SECTION 778-10

The creation of preferred shares gives rise to the application of articles 399 to 403 and 619 to 625 above relating to special benefits when the shares are issued to one or more named shareholders. In this case, the contributions auditor shall be subject to incompatibilities prescribed in articles 697 and 698 above. He may be the statutory auditor. Holders of shares to be converted into preferred shares of the class to be created may not take part in the vote on the creation of such class and their shares shall not be taken into account for the calculation of quorum and majority, unless all shares are to be converted into preferred shares. Any decision taken in violation of this paragraph shall be null. By exception to the first paragraph, when the issue is of preferred shares of a class already created, the assessment of resulting special benefits shall be included in the special report of the auditor referred to in the first paragraph of article 778-2 above.