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Glossary of terms

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Preliminary company

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.

Principle of formal publicity

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.

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Principle of material publicity

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.

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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
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Profit transfer agreement

Commitment to transfer profits can be arranged or in controlling  agreement, or separately - legal instrument is a profit transfer  agreement - § 190a. Controlled entity has a commitment to transfer profit to the controlling person, the controlling person has the duty of annual settlement with every outstanding shareholders. This settlement must be proportionate to the economic performance of dominated society.

These commitments must be included in the contract, otherwise the contract is void. However, if the compensation is not adequate, the determination of the amount of settlement may be claimed in the court within from publication of the notice on the collection of the contract documents. Otherwise, the same applies as for the controlling agreement.

Prohibition of competition

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.

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