Glossary of terms

This institute allows overtaking deposits for the company prior to its incorporation

The administrator of deposits is:

• one of the founders (mentioned in the founding document)
• or bank (only cash deposits, under contract from the bank)

Administrator's duties:

• require the transfer of deposits that must be paid before the incorporation of the company
• proper governance
• provide a written declaration of repayment of deposits by shareholders for the purpose of registration in Commercial Register
• transfer investment contributions

Managing authority of executive and administrative nature (therefore sometimes referred to as "the Board").

The authority that decides on all matters except for matters reserved for the General Meeting or Supervisory Board.

The Board of Directors consists of:

• Business management - management of the company in economic, industrial and organizational terms
• Secretary/agent - makes legal acts on behalf of OJSC externally (articles, General Meeting or Supervisory Board may restrict it, limit, however, is not effective outside), each member of the Board of Directors acts separately on behalf of the company, unless the statutes provide otherwise.

Board of Directors manages the company between sessions of the General Meeting, it is a collective body (at least 3 members, from their elected chairman; does not apply to one-member JSC) and elected (by General Meeting or Supervisory Board, for the maximum term of 5 years - assessed for each member of the Board of Directors separately, repeatability possible) , its members may be appealed ny the body that elected them, they can withdraw (§ 66/1 col. law).

Systematic activities carried out by an entrepreneur independently, in his own name and on his own responsibility for profit.

Independence
The entrepreneur himself makes business decisions, is not subject to command of anyone else, is in no relationship of subordination, is not personally subordinate to his trading partners (in many business professions certain dependence on the instructions of the customer is evident); independence, however, does not remove the obligation to follow the law and the liabilities assumed; the results of his activities are carried out by contract, i.e. by selling products, providing services, etc. The business should be distinguished from the work under an employment relationship where the employee performs work within the employer's organization, according to his disposition, usually in his premises and through his production and labour resources

Consistency
for example, may be a seasonal activity, activity with certain breaks or special occasions - but it must not be unique activity, performed only rarely and randomly - a prerequisite for consistency is repetition of individual actions.

Carry out in his own  name 
excludes such action by companions on behalf of shareholders or employees activities on behalf of the employer, includes activity based on the contract of mandate (commercial lawyers, lawyers)

On his own  responsibility
anyone else in not responsible for the entrepreneur, he is responsible for his liabilities, if he commits a breach of a legal obligation, he bears responsibility associated with such a violation; that is not the case, if an employee commits a breach of a legal obligation when performing tasks of his employer - responsibility to a third party arises the employer and the employee is responsible to that employer, the infringement is therefore attributed to his employer - entrepreneur

For profit
an entrepreneur tries to get material benefit, profit is the motive of business; fact that this effort has not been satisfied yet does not change the fact that this is a business, the same applies to loss of earnings; law admits, in some cases, an entrepreneur and companies, which became not established for business purposes, in practice, it raises the question whether this benefit must have a pecuniary nature

A business is defined so that it is an activity performed by an entrepreneur - it must be an activity performed by a person under the list referred to in § 2, second paragraph, this list, however, is to some extent dependent on whether these people actually do business, and from that point of view, the provisions of § 2 of the Commercial Code is a circular definition: An entrepreneur is one who undertakes, but business is activity done by entrepreneur."

Business share is participation of a partner in a company and the resulting rights and duties.

Share in the business always has two sides:

1. Quantitative page -partner's share, can be defined in general
2. Qualitative - rights and duties associated with the share, different for each company

• Property rights
• right to share in profits
• the right to settle the shareholder and the company
• Non-material rights
• right to participate in the control and management of the company
• right to information on matters of the company
• Equity obligations
• deposit obligation
• obligation to compensate for loss of the company
• Non equity obligations
• to refrain from competitive behaviour
• other obligations - are usually based by social contract and under the specific circumstances of that company"

Forms of company cancellation

1) Without liquidation

• the wealth goes to legal successor company transformation) - 52
• when submitting a petition for bankruptcy where:
• proposal rejected for lack of property,
• cancellation of bankruptcy following the completion of the resolutions
• cancellation of bankruptcy where the assets of the bankrupt is insufficient to cover bankruptcy costs; provided that the company has no property (except for matters excluded from the merits); the approval of the tax authority is not required for the deletion of the SO;

2) With liquidation - the company is abolished already at the moment of entering the liquidation."

Ways to cancel

Voluntary - by agreement of all shareholders or by the decision of the body of the company (dissociation decision) - these may cancel their decision until the liquidation balance has been started (the date of effect of such decision the role of the liquidator ends; the company has to prepare interim financial statements)

Forced - by decision of the court (on a proposal of the body or person with a first interest, regional courts)

• inactivity - no general meeting has been held in the past 2 years, or no statutory bodies of the company whose terms of office ended more than one year ago have been elected in the last year, or the company does not carry out activities for more than two years
• loss of business authorization
• the disappearance of the prerequisites required by the law for the company establishment or the company cannot be perform business for insurmountable conflicts between shareholders
• violation of the obligation to create RF
• violation of the obligation to pursue business activity through the natural persons specially authorized
• breach of the obligation to sell part of the business or to divide it imposed by the competition authority
• bankruptcy - see here above (if a bankruptcy petition is rejected for a reason other than for lack of property, the company is not cancelled, if the bankruptcy is determined, the liquidation will be carried out)
• the court shall set a time limit for the removal of the ground of revocation if removal is possible

The company is cancelled as of the date of the deletion from the Commercial Register (similar to its origin - registration in the OR).

Commercial Register is a public list which shall contain the information concerning the entrepreneurs or organizational units of their companies for which it provides law. Commercial Register is kept by a court appointed by a special law (registration court). Commercial Register is a public list of entrepreneurs (but not all) and of basic and legally relevant data about them (the data that are important for flexible and secure business transactions).

The main function of Commercial Register is to provide  basic information on business partners in business.

It is a process leading to the founding of a trading company, usually a limited liability company or a joint stock company, but also other forms of company are established in certain cases. Founding a company in the Czech Republic is considered a very time-consuming and administratively demanding process and therefore more and more clients are using specialized advisory firms or law firms for this purpose.

A company name is a name under which the entrepreneur is incorporated and which therefore must be used in his/her business. It must meet the general legal requirements - e.g. uniqueness, unmistakability, truthfulness, etc. 

The company name consists of a business name and a supplement of the respective type or company (in the Czech Republic, for example s.r.o. for limited liability company or a. s. for joint-stock company).

Company registered office is the address that is registered as a seat in the Commercial Register or other legal records. The entrepreneur is obliged to state to the Commercial Register, a priori, his actual place of business. The seat of the organizational unit of the enterprise is the address of its location. Registered office is of fundamental importance in terms of the nationality of a legal person. It determines the law applicable to that person, juridical and defines who will give it diplomatic protection. The four criteria are distinguished - the seat, the state constitution, state of business, nationality of partners (directors).

Concern arises as a grouping of formally autonomous entities, some of which are in spite of their legal personality subordinate to another subject so that the group acts as a centralized entity comprising a single organization and unity of management.

Concern is defined by Commercial Code § 66a, paragraph 7: a group consists of a single business group of at least two persons, one of which is against the other person in controlling position. A concern may arise based on the simple fact of the existence of a controlling and controlled entities (rebuttable presumption) - then we are talking about a de facto concern. The group may be constituted on the basis of the controlling agreement - then we are talking about contracting concern.

Defining element of concern is the merger of several legally autonomous persons to the system allowing common management. Individual group companies are managed in the interests of the whole, which may not lead to the simultaneous benefits of each of the group companies.

The term of concerted practices is regulated by the provisions of § 66b of the Commercial Code. Acting in concert is acting of independent persons made in mutual understanding to acquire, assign or exercise voting rights on particular person for the purpose of enforcing a common influence on its management, running a business, occupation statutory or supervisory body or else influence the behaviour of such a person. Those who act in concert are obliged to fulfil the obligations arising therefrom jointly and severally.

Concerted practices must be active, it may not be concluded a special agreement and must follow the legally relevant target. Not every action is automatically acting in concert.

Acting in concert is thus a deliberate alignment that may not be permanent. The law does not define exactly acting in concert, but establishes a rebuttable presumption.

• persons who have a relationship with the company, i.e. legal person and its statutory authority, persons in their direct control scope, a member of the supervisory board, liquidator, bankruptcy, arrangement or forced administrator
• controlling and controlled entities
• persons controlled by the same person
• entities constituting the Group
• Ltd. and its partners, public trade company and its partners, limited partnership and general partners. These partners act as persons in concert
• relatives - as Civil Code defines in § 116
• investment company and its investment fund or pension fund

The burden of proof that the persons mentioned above are not acting in concert carries any person who testifies presumption.

Concerted practices have, according to the Commercial Code, inter alia, the following legal consequences:

• constitutes control of the company, if the persons acting in concert have votes enough to promote decisive influence over the management and operation of the enterprise,
• excludes the right to claim damages for non-payment of the harm that was caused by the implementation of the instruction of the controlling entity if all shareholders were acting in concert,
• excludes the exercise of voting rights at the AGM in cases provided by law (when deciding whether to him or another person acting in concert to be excused duty or whether he or person acting in concert to be removed from office for the infringement) unless all shareholders are acting in concert,
• constitutes an obligation to make a takeover bid for control of the company with registered participating securities except for exceptions set by law
• constitutes reporting duty of voting rights

A cooperative is a community of an unclosed number of persons established for the purpose of mutual support of its members or third parties or for the purpose of conducting business.

According to the Business Corporations Act (in other words "ZOK"), the cooperative is a legal entity with an unclosed number of members. In the event of an increase in their number, there is no need to amend the statutes, as is the case with companies. The ZOK   regulates the minimum number of founding persons by setting it to 3 regardless of whether they are natural or legal persons.

Those interested in establishing a cooperative shall authorize the convener in writing (which may be only a natural person) to draw up the statute of the cooperative. The statute must be in the form of an authentic instrument (notarial deed) and must contain at least the obligatory particulars (company name, registered office, subject of business or activity, amount of the membership fee, method and term of its payment. Otherwise, the court will find it void on its own motion. The adoption of the statute and its amendment is decided by the member (or constitutive) meeting, which is always public.

Dividend is a right of a shareholder to a part of the profits of a joint stock company which is distributed among shareholders at the decision of the General Meeting for given accounting period.

The amount of dividend is determined as a pro rata share (the ratio of nominal value of shares to the shareholders aggregate par value of all shares; other rules may be for the preference shares) on that part of the net profit of the joint-stock company for the accounting period, which is approved by the General Meeting and within the law to be distributed.

We can distinguish several ways of division of companies:

• The formation of new companies - a company ceases to exist, its assets are transferred to the acquiring company and its shareholders become shareholders of the successor company (A cancelled> formation of B and C) only the cancelled company is concerned
• The division by merger - company ceases to exist and is divided, and these parts passes to other existing companies (A cancelled and divided into two or more parts> parts will be merged into existing companies B and C) merging and acquiring companies are involved
• a combination - being acquired and the acquiring company must have the same form

Divided Ltd. or JSC must have the asset valued appreciated by an expert on the date of processing the final financial statement (there must also be separately valued the assets to be transferred to individual successor companies); for the appointment, reward of the expert and the content of the report applies the same as for deposits.

For the purposes of the Commercial Code, the enterprise is understood as a set of tangible as well as personal and intangible components of the business. To the enterprise belong the rights and other property values belonging to the entrepreneur and are used for the operation of an enterprise or because of their nature they should serve the following purpose:

• Material component (buildings, machinery, materials and other things)
• The personalcomponent (depends mainly on the level of the entrepreneur, the managerial staff and the structure, qualification and experience of the employees and other persons involved in the business)
• Intangible (constituted by rights and other property values)

Entrepreneur - according to the definition contained in § 2 of the Commercial Code - a business is defined as a systematic business activity conducted by an entrepreneur independently in his own name and on is own responsibility for profit. Second paragraph contains an additional criterion, making the list of four groups of entrepreneurs:

• Entrepreneur is any person registered in the Commercial Register - commercial companies, cooperatives, other legal persons as provided by law and foreign persons. According to § 3 paragraph 2, a natural person may be registered in Commercial Registry at his own request
• Entity running a business under a trade license
• Entity running a business on the basis of other than trade license
• Natural person engaged in agricultural production by optional rules

Entrepreneur is not a person who carries out a particular profession as an employee or as a companion of commercial company - does not carry it independently. With regard to the representation of another legal person, our legislation does not solve the problem, whether an agent is an entrepreneur. On the one hand, defines the business, on the other hand, sees entrepreneurs as well as those who represent another (agency agreement, contract of commercial representation are regulated as relations between businessmen).

Summary: 

Entrepreneur is a person who is authorized to carry out a business, or is registered in the Commercial Register.

Entrepreneur is a person who is authorized to carry out a business, or is registered in the Commercial Register. It should be noted, however, that a joint-stock company and Ltd. can be established without the business objective. They are registered in the Commercial Registry - they are entrepreneurs by legal form.

Establishment is the room in which certain business activity is carried out.

Definition of the Commercial Code is very broad, the establishment in this definition means (any) space "within which the business activities are carried out" - there is no connection with the authorization to do business in this space (resulting from the ownership or lease, etc.) and could mean that the establishment could became the space illegally occupied by entrepreneur.

In a similar way, the establishment is defined by the Trade Licensing Act, § 17 paragraph 1, although it is defined only for a trade - specifically declares a establishment also stand, mobile shop and similar devices used for the sale of goods or provision of services. Establishment within the meaning of the Trade Licensing Act does not include an establishment in which the activities other than those of the tradesmen take place. For example, doctors' or lawyers' offices, tax consultants, etc. are not trade licensing establishments, but will be establishments within the meaning of § 7 of the Commercial Code - public obligations of the Trade Licensing Act are not applicable for other than trade establishment.

The establishments must be labelled by the firm of the entrepreneurs, which may be completed by the name of the establishment or other distinctive signs.

Those interested in establishing a cooperative shall authorize the convener in writing (which may be only a natural person) to draw up the statute of the cooperative. The statute must be in the form of an authentic instrument (notarial deed) and must contain at least the obligatory particulars (company name, registered office, subject of business or activity, amount of the membership fee, method and term of its payment. Otherwise, the court will find it void on its own motion. The adoption of the statute and its amendment is decided by the member (or constitutive) meeting, which is always public.

The SE Regulation specifies how to establish the European company. It does not allow it to be based on a "green field." Establishment is only possible within the reorganization of selected existing forms of business - in addition, it is necessary to monitor which forms of companies can participate in it and what other requirements must be fulfilled.

Ways of establishing the SE:

• Merger two or more JSC or SE, which are based on the law of the EU Member States and have their registered office in the EU, if at least 2 of them are governed by the law of different member states (establishment via fusion).
• As a holding company over two or more existing JSC or SE or Ltd., which were established under the law of one of the states and have their registered office in the EU if at least 2 of them are established under the law of different Member States or have at least two years a subsidiary or an organizational unit of an enterprise in the territory of a Member State other than the State by the law of which it is governed (Holding e.s.).
• As a subsidiary of at least 2 companies within the meaning of Article 48 of the SES (including SE), which were established under the law of an EU Member State and have their registered office in the EU if at least 2 of them are established under the law of different Member States or have for at least two years a subsidiary or an organizational unit of an enterprise in the territory of a Member State other than the State by the law of which it is governed (subsidiary or joint venture es)
• Transformation of a JSC based on the law of one of the EU Member States, if its registered office are located in the EU if it has a subsidiary for at least two years in the territory of another Member State.
• As a subsidiary of another SE

Restrictions only form a formal barrier for entities that do not meet the prescribed conditions. Conditions can be circumvented (eg by establishing formal JSC only for the purpose of establishing the SE).

Art. (2) of the SCE Regulation deals  exhaustively with the ways in which the SCE can be established. The so-called  transnational element is needed. An SCE can be established:

• Mergers of national cooperatives under the law of a state whose registered office and principal administration are located in the EC territory, if at least 2 of them are governed by the law of different member states.
• Transformation of a cooperative having its registered office in the EC if such a cooperative has at least two years a subsidiary which is governed by the law of another Member State. It may arise even if the national cooperative has at least two years at least the organizational unit of an enterprise in another Member State (difference from SE)

The SCE Regulation also permits the SCE to be set up as a new entity:

• By at least 5 natural persons in the territory of at least 2 different member states
• By at least 5 natural persons and companies within the meaning of Article 48 of the SES and other legal entities established under the law of a Member State which are resident in the territory or governed by the law of at least two Member States
• By at least two companies within the meaning of Article 48 of the SES and other legal entities established under the law of a State which is governed by the law of at least two different Member States.

The EEIG is established by a consortium agreement and is established on the day of its  registration. The contract must include:

• Company name, the company must include the European Economic Interest Grouping or EEIG,
• Domicile - on the registered office depends which law will be applicable in the alternative, it may be only in an EU Member State, it may be just the place where the main EEIG management or the main management of the member of the EEIG which is a legal person or, if a natural person, where he / she carries out his / her main activity if the EEIG also carries on business,
• The scope of activities of the EEIG
• The designation of a member of the EEIG - a Member State may provide that the EEIG may not have more than 20 members (restrictions are governed by the law of the association's headquarters) and that certain groups of entities may not charge membership, only under specified conditions (limitation by the law of the State to which the person concerned is subject)
• The duration of the EEIG unless otherwise stated in the contract, is based on an indefinite period of time, the EEIG Regulation expressly prohibits the contract from adjusting in advance the amount of the rights and obligations of a member upon termination of membership.
• Formal requirements - written form, notarial deed nor official signature verification is not required. The Member State cannot make any further requirements.

Only one person may set up a joint stock company if it is a legal person (the concentration of shares in the hands of 1 natural person is not a reason for cancellation of a JSC or the cause of its invalidity)

4 Steps to establish a JSC

• Founding agreement (or founding document in case of only 1 shareholder)
• Statutes of the JSC
• Subscription and min. partial repayment of deposits
• Collective decision on establishing JSC and on its statutes

Two ways of foundation:

• One-off (simultaneous) - no public offer of shares
• Gradual (successive) - with public offering of shares

Simultaneous establishment - founding of the JSC without public offers of shares

Founders will be obliged to repay the entire share capital, there is no underwriting of the shares or establishing general meeting (instead of it, the founders decide together). Founders have to pay the entire share premium (= the difference between the nominal value of the share and its selling price), 30% of all shares (when repaying with cash deposits) and fully repay the non-cash deposits prior to the registration. Here too, it is necessary to make a notarial deed (also if the simultaneous method is used by one founder), the share capital here is min. 2 million CZK.

Successive way of establishing of a JSC. - establishing JSC on the basis of a public offer of shares

Used if founders cannot, or do not want to subscribe the entire share capital. Part of the share capital, which exceeds the sum of the value of their deposits, is thus subscribed to by shares (by public offer). The share capital must be min. 20 million (if the JSC with a capital of less than 20 million increases its capital by public offer, it must be increased to this amount at minimum).

Founders (associates) - natural persons and legal entities, min. 1 and up to 50 founders (members), one-person Ltd. however, ca not be the sole founder (partner) of another company, 1 natural person may be the sole shareholder of max. 3 Ltd.

Founding s.r.o. - a social contract (a founding charter - if there is only one founder)
form - notarial deed
essentials:

• Firm (with mandatory addendum) and registered office of the Ltd.
• Partners - firm or name and registered office of the legal entity (including ID and place of business) or name and domicile of natural person (incl. personal ID)
• The scope of business or activity (Ltd. can be set up for non-business purposes - fictive or formal PL) - scope of business can also be activities which can be performed only through persons with special justification (§56 / 3; however, the performance of these activities in the form of Ltd. does not deprive these persons of personal and unlimited liability for the proper performance of professional activity based on special regulations - it is then a joint liability of the Ldt. and above mentioned persons)

• Amount of share capital and the amount of the contribution of each partner (including the manner and time of repayment of the deposit, in the case of non-monetary deposits, their subject and the amount to be credited to the shareholder's contribution, and the price according to expert's opinion)
• Names and residence of the first directors of Ltd. and the way they act on behalf of the Ltd. (in the case of other executives, how many will be and the manner of negotiations on behalf of Ltd.)
• Names and domicile of members of the first supervisory board (if established)
• Determination of the deposit manager
• According to the practice and the arrangement on the reserve fund (see §124 / 1)
• Other data according to the Commercial Code
• Officially verified signatures of all founders

Company establishment – registration in Commercial Register - conditions:

• Submission of the proposal
• Business license
• Fulfilment of the deposit obligation in the legal scope (total capital of at least CZK 1,-, non-monetary deposits fully repaid, each monetary minimum of 30%, repayment of the entire issue); if 1 founder, then in full (non-cash contributions require expert opinion of 2 experts)
• Proof of the legal reason for the use of the premises in which the Ltd. has a registered office
• The proposal shall be signed (officially certified) by all directors (the proposal is filed on behalf of Ltd.); with the proposal are connected data about facts recorded in the Commercial Register pursuant to §28 of the Commercial Code, incl. documents in the collection of documents (in particular the social contract, proof of fulfilment of the mandatory extent of the repayment of deposits, expert opinion valuing non-cash deposits). In OR with Ltd. enters into section C.

Founders (associates) - natural persons and legal entities, min. 1 and up to 50 founders (members), one-person s.r.o. however, cannot be the sole founder (partner) of another company, 1 natural person may be the sole shareholder of max. 3 s.r.o.

Founding s.r.o. - a social contract (a founding charter - if there is only one founder)
Form - notarial deed

Essentials:

• Firm (with mandatory addendum) and registered office of the s.r.o.
• Partners - firm or name and registered office of the legal person (including ID and place of business) or name and domicile of natural person (incl. personal ID)
• The scope of business or activity (s.r.o. can be set up for non-business purposes - fictive or formal PL) - scope of business can also be activities which can be performed only through persons with special justification (§56 / 3; however, the performance of these activities in the form of s.r.o. does not deprive these persons of personal and unlimited liability for the proper performance of professional activity based on special regulations - it is then a joint liability of the s.r.o. and above mentioned persons)
• Amount of share capital and the amount of the contribution of each partner (including the manner and time of repayment of the deposit, in the case of non-monetary deposits, their subject and the amount to be credited to the shareholder's contribution, and the price according to expert's opinion)
• Names and residence of the first directors of s.r.o. and the way they act by s.r.o. (in the case of other executives, how many will be and the manner of negotiations on behalf of s.r.o.)
• Names and domicile of members of the first supervisory board (if established)
• Determination of the deposit manager
• According to the practice and the arrangement on the reserve fund (see §124 / 1)
• Other data according to the Commercial Code
• Officially verified signatures of all founders

European society is a form of a multinational society, the regulation of which is based on Community rules. The basis is Council Regulation (EC) No 2157/2001 on the Statute for a European Company (SE), followed by Council Directive 2001/86 / EC (SE Directive).

The SE Regulation foresees the adoption of laws in the Member States that fill the gaps that the regulation deliberately creates. The SE Regulation only regulates the basic status issues, their scope is far from exhaustive.

The Regulation either authorizes the Member States to create a specific rule - Member States may adapt the relevant issues for the SE without having to take into account the provisions they apply to the joint-stock company, are limited by the relevant European directives or refer directly to the stock law of Member States.

Benefits of a European Society:

• Most legal orders do not allow a registered office to be relocated abroad without the cancellation of the company, and thus the interruption of the continuity of legal personality. European company allows relocation to another state, thereby changing the applicable law.
• European society has a more flexible management and governance structure, and states are obliged to organize a SE based on their territory, both according to the dualistic and the monistic model (only the Board of Directors)

Capital Structure:

It does not differ from a regular joint-stock company. Mandatory share capital is created and is divided into shares and must be expressed in EURO. A minimum subscribed capital is of € 120,000 (however, conducting business in a particular field may require a higher amount).

The basic purpose of regulation is to facilitate cooperation between entrepreneurs from different Member States. Based on the Council Regulation No 2137/85 establishing a European Economic Interest Grouping (EEIG). It is effective from 1 July 1989, with the exception of Articles 39, 41 and 42 which entered into force as from the entry into force of the Regulation. In the Czech Republic, effective from 1 May 2004.

EEIG differs from cooperatives and commercial companies in the CR by activity, which must meet the following conditions:

Positive definition of the activity:

• The activity is intended to alleviate or develop the economic activities of its members, as well as to improve and increase the results of those activities
• The EEIG's activities must be related to the economic activities of its members
• Activities of the EEIG may be only ancillary activities in relation to the economic activities of its members

Negative definition of the purpose:

• Purpose of the EEIG is not to achieve its own profit, but to support profit growth of members, EEIG can generate profit, but it should be divided among the members,
• EEIG may not exercise executive or supervisory power over the actions of its members or other business activities (cannot be controlling person within the meaning of § 66a of the Commercial Code), an EEIG may exercise in relation to its members and other persons EEIG coordination activities.

The EEIG cannot carry out the activity instead of its members, but at the same time its activity cannot be independent of the activities of its members. E.g. EEIG whose members are lawyers, cannot practice law itself but only ancillary activities, such as organizing training, clients seek etc. Most EEIG were founded in services, 90% are private sector.

The EEIG may or may not be a legal person, it depends on the legislation of a Member State, it is always possible participant in substantive and procedural relationships.

This term is used in business practice with the term company foundation. In fact, the term of the foundation of the firm is wider and includes not only the foundation of companies as legal entities, but also, for example, the registration  of a natural person in the Commercial Register, which is also mandatory for a natural person in certain cases. The term firm is not equal to the term company, but is the name under which a person (whether natural or legal) is registered in the Commercial Register.

Founders (partners) v.o.s. are both natural person and legal person (except for special laws, e.g. bank), domestic and foreign, min.  2, the maximum number is not fixed, but it is true for the same law that one can be an unlimited guarantor only in one company (but does not refer to the societas or the silent participation).

Natural person must meet general conditions for operation of the trade according to the special law and it must not be impeded by the pursuit of the trade (irrespective of the scope of business of the company).

If partner is a legal person, his rights and duties are associated with participation in v.o.s., or authorized representative (but must meet the conditions set for the natural person).

Social Contract (SS)

Form - written with officially verified signatures (SS may also be concluded by an agent with a written power of attorney with officially verified signature of the principal - he / she will join the SS)
Essentials:

• Firm and registered office - firm with a mandatory supplement (see above)
• Partners - firm or name and registered office of natural persons (ID) or name and domicile of natural person (personal ID)
• Scope of business - within the limits of § 2/1
• Signatures

Establishment of v.o.s .:

• Social contract
• Before the filing of an application for registration in the Commercial Register, the partners must be authorized to exercise business activity (the founders have to prove the trade, the foundation of the v.o.s and set up a competent responsible representative for the performance of the trade, the company will get a trade license on the day it is created itself), v.o.s. can also be established for the purpose of pursuing the free professions = business whose performance is by law only allowed to natural persons (can only be done by persons authorized to do so, §56 / 3)
• The v.o.s. is established by the day on which it was registered in the Commercial Register - the proposal is signed by all partners, social contract is attached (+ documents certifying the data entered in the Commercial Register - §28 / 1.2). In case that the application is not filed 90 days from the founding of the v.o.s. or from the delivery of the trade licence or other authorization, it is no longer possible to file an application for registration.

Ways of founding

• System of free formation - the company is founded and as a legal person is created simultaneously with the signing of the social contract
• Concession system - valid founding depends on permission
• Normative (registration) system - social contract is sufficient for founding, but the company as a legal person is established only after the registration in the public register

Founding in the Czech Republic - Founding in the Czech Republic is a legal action, which creates a basic prerequisite for the establishment of a company as a legal person

The legal act underlying founding of the company is

• Social contract
• Founding agreement and the statutes (JSC)
• Founding charter (Ltd, JSC, if there is 1 founder, the form is notarial deed)

The essential elements of all these documents must be identical, the authenticity of the signatures of the persons who have founded the company must be authenticated (legalization, social contract of the Ltd. and founding agreement of the JSC must take the form of a notarial deed. Notarial Order introduces as a new type of notarial deed the report on decision of the statutory body of the legal person - the notary is newly responsible for the compliance of the recorded facts with legislation). The social contract can be signed by the founder's agent if it is equipped with a written power of attorney with an officially signed signature of the principal.

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.

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.

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

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

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

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.

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).

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).

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.

A process regulated by law in which an extrajudicial  settlement of property relations of an expiring  legal person takes place. Liquidation is mandatory, unless the law expressly determines that it is not necessary (legal successor). The purpose is to clarify the financial situation of the trade company. Liquidation is carried out by the liquidator and after its termination it may result in deletion from the Commercial Register.

Managing director is the statutory body of a limited liability company. He is in charge of acting on behalf of the company. The statutory body of a limited liability company is one or more directors (the number is stated in the social contract). Managing director can only be a natural person who fulfils the conditions for the operation of the trade - the majority, the integrity etc.

A mutual fund is a collection of assets that belongs  to all owners of mutual fund shares, the shareholders, in proportion to shares owned.

Mutual fund is not a legal person. Finances to the mutual fund are collected by an investment company. Mutual fund share is a security that represents a shareholder's share in the assets of a mutual fund and other rights. A mutual fund may be open or closed.

Open mutual fund
It does not limit the number of issued shares. Shares are connected with the right of redemption by the investment company at the request of its owner, it does not have to have a nominal value. In the case of purchase, the investment company will purchase a mutual fund share for its current value announced to the date on which the shareholder has received a request for redemption.

Closed mutual fund
Investment company does not redeem mutual fund shares. The name of the fund consists of the name of the managing investment company and of identification of closed mutual fund. The closed mutual fund is set up for a fixed period, which must be stated in the statute.

Nullity may be declared by a court (without proposal) for the following reasons:

• Absence of a social contract, memorandum of agreement or articles of association or not respected their required form
• Real scope of business is illegal, or contrary to public policy
• The social contract, memorandum of agreement or articles of association do not contain information about the company or the shareholders or the amount of share capital (if it is prescribed by law) or info on the scope of business
• Minimum repayment of deposits was not observed
• All the founders are incapacitated
• Number of founders is contrary to the law (sole)

By this decision, the company enters into liquidation, such decision is entered in the Commercial Register and published in the Business Journal. The legal relationships into which this company has entered is not invalidated and are therefore valid.

After the establishment of the company, the decision to authorize the company's registration in the Commercial Register cannot  be annulled, and it cannot be  claimed that the company has not been established.

A company that was already founded (by the founding document), but that was not incorporated yet (registered in the Commercial Register).

Who acts on behalf of the company before its foundation, is committed from this decisions, (more people then jointly and severally) - if companions (or organs of the company) approves this decision within three months from the date of the company incorporation, then these decisions have been committed since the beginning of business company.

Liabilities that are not related to the creation of the company, and liabilities that are not at the expense of the founders, the company may not assume (unless they are signed with a suspensive condition of the company and approved by the shareholders, or authority) > founders must provide a list of these negotiations and submit them for approval to the shareholders (the authority within 3 months).

Persons who take over on behalf of the company other commitments are committed from this decision and responsible for damages.

The principle of formal publicity is based on the fact that the Commercial Register is accessible to everyone regardless of the presence or absence of his legal interest (§ 27/1 of the Commercial Code).

Everyone has the right to inspect, make copies  and extracts, on request, the registration court issues a certified complete or partial copy of the entry or document stored in a collection of documents, statement or confirmation of a particular entry or confirmation that the Commercial Register does not contain some records.

The case file regarding the company (not the file that is based on the procedures for some entries, there can be consulted only with power of attorney) or to the Commercial Registry can be viewed at the court and copies or extracts of them can be obtained during office hours under  the supervision of an authorized court staff; room for this purpose must be clearly marked and placed on the orientation board of the court (§ 8 of Decree No. 37/1992)

The law does not absolutely set right to the  court to limit in any way the accessibility of the collection of documents - such court procedure would not only be contrary to the law, but also in violation of the Constitution because of the Charter states in Article 2, paragraph 2 clearly: "State power can be exercised only within the limits set by law and in the manner prescribed by law. "- Court action belongs clearly within the scope of state power and is fully subject to the law.

The manifestation of the principle of formal public is the obligation of the registration court to disclose records - the scope and manner of publication of the deposit of the document in the collection of documents is regulated by implementing regulation - Government Regulation 503/2000 Coll., on the Business Journal; the Business Journal is issued by the Ministry of Justice via publishing house.

It is a principle of public trust (faith) = data entered in the Commercial Register are legally effective externally even if they do not correspond to the actual state, providing that conditions of the principle of publicity material (§ 27/2 of the Commercial Code) are applied.

Positive side of the principle of publicity

Records are legally enforceable against everyone (even the governmental agencies) from the date of publication of registration, but at the same time a person who knew about these facts previously, can apply them from the date of registration; the burden of proof of good faith of third people lies with the registered entrepreneur

Declaratory entries - it is possible to actually apply from the time the third person hears them, but cannot be relied upon prior to publication, or the end of the sixteenth day after publication (the enforceability of the special treatment given to the effectiveness of the registered facts - so if a certain fact is already effective because of the publication of the entry, but has not passed 16 days from publication of the entry and a third person proves that she could not know about it, it is not possible to enforced it against her)

Constitutive entries - legal effects occur only at the time of publication, before the publication of the entry that effects cannot occur, but even here cannot be relied upon up to the sixteenth day, if a third party proves that she could not know the facts. In other cases, the effectiveness starts from the date of disclosure if there is a discrepancy between registered and published data or stored and disclosed documents, it is not possible to argue the published version against third parties, third parties may nevertheless rely on the published version, unless the registered person proves, that they were aware of the data entered in the Commercial Register or the contents of documents stored there.

Negative side of the material publicity

It is not possible to argue against a third party acting in reliance on a record that it does not reflect reality - the limits of the application of that principle is therefore trust of a third party - if such person knew or should have known about the differences between the registered data from reality, the actual situation is compared to the Registry - this will be particularly the case where a third party will be the person to whom the record relates, specifically advised of the difference; burden of proof borne by the person whose registration is concerned, therefore, the written form of notice will be necessary in practice.

Particularly broad and against third parties as to the effects of illimitable power of attorney, which gives permission to proxies to represent the business to a certain extent - empowering to all legal acts that occur during operation of the business:

• Proxy may not burden property without the express approval of the General Meeting when granting power of attorney
• Procuration may only grant an entrepreneur registered in the Commercial Register
• Proctor may be a natural person only

Types of procuration:

• Basic - no permission to burdening real estate and expanded - with permission
• Individual - each proxy is entitled to act on behalf of entrepreneurs and sign separately and collective (group) - the synergy of at least two secretaries are necessary to negotiate and sign

Private law prohibition, the violation of which is associated only with the responsibilities provided for in § 65 of the Commercial Code, it will be applied only on the initiative of the company itself, eventually. Its shareholders, but it is not excluded criminal responsibility.

It is a tool that is provided to partners to protect  the interests of the company. For different companies are different prohibitions of competition - for example, LLC only for agents, for public trade company for all partners, etc.

Prohibition of competition in the Commercial Code restricts  business and to some extent dependent activity of members of company bodies and allows application of penalties for its violation.

If the company decides to apply sanctions can choose between a requirement that the violator gave the benefit of the trade in question, or transfer rights to the company - in the first case, the trade will be executed according to the result of the infringement (breach of contract with the non-competition) and only yield will be handed over to the Company, in the latter case, the violator shall transfer the rights arising from the resulting relationship to society - only in the second case, a change resulting from the contractual relationship will be, in either case, the result of violation of non-competition shall not be invalidity of legal actions - Company therefore cannot invoke nor relative invalidity of such an act, because the law in this case provides for a specific penalty = deviation from § 39 of the Civil Code - although it is a legal act made in violation of the law, the result in this case is not nullity.

If the company suffered damage by the violation of prohibition of competition is entitled to seek compensation under the conditions of § 373 et seq. Commercial Code without regard to the aforementioned special penalty, the right to compensation may not be applied - in this sense it is a free decision, if they reach their claim, but in terms of members of the governing bodies must realize that if of its own accord law does not apply, it may cause damage to the Company, for which bear legal responsibility, it could also be the fulfilment of the crime of violation of the duty to administer foreign assets pursuant to § 255 of the Penal Code.

Defined for JSC and Ltd. where it is obligatory to create the reserve fund from net income for the current accounting period after taxation.

The reserve fund is one of the liabilities in the accounting and one of own resources  of company assets. The reserve fund can only be used to cover losses.

Beyond the scope of the general provisions of the use of the reserve fund provided for in § 67 goes the provision of § 216a.

Reserve Fund may be applied under certain conditions, to increase the share capital. The loss is if the financial statements show that the company's costs are higher than its revenues. The company has no obligation to cover the loss using the reserve fund. The reserve fund may not be made up of funds deposited with a bank or fast liquid property values, may not be established since the establishment of the company.

The reserve fund can also be created by a partnership, then use of its funds is not earmarked.

The prerequisites for the establishment of a trade license are determined by the fact that only natural persons can meet them - the institute of the responsible representative, i.e. the natural person appointed by the entrepreneur who:

• Is responsible for the proper operation of the trade and for compliance with the trade licensing regulations,
• Must comply both with the general and special conditions of the operation of the trade according to the type of business operated,
• They must participate in the trade to the extent necessary,
• Must have permanent residence in the territory of the Czech Republic

Obligation to appoint a Responsible Representative §11 Trade Act:

• An entrepreneur who is a natural person and does not fulfill the special conditions of the operation of a trade (Section 7), unless it is an notifiable trade in an industrial manner,
• An entrepreneur who is a foreign natural person and does not have a residence permit in the Czech Republic,
• An entrepreneur who is a legal person established in the Czech Republic - appoints a member of the statutory body or a statutory body as the responsible representative who fulfils the conditions for the performance of the function of the responsible representative according to the Trade Act. If the responsible representative cannot be appointed from among these persons, the entrepreneur shall appoint a responsible representative from other persons,
• An entrepreneur who is a foreign legal person - to the position of the responsible representative, shall appoint a head of the organizational unit located in the territory of the Czech Republic who fulfils the conditions for the performance of the function of the responsible representative under this Act; if the head of the organisational unit does not meet these conditions, the entrepreneur shall appoint a responsible representative from other persons.

However, a representative may be appointed also on  a voluntary basis (optional).

Share (usually money) that belongs to the partner whose participation in the company expired, or expired to his heirs or other successors (excluded for JSC). The company must draw up interim, regular or extraordinary financial statements as of the date of termination of the participation of this partner in the company. The settlement amount is calculated by the equity (if the social contract does not stipulate that a check of the net assets shall be based on expert opinion), the share is payable 3 months after approval of the financial Statements (or receipt of the expert's report to the company) - if companions or body do not approve the financial statements without a serious reason, the settlement is paid in the same period.

Share is a security stating that the owner put a capital to the joint-stock company. A security which gives shareholders the right to participate in the management of a joint stock company, in its profits and in the liquidation balance upon the dissolution of the company, and the pre-emptive right to newly issued shares, in accordance with the Commercial Code and the Articles of Association.

Základní kapitál akciové společnosti je rozvržen na jednotlivé akcie. Akcie je dělí na akcie listinné a zaknihované a akcie na jméno a na majitele.

Share capital is basic assets of the company, which must be expressed in Czech  currency and the amount of which varies depending on the type of company. The share capital consists of the founder's deposits (cash, respectively expressible by money) or during the operation of other deposits by their owner.

The creation of share capital is mandatory by law for limited partnership, for limited liability company (minimum 1, - CZK) and for joint-stock company (the minimum amount of 2,000,000 CZK without a public offering or at least CZK 20 million with public offering of shares).

Stock warrant is a security replacing temporarily share. Security replacement share when the Company increased the share capital by subscription of new shares, the underwriter fully repay the issue price of shares subscribed, but the capital increase has not yet been entered in the Commercial Register.

The supervisory Board is the supervisory body of the company with controlling powers.

It is a collective body with at least 3 members who elect a chairman from among their members (The number of members must be divisible by 3). Membership in the Supervisory Board is incompatible with the membership in the Board of Directors, clerk or a person authorized to act on behalf of the JSC. Members are elected for a term according to the statutes, for a maximum of 5 years (the first term of office is one year from the creation).

Působnost Dozorčí rady akciové společnosti:

• kontrolní
  • dohlíží na výkon působnosti představenstva a výkon podnikatelské činnosti a.s.
  • přezkoumává účetní závěrky a návrh na rozdělení zisku či úhradu ztráty; své vyjádření předloží na VH
  • respektuje žádosti akciové minority
• řídící
  • svolá mimořádnou valnou hromadu, je-li to v zájmu a.s., a navrhuje potřebná opatření
  • stanoví-li to stanovy, může volit a odvolávat představenstvo,
• jednatelská
  • určuje svého člena, který zastupuje a.s. v řízení před soudy a jinými orgány proti členu představenstva
  • nahlíží do všech dokladů a záznamů a prověřuje jejich správnost (kontroluje soulad se skutečným stavem i s právními předpisy a stanovami)

Trade means the business under the Trade Licensing Act, it is therefore a narrower term than business in general, this is just the business run under the Trade Licensing Act.

Business activity excluded from the scope of Trade Licensing Act by special regulations is not a trade. Activity excluded from the scope Trade Act or activity uncontrolled by any law, even if the profession is not listed in Annexes of the Trade Licensing Act, is the trade and in this respect the Trade Licensing Act is subsidiary general arrangement for business conditions.

Activities that are not trades - an exhaustive list of § 3 and 4 Trade Act

• Business performed only by natural persons (e.g. freelancers)
• Business usually performed only by legal persons (such as state monopoly, banking, insurance, the so-called primary production)
• Rental properties, apartments and commercial space is a trade, only if in addition to the rent the landlord also provides other than basic services covering the proper operation of real estate, residential and commercial space (§ 4 Trade Licensing Act)

Trade secret is competitive valuable fact in running a business that is unknown to other competitors and entrepreneurs and according to the will of the entrepreneur, should remain unknown.

This includes, for example, all business  facts (e.g. lists of customers, suppliers, sales representatives, business plans, price calculations), manufacturing (e.g. procedures, methods, samples, non-patented inventions) or technical (e.g. drawings, attempts) of nature, facts related to the enterprise (exist in connection with an enterprise, its subject matter cannot be facts whose secrecy excludes the prescription or whose protection would be contrary to good morals) and others.

The trading company is a private association of persons who come together for business purposes, i.e. for the purpose of continuing  business activity in their own names and on their own responsibility to gain  profit. For generic character is also considered that it is a legal person.

Commercial companies can be divided into capital and personal.

Among private companies belong:

• Public company (minimum 2 persons conducting business under the conjoint name, according to § 76 et seq. Com. Code.)
• Limited partnership (minimum 2 persons conducting business under the conjoint name of, § 93 et seq. Commercial Code).

Among capital companies belong:

• Limited liability company (LLC, can be founded by a single person, maximum 50, § 150 et seq. Com. Code.)
• Joint-stock company (may be established by one person, but must be legal, maximum number of people is not limited, § 154 et seq. Com. Code).

In addition to capital companies and partnerships, which are inherent to Czech law, we can still distinguish a European Company: European join-stock company and a European Economic Interest Grouping

Partners or the competent authority may decide (possibly against the will of the minority shareholders) on the company cancelation and transfer of its assets to one partner (the majority, even physical person) residing in the Czech Republic.

Legal effects occur on the date of registration of the transfer to the Commercial  Register. These are called private  expropriation.

Change of the legal form of the company. Change from Ltd. to JCS and the like. The company does not cease nor its assets are transferred, but there is a change  in the internal legal relations and legal status of its partners. Effects of changes occur on the date of incorporation in Commercial Register.

Legal consequences of the fact that a person  carries a business illegally:

• A person carries a business without authorization
• His/her business was forbidden (e. g. disqualification by judgment of the court, decision on suspending trade by Trade Office)
• The person has a license to do business, but his / her activity is beyond the scope of such authorization

Practices of a trader in respect of other competitors are deemed to be unfair if they are contrary to the requirements of professional diligence, may be detrimental to other competitors or consumers. Unfair  competition is prohibited.

The prohibition of unfair competition affects legal offenses that do not act against the existence of competition but abuse it by distorting competition rules in order to harm competitors in an unfair manner.

Unfair competition is especially:

• Misleading advertising.
• Misleading labeling of goods and services,
• Creating the likelihood of confusion,
• Free riding on the reputation of the products or services of other competitor,
• Bribery
• Detraction,
• Comparative advertising,
• Violation of trade secrets,
• Endangering the health of consumers and the environment

Option is a condition precedent in the contract on sale of securities, according to which one party may during the option period express the will to confirm the  contract (the publication of the option) or on the contrary silently withdraw.

For the establishment of option rights, a payment  (option premium) can be arranged, which must be paid regardless of whether declared or not an option. The right of option is transferrable; if transferred, goes with it both rights and obligations under the contract on security purchase. The transition of liabilities does  not require the consent of the lender. If the options are traded themselves, separate security is issued - in the Czech Republic not yet treated by law.

Similar to options in the Czech Republic are warrants, which may be published by the JSC. It is a security which gives the right to exercise pre-emptive right to subscribe for new shares or to acquire convertible bonds or preferred or to subscribe for shares that are issued to holders of priority bonds.