents prescribed by law.

 (2) In the petition, the members of the management board shall confirm that the claims of creditors who submitted their claims during the term or who opposed the reduction are guaranteed or satisfied.

 (3) The share capital shall be deemed to be reduced as of the making of such entry in the commercial register.

§ 2001. Payments to shareholders

 (1) Payments may be made to the shareholders upon a reduction of share capital if prescribed in the resolution on reduction of share capital.

 (2) The payments specified in subsection (1) of this section may be made no earlier than three months after entry of the reduction of share capital in the commercial register and on the condition that the claims of creditors submitted during the term are guaranteed or satisfied.

Chapter 22 DISSOLUTION OF PRIVATE LIMITED COMPANY  

§ 201. Bases for dissolution of private limited company

  A private limited company shall be dissolved:
 1) by a resolution of the shareholders;
 2) by a court decision;
 21) by declaration of bankruptcy of the private limited company;
 22) by abatement of the bankruptcy proceeding of the private limited company before declaration of bankruptcy;
 3) [Omitted - RT I 1996, 40, 773 - entry into force 08.06.1996]
 4) on other bases prescribed by law or the articles of association.

§ 202. Adoption of dissolution resolution of private limited company

 (1) A dissolution resolution shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the cases specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

 (2) The management board shall present the preceding annual report and an overview of the economic activities of the private limited company for the current year to the shareholders.

 (3) The overview of economic activities shall indicate the term during which the private limited company is able to satisfy the claims of creditors.

§ 203. Compulsory dissolution

 (1) A private limited company shall be dissolved by a court ruling if:
 1) the shareholders do not adopt a dissolution resolution if its adoption is obligatory pursuant to law or the articles of association, or if the shareholders do not adopt any of the resolutions prescribed in § 176 or if no meeting of shareholders is called to adopt a resolution specified in § 176;
 2) the term of office of the management board expired more than two years previously and a new management board has not been elected;
 3) in other cases provided by law.

 (2) A petition for the compulsory dissolution of a private limited company may be submitted by the management board, the supervisory board, a member of the management board, a shareholder or other persons specified by law. Unless otherwise provided by law, a court may also decide on compulsory dissolution at its own initiative.

 (3) If the deficiency or other circumstance that provides the basis for compulsory dissolution can be evidently eliminated, the court shall previously establish a term for the private limited company for the elimination of the deficiency or circumstance.

§ 204. Petition for dissolution of private limited company

 (1) The management board shall submit a petition for entry of the dissolution resolution of the private limited company in the commercial register. The resolution of the shareholders and the minutes of the meeting of shareholders or, in the cases provided for in § 173 of this Code, the record of voting shall be appended to the petition.

 (2) If a private limited company is dissolved on the basis of a court decision, the court shall send the decision to the commercial register for entry.

 (3) A private limited company is deemed to be dissolved as of the making of the entry on dissolution in the commercial register. Compulsory dissolution enters into force as of the entry into force of the court decision.

§ 205. Liquidation

  A private limited company shall be liquidated (liquidation proceeding) upon dissolution unless otherwise provided by law.

§ 206. Appointment of liquidators

 (1) The liquidators of a private limited company shall be members of the management board unless the articles of association, a resolution of the shareholders or a court ruling prescribes otherwise. A natural person who is prohibited from acting as a member of the management board shall not be a liquidator.

 (2) The residence of at least one liquidator must be in Estonia.

 (3) A court shall appoint the liquidators in a compulsory dissolution or if this is requested by shareholders whose shares represent at least one-tenth of the share capital. The court shall also specify the procedure for and amount of remuneration for the liquidators.

§ 207. Removal of liquidators

 (1) A liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the shareholders can be recalled at any time by a resolution of the shareholders. In order to adopt such resolution, a majority of votes equal to the majority of votes necessary for appointment of a liquidator is needed.

 (2) A court may recall a liquidator appointed by the court, and to appoint a new liquidator. Based on the demand of the shareholders whose shares represent at least one tenth of the share capital, a court may also recall, for a good reason, a liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the shareholders, and to appoint a new liquidator.

 (3) A liquidator may resign for the same reasons and pursuant to the same procedure as a member of the management board.

§ 208. Entry of liquidator

 (1) The management board shall submit a petition for entry of the first liquidators in the commercial register. A petition for entry in the commercial register of a change of liquidator or the right of representation of a liquidator shall be submitted by the liquidators. The resolution which constitutes the basis for the change of a liquidator or the right of representation of a liquidator shall be appended to the petition. All liquidators shall submit to the registrar a written confirmation concerning their right pursuant to law to act as liquidators.

 (2) If a liquidator is appointed by a court decision, the court shall send the decision to the commercial register for entry.

 (3) The names and personal identification codes of the liquidators shall be entered in the commercial register.

§ 209. Rights and obligations of liquidators

 (1) Liquidators have the rights and obligations of the management board which are not contrary to the objective of the liquidation. Liquidation does not affect the legal relationships between the shareholders or between the shareholders and the private limited company, or the rights of the supervisory board, unless otherwise provided by law and the nature of liquidation.

 (2) The liquidators shall terminate the activities of the private limited company, collect debts, sell assets and satisfy the claims of creditors.

 (3) The liquidators may only conclude transactions which are necessary for liquidation of the private limited company. The right of representation of liquidators is unrestricted with regard to third persons.

 (4) The right of representation of liquidators who are members of the management board does not change upon liquidation unless the articles of association, a resolution of the shareholders or a court decision prescribes the changing of the right of representation into joint representation or sole representation. Liquidators appointed by a resolution of the shareholders or a court decision may represent the private limited company only jointly, unless the resolution of the general meeting or a court decision prescribe that all or some of the liquidators may represent the private limited company alone or together. A division of the right of representation which differs from the right of representation prescribed by law applies with respect to third persons only if it has been entered in the commercial register.

 (5) During a liquidation proceeding, the notation “likvideerimisel” [in liquidation] shall be appended to the business name of the private limited company.

§ 210. Submission of bankruptcy petition

  If the assets of a private limited company being liquidated are insufficient for satisfaction of all claims of creditors, the liquidators shall submit a bankruptcy petition.

§ 211. Accounting during liquidation

 (1) A private limited company undergoing liquidation shall organise its accounting pursuant to the procedure provided by the Accounting Act unless otherwise provided by the law or the nature of liquidation.

 (2) Within three months after the date of the dissolution resolution, the liquidators shall prepare, taking account of the provisions concerning the balance sheet contained in the annual report, the opening balance sheet of the liquidation and a report explaining such balance sheet which shall contain the information subject to inclusion in the annexes of the annual accounts.

 (3) With the passing of the dissolution resolution, the current financial year of the private limited company shall end and a new financial year shall begin. The liquidators shall prepare the annual accounts of the private limited company as at the end of the financial year which ends at the time of dissolution of the private limited company and as at the end of every financial year following dissolution.

 (4) The shareholders shall approve the opening balance sheet of the liquidation and the annual report by a resolution. After approval, the opening balance sheet of the liquidation and the annual report shall be immediately submitted to the commercial register.

 (5) A court may release a private limited company from the obligation to audit the opening balance sheet of the liquidation and the annual report if the financial situation of the private limited company is sufficiently clear and auditing is evidently not necessary in the interests of the shareholders and creditors.

§ 212. Notification of creditors

 (1) The liquidators shall promptly publish a notice of the liquidation proceeding of the private limited company in the official publication Ametlikud Teadaanded.

 (2) The liquidators shall send a notice of liquidation to the known creditors.

 (3) The notice of liquidation shall indicate that creditors are to submit their claims within four months after publication of the notice.

§ 213. Submission of claims

  The creditors shall notify the liquidators of all their claims against the private limited company within four months after publication of the notice. The notice shall set out the content, basis and amount of the claim, and documents substantiating the claim shall be appended thereto. Failure to notify of a claim on time does not affect the validity of the claim or restrict the right of the creditor to file an action with a court against the private limited company being liquidated.

§ 214. Satisfaction of claims

 (1) Liquidators shall satisfy the claims of creditors of which the private limited company is aware regardless of whether or not notification of such claims has been given.

 (2) If a creditor known to the private limited company has not filed a claim and the claim cannot be satisfied for reasons independent of the private limited company, the money which belongs to the creditor shall be deposited if the conditions for depositing exist.

 (3) If an obligation cannot be performed during liquidation or if a claim is under dispute, the assets of the private limited company cannot be distributed between the shareholders unless the contested amount of money has been deposited and the creditor has been granted sufficient security.

§ 215. Final balance sheet

 (1) After satisfaction of the claims of all creditors and the deposit of money, the liquidators shall prepare the final balance sheet and distribution plan for the assets remaining upon liquidation.

 (2) An auditor shall audit the final balance sheet and asset distribution plan if audit of the annual report of the private limited company by an auditor is prescribed.

 (3) The liquidators shall present the final balance sheet and asset distribution plan to all shareholders for examination at the registered office of the private limited company and shall notify the shareholders thereof.

 (4) If the provisions of law or of the articles of association, or the resolutions of the meeting of the shareholders are not observed in the preparation of a balance sheet or asset distribution plan, a court may, based on an action by the shareholders whose shares represent at least one tenth of the share capital, order preparation of a new balance sheet or asset distribution plan, or supplementary liquidation. Such action may be filed within two months after the date on which the shareholders were informed that the balance sheet and asset distribution plan are presented to the shareholders for examination. The private limited party is the defendant.

§ 216. Distribution of assets

 (1) After satisfying or guaranteeing all the creditors' claims and depositing the money, the remaining assets shall be distributed among the shareholders according to the nominal values of their shares pursuant to the asset distribution plan prepared by the liquidators unless the articles of association prescribe otherwise.

 (2) Assets may be distributed within six months after the entry of the dissolution of the private limited company in the commercial register and within two months after the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, except in the case where the balance sheet or asset distribution plan have been contested in court, the action has not been heard or has not been satisfied, or if the proceeding in the matter has been concluded.

 (3) A court may allow payments to shareholders within six months after publication of the notice of liquidation unless this damages the interests of the creditors.

 (4) Payments shall be made in money unless the articles of association prescribe otherwise.

 (5) The liquidators need not sell assets unless this is necessary for satisfaction of the claims of creditors, and if the shareholders consent thereto.

§ 217. Continuation of activities of dissolved private limited company

 (1) If dissolution of a private limited company is prescribed by the articles of association or is decided by the shareholders, the shareholders may, until commencement of the distribution of assets among the shareholders, decide on continuation of the activities of the private limited company or on merger, division or transformation of the private limited company. A resolution on continuation of activities shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the cases specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

 (2) If continuation of activities is decided, the same resolution shall designate the new management board and supervisory board, and shall reduce the share capital to the value of the remaining assets. If the assets have decreased below the amount of share capital specified in § 136 of this Code, increase of share capital shall also be decided.

 (3) The liquidators shall submit a petition for entry of the continuation of activities in the commercial register. The resolution on continuation shall enter into force as of its entry in the commercial register.

§ 218. Deletion from commercial register and supplementary liquidation

 (1) Liquidators shall submit a petition for deletion of a private limited company from the commercial register after the conclusion of the liquidation, however not earlier than six months after the entry of the liquidation of the private limited company in the commercial register and publication of the liquidation notice and after three months of the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, provided that the private limited company is not a party to any court proceedings currently conducted in Estonia. The final balance sheet and asset distribution plan shall be appended to the petition. The petition shall include a confirmation by all the liquidators that the final balance sheet and asset distribution plan have not been contested in court, or the action has been not been heard or has not been satisfied, or that the proceeding in the matter has been terminated and the claims of the creditors of the private limited company have been satisfied or that the assets necessary to satisfy the claims have been deposited and that the private limited company is not a party to any court proceedings currently conducted in Estonia.

 (2) If, after the private limited company has been deleted from the register, it becomes evident that the private limited company has assets which were not distributed and that supplementary liquidation measures are necessary, a court may, at the request of an interested person, order a supplementary liquidation and restore the rights of the former liquidators or appoint new liquidators.

 (3) After a private limited company has been deleted from the register, liquidation may be carried out at the demand of a creditor only in the case where the creditor proves that the creditor's claim against the private limited company was not satisfied in the liquidation proceeding, that the creditor has no other possibility for the satisfaction of the claim and that, upon restoration of the liquidation proceeding, the claim could be satisfied, or that the private limited company should not have been deleted from the register because a dispute over the claim existed. Among other, a creditor's demand for supplementary liquidation shall not be satisfied if the creditor has failed, without good reason, to submit the creditor's claim to the liquidators on time.

§ 219. Preservation of documents

 (1) The liquidators shall deposit the documents of a private limited company with a liquidator, a person maintaining an archive or another trustworthy person. If the liquidators have not appointed a depositary of documents, a court shall appoint one as necessary.

 (2) The name, residence or registered office, and personal identification code or registry code of the depositary of documents shall be entered in the commercial register on the petition of the liquidators or, in the case of a court-appointed depositary, on the basis of the court ruling. The depositary of documents shall be exchanged and a new depositary shall be appointed based on a court ruling.

 (3) The depositary of documents shall be responsible for the preservation, during the term prescribed for by law, of the documents deposited with the depositary.

 (4) Shareholders and their legal successors have the right to examine the deposited documents. The creditors of the private limited company and persons with a legitimate interest in the matter may examine the documents with the permission of the court.

§ 220. Liability of liquidators

  The liquidators shall be liable in the same manner as members of the management board for any damage caused.

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