Business companies (corporations) are legal entities formed by shareholders to conduct business or manage their assets. They are legal entities combining interests into a single functioning unit with defined business activity. The basic rules of operation are laid down in the articles of incorporation, the memorandum of association, or regulated by Act No. 90/2012 Coll., on Companies and Cooperatives. The commercial corporation is a common collective name for commercial companies and cooperatives. Business corporations include public corporations, limited partnerships (collectively referred to as partnerships), limited liability companies, and joint stock companies (limited liability companies). There is also the European Company and the European Economic Interest Grouping.
The survival of commercial companies depends on striking the right balance between the interests of the whole, the individual shareholders, and the commercial management (managing directors of limited companies, board members of public limited companies, chairman of a cooperative). The correct set-up of a retail company and the fulfillment of statutory obligations are essential for a sustainable future and business success. The agenda of company law aims at harmoniously securing the company’s interests, and setting up an adequate system of incentives and remuneration for persons performing elected functions (representing the company externally) is a natural part of this agenda.
For corporate clients, the law firm routinely arranges for the holding of general meetings or membership meetings, defines the rules for the management and remuneration of managing directors, board of directors, chairmen of membership meetings, and other elected members, and represents in disputes between shareholders or between the company and a shareholder. Significant facts concerning the company are entered in the Commercial Register.
Unlimited liability partnership
It is a commercial company of two or more persons who jointly participate in its operation, represented in external dealings directly by the partners, who, within the framework and business and management of the assets of the public company, are liable for the debts and obligations incurred without limitation. The company contains the designation “Unlimited liability partnership,” which may be replaced by the abbreviation “publicly traded company”. obch. spol.” or “v.o.s.” (in czech). If the company’s name contains the name of at least one of the partners, the designation ‘and the company’ shall suffice. The articles of association shall govern the mutual relations of the parties. Unless otherwise agreed in the articles of association, the partners’ shares are equal. The consent of all the partners is required to decide on the affairs of a public company unless the articles of association provide otherwise.
Limited partnership
A limited partnership is a type of partnership in which at least one partner has limited liability (limited partner), and at least one partner has unlimited liability (general/unlimited partner). The value of their contributions determines the shares of the limited partners. The company contains the designation “limited partnership”, which may be replaced by the abbreviation “k. s.” (in czech). The general partners, acting as the statutory body, work for the limited partnership. Unless the articles of association provide otherwise, all the partners shall decide on matters which do not belong to the statutory body. Voting shall take place separately for general partners and limited partners.
A Private Company Limited by Shares
A Private Company Limited by Shares is a type of limited liability company for whose debts the members are jointly and severally liable up to the amount of the unfulfilled deposit obligation, according to the unfulfilled amount registered in the Commercial Register on the date of performance. If the statutory conditions are met, the court may decide in bankruptcy that the managing director is liable for the company’s debts in the prescribed amount. The company contains the designation “a private company limited by share” or “private limited company,” which may be replaced by the abbreviation “Ltd”. The partners shall share in the company’s profits in the manner provided for in the memorandum of association, otherwise by the proportion of their shares. A decision of the general meeting precedes the distribution of profits among the shareholders and their payment. The general meeting takes decisions on critical issues, which is quorate if the shareholders with at least a majority of voting rights participate in it. A resolution of the general meeting is adopted if a majority of the members agree. The managing director carries out the company’s ordinary activities, and business management represents the Ltd. Externally and expresses the company’s will.
The law firm provides comprehensive legal advice to limited liability companies, in particular:
- Legal advice before the establishment and formation of a limited liability company;
- Legal assistance in the establishment of;
- Contract of office of managing director, setting the terms of office and remuneration;
- Creation of complete contractual documentation and legal documentation necessary to ensure the functions of the company;
- Provision of legal services related to the general meeting of a limited liability company;
- Fulfilling the statutory and contractual obligations of the company;
- Setting up control mechanisms and supervision;
- Representation of the shareholder at the general meeting of the company;
- Fulfilling the function of a recorder of the general meeting; Preparation of minutes of the general meeting;
- Transfer of business shares;
- Legal representation in disputes;
- Entries from the Commercial Register and representation in registration matters;
- Legal representation before courts.
Public limited company
A public limited company is a type of capital company whose share capital is distributed and linked to shares. A share is security with which rights and obligations are attached. The voting and exercise of the rights of shareholders (shareholders) are related to the issued security (shares). The company contains the designation “joint stock company”, which may be replaced by the abbreviation “akc. spol.” or “a.s.”. Shareholders share in the profits in the manner set out in the articles of association (memorandum of association). The exercise of shareholder rights takes place at general meetings. A quorum is present or present at a general meeting if the shareholders holding more than 30% of the company’s share capital are present or participate unless the articles of association provide otherwise. The day-to-day business and management of the company are carried out by the Board of Directors, which represents the Ltd. externally and expresses the will of the company.
The law firm provides comprehensive legal advice to joint stock companies, in particular:
- Legal advice before the establishment and formation of a joint stock company;
- Legal assistance during the incorporation process;
- Drafting of articles of association;
- Contract of office of a member of the Board of Directors/Supervisory Board, setting the terms of office and remuneration;
- Drafting of contractual and other documentation to ensure the operation of the company;
- Shareholder representation at general meetings, the exercise of voting, and other shareholder rights;
- Serving as a recorder of the general meeting, preparation of written minutes of the general meeting;
- Ensuring the fulfillment of the legal obligations of the company;
- Setting up control mechanisms;
- Share transfer agreement;
- Legal representation in disputes;
- Entries from the Commercial Register and representation in registration matters;
- Legal representation before the courts.
In addition to capital and partnership companies, which are proper to the Czech legal system, a distinction can be made between European companies: European public limited liability company / Societas Europae (SE) and European Economic Interest Grouping.
Registration of beneficial owners
The Register of Beneficial Owners is a register of registered natural persons with a significant influence on the operation of a company. These may be persons who:
- (a) are themselves or in conjunction with others the ultimate beneficiary of a substantial part of the benefits (directly or indirectly more than 25% of the benefits);
- b) have decisive influence (directly or indirectly exercise powerful influence or hold more than 25% of the voting rights);
- (c) if it cannot be ascertained, then the person running the company (or also in cases where the law provides).
The statutory obligation affects both companies (the obligation to register according to the actual and actual situation with a possible penalty for non-compliance) and individual natural persons subject to registration (impossibility to exercise voting rights, loss of economic benefits). We provide legal advice in dealing with the obligations under the Beneficial Owners Registration Act.
