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Glossary of terms

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Fusions

The legal effects of mergers occur on the date of their entry into the Commercial Register.

There are two types of fusions:

  • Mergers - the dissolution of the company (preceded by dissolution without liquidation), and its assets are transferred to another company (A, B> B canceled and the property is passed to A> A), the shareholders of the acquired company become shareholders of the acquiring company, both the dissolving and the successor business company is involved
  • Fusions - the dissolution of 2 or more companies, the assets transferred to the successor company (A, B> both canceled > C rise), even here the partners remain, only the dissolving companies are involved.

General Meeting of OJSC

The supreme body of the JSC, the authority through which the shareholder exercises his rights (except for the unanimous agreement, except for §205).

The General Meeting must be duly convened (the quorum must be capable of expressing the shareholder's will). The General Meeting gives instructions and directs the Board of Directors, the Supervisory Board, the liquidator and other bodies.

The General Meeting is convened min. once a year within the time limit set by the statutes, but up to 6 months from the end of the previous accounting period.

Basic tasks of the regular General Meetings, (annual):

  • To decide on an annual financial statement, how to deal with profit or to deal with loss
  • Assesses the work of the bodies, grants discharge (see below)
  • Discusses the Annual Report on activities of the JSC and the state of its assets

Other general meetings are called extraordinary (convened by the minority shareholder, the board of directors - JSC reports a loss of 1/2 of the basic capital or is in bankruptcy, the Supervisory Board – required by the interests of the JSC).

In one-person JSC the General Meeting does not take place, the competence is exercised by 1 shareholder.

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General Meeting of the Ltd.

The General Meeting is the highest body of a Ltd. The General Meeting decides in particular on conceptual issues and controls the other bodies. The shareholders exercise through the General Meeting their right to participate in governance of the Ltd. The General Meeting is the body of a collective nature, the presence of all partners is not required.

The scope of the generalmeeting:

  • Deciding on changes in the amount of registered capital or on the admission of a non-monetary contribution or on the possibility of offsetting a monetary claim against a claim to fulfill the deposit obligation
  • Granting consent to increase the registered capital by taking deposit other than by shareholders in proportion to their shares
  • Approval of the transfer or suspension of a business establishment or part thereof
  • Approval of company transformation
  • Approval of financial statements, distribution of profit or other own resources and settlement of losses
  • Deciding to appoint an auditor
  • Deciding to take over the effects of actions taken on behalf of a company before its formation
  • Deciding on the handling of the share premium
  • Deciding to change the type of equity certificate
  • Deciding on the transfer of the released interest
  • Grant of consent to share distribution (§ 43 par. 2 and 3 BCA)
  • Election and dismissal of the executive or a member of the Supervisory Board, if established
  • Appointment of Audit Committee members
  • Approval of the contract on performance of office (§ 59 par. 2 BCA)
  • Deciding on the suspension of the office of a member of the body or a proxy holder who declares a conflict of interest (Section 54 par 4 BCA)
  • Decision on prohibition of the contract according to the provisions of § 55 and 56 of the BCA
  • Approval of an agreement on the settlement of damage incurred by a business corporation by breach of due diligence
  • Approval of the silent partnership agreement
  • Approval of financial assistance
  • Deciding on the exclusion of a shareholder in case of failure to meet the deposit or additional payment obligation
  • Procedural decision-making in connection with the General Meeting
  • Approval of the granting and revocation of the procuration, unless otherwise specified in the memorandum of association
  • Giving consent to transfer of interest to a person other than a shareholder or to cease interest in that person, unless otherwise specified in the memorandum of association
  • Decisions on the method of profit sharing, unless otherwise stipulated in the memorandum of association
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General partnership

An association of at least 2 persons, established solely for the purpose of doing  business as a legal person. Legal person, whose partners are jointly and severally liable for their liabilities. A company where min. 2 people run under a joint venture and guarantee together and unlimited.

The statutory body is all partners, or only authorized member.

  • Development - the emergence of societas iuris civilis in Roman law, in the Middle Ages (Italy) as a compagnia (societates terrae), legally regulated in the Commercial Code 1863, but proclaimed as a legal person only after the amendment to the Commercial Code in 1990
  • Benefits - minimum financial requirements for foundations, the law does not stipulate an internal organisational structure
  • Disadvantages - unlimited and solidarity guarantee

Investment Company

An investment company is a legal person whose scope of business is the collective investment based on:

  • Creation and management of mutual funds, or
  • Management of investment funds under the management contract.

The investment company must have a permission of the Czech National Bank (CNB), the firm contains designation "investment company". The CNB shall grant authorization only to such a JSC which

  • Issues only registered shares
  • Whose headquarters and real seat is in the Czech Republic
  • Which submits a business plan and design of the organizational structure of the investment company
  • Has paid up share capital

Investment company may not issue bonds. An investment company may manage assets in a mutual fund of other investment company or property of an investment fund, which has not concluded a management contract.

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Investment contribution to the company

A summary of the values entered in the company to acquire or increase participation in the company.

The contribution may be tangible or intangible asset, which is capable of being the subject of civil relations, is transferable, and is appreciable in money.

Contribution can be:

  • monetary
  • non-monetary - only estate which can be of economic use in relation to business activities of the company and the economic value of which is economically valuable

Contribution may also be:

  • Real estate (only if the company will have the seat or workshop there or it is real estate agent etc.).
  • Business (part; contract for the investment to the company)
  • Know-how
  • Security (company must be a bank, investment fund, dealer in securities, etc.)
  • Receivable
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Investment fund

Investment fund is a legal person whose scope of business is collective investment (later change of the scope of business is not possible). The firm includes a supplement closed-end investment fund.

Funds are collected from the public by subscription of shares. The activities of the investment fund must be authorized by the Securities  Commission (similarly to the investment company) and may only be applied for by the founders of the joint stock company that have not yet been created.

This joint-stock company must not be established on the basis of a public offer of shares. The Investment Fund may only issue shares of the same nominal value, and their transferability shall not be restricted. It may not issue, for example, interim letters, priority shares, bonds.

The share capital of an investment fund that does not have a management contract must amount to at least EUR 300,000 at the time of the license is issued.

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Joint Stock Company (JSC)

It is a commercial capital company whose share capital is divided into a determined number of shares with a certain nominal value.

Shareholders participate in the company through shares. However, shareholders do not participate personally in the performance of the JSC and the names of shareholders are not disclosed (also an anonymous company) - except for a single shareholder.

The joint-stock company is a closed corporation (the number of shareholders is limited by the number of shares), a tied membership (one can not denounce the company relationship, he/she can only transfer shares to another).

The bodies of the company are the General Meeting (here are the shareholders), the Board  of Directors (executive body - acting as a company) and the Supervisory Board (overseeing the Board of Directors).

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Limited liability company (LLC, Ltd.)

The company whose share capital consists of the contributions  of partners and the partners of which are liable for the company's liabilities until the repayment of the deposits has been registered in the Commercial Register.

It is one of the most frequently established companies at all (advantages - capital separation from the property and guarantee to the creditors in the form of share capital, ideal for medium and small businesses).

The bodies of the company are the General Meeting and the executive director (or more directors).

Limited partnership

A company in which 1 or more partners are liable  for the limited partnership's obligations up to the amount of their unpaid  contribution (limited partners) and 1 or more guarantee their entire property (general partners).

The limited partners insert property values, the general partners then a personal contribution. Limited partnerships are governed by the provisions of a public company, the status of limited partnership is governed by the provisions on Ltd., the statutory body of the company are always general partners.

Limited partnership is historically the oldest  trading company.

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