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Glossary of terms

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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)
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Trade secret

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.

Trading company

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

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Transfer of assets to a partner

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.

Transformation of a company

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.