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Glossary of terms

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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.

Unauthorized business

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

Unfair competition

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
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Warrants - options

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.