INTRODUCTION TO CZECH BUSINESS LAW 1 Time & Location Thursday10-12 a.m. Grading – criteria Participation in lectures - 50% Presentations Discussion Test - three types – 50% Two questions private int. law and two questions commercial law Four questions private international law Four questions commercial law

INTRODUCTION TO CZECH BUSINESS LAW 2 Concept, Main Principles Regulation of Business Relations New codification of Czech private law New Civil Code (Act No. 89/2012 Coll.) Act on Commercial Corporations (Act. 90/2012 Coll.) New Act on Private International Law (Act 91/2012 Coll.) New codes took effect on January 1, 2014 Introduce new concept of Czech private law

INTRODUCTION TO CZECH BUSINESS LAW Civil Code - main general source of Czech private law Basic structure of Civil Code General principles of private law Participants in private law relations (individuals, legal entities), legal positions and rights of these participants Objects of private law relations (things) Legal acts and their validity, legal facts (time, statute of limitation) Family law Ownership and related issues (rights in rem including security interests), succession laws Obligations (law of contracts, liability for damage, unjust enrichment, unfair competition) 3

INTRODUCTION TO CZECH BUSINESS LAW Civil Code applicable to full extent to commercial relations including legal position of participants to commercial relations (entrepreneurs, companies, cooperatives) protection against unfair competition commercial obligations (contracts, liability for breach of obligations) Specifics of business relations included in special laws of private and public laws nature 4

INTRODUCTION TO CZECH BUSINESS LAW 5 Act on Business Corporations Regulates specifics of establishment, structure and existence of business corporations as a special law in relation to Civil Code EC Law EC law became part of the Czech body of law following the accession of the Czech Republic to the European Union Treaties and Regulations are directly applicable. Directives dealing with commercial relations have been mostly implemented into Czech national legislation even before accession of the Czech Republic to the EU

INTRODUCTION TO CZECH BUSINESS LAW 6 Specific laws protecting economic competition, laws on capital markets Antitrust regulation – Act No. 143/2001 Coll., on Protection of Economic Competition Capital markets – Act No. 256/2004 Coll., on Business Activities within Capital Markets The course Will cover certain general aspects of business relations Will mainly focus on Czech corporate law and special business contracts Will address Czech legislation and relevant aspects of EU law

INTRODUCTION TO CZECH BUSINESS LAW 7 Entrepreneurs – Term, Legal Position Regulation of business relations - law of professionals (entrepreneurs) Entrepreneur is a person (entity) professionally engaged in a business activity Business activity is a continuous activity carried out by an entrepreneur independently in his own name at his own account (responsibility) for the purpose of gaining profit Professionally engaged means: the business activity is carried out on the basis of authorization granted in accordance with specific public laws. The most often authorization is a trade authorization / trade license

INTRODUCTION TO CZECH BUSINESS LAW Entrepreneurs individuals legal entities Legal entities – corporations, foundations Main features of legal entities defined organizational structure own assets ability to make decisions legally accepted objects of activity ability to gain rights and assume obligations granted by law 8

INTRODUCTION TO CZECH BUSINESS LAW Main forms of entrepreneurs business (commercial) companies – legal entities sole entrepreneurs - individuals Distinguishing features of entrepreneurs seat (registered office) / place od doing business trade name 9

INTRODUCTION TO CZECH BUSINESS LAW Legal entities - seat (registered address) point of contact Real seat v. registered (statutory) seat of legal entity real seat – address of headquarters, main administration and governance registered seat – address registered in public registers Each entrepreneur – legal entity must register in commercial register its seat as of its incorporation Everybody can rely on the real seat of the legal entity Good faith in the registered seat is protected 10

INTRODUCTION TO CZECH BUSINESS LAW Entrepreneur – individual has to register his/her place of doing business in commercial register Trade name name under which entrepreneur is obligated to do business has to be registered in commercial register Trade name of entrepreneur – individual his/her name, if name changed the original name can be used but chage must be registered 11

INTRODUCTION TO CZECH BUSINESS LAW Trade name of entrepreneur – legal entity name under which entity is registered in commercial register and addendum designating its legal form Trade name is main distinguishing feature, therefore must not be open to confusion with name of another entrepreneur must not be misleading (deceitful) Exception for corporate groupings trade names of companies belonging to the same group may contain identical elements however public must be able to distinguish individual members of the group 12

INTRODUCTION TO CZECH BUSINESS LAW Transfers and other changes – impact on trade name – principle of truthfulness Trade name can be transferred independently or together with transfer of pertinent business (transformation, sale of business) Legal successor/heir may use trade name of predecessor only with addendum designating succession and with consent of decedent/predecessor In case of transformation trade name is transferred to the successor if successor agrees. In case of more successors and neither of them is determined as owner of trade name, trade name is not transferred to any of them 13

INTRODUCTION TO CZECH BUSINESS LAW The owner of the trade name may revoke his consent to use his name by another person for important reason, e.g. change of business activity or ownership structure of the user of his trade name Protection against unlawful use/misuse of trade name claim to desistance from further use of trade name and to eliminate consequences of unlawful use claim to damages and to surrender unjust enrichment remedies provided for protection against unfair competition – appropriate satisfaction, publication of judgment 14

INTRODUCTION TO CZECH BUSINESS LAW 15 Acting on Behalf of Entrepreneurs Entrepreneurs - individuals can act by their own acts (directly), or through a legal representative acting on the basis of a power of attorney Entrepreneurs – legal entities (companies) can act Through a legal representative (agent) Statutory body Employees and other persons entrusted with performance of a certain activity within a company Other persons on the basis of power of attorneys

INTRODUCTION TO CZECH BUSINESS LAW 16 Statutory body Corporate body authorized to all acts that founding document, law or decision of the state body did not entrust to other corporate bodies. (Section 163 of the Civil Code) Member of statutory body may act on behalf of company in all matters Any internal restriction of statutory body’s authority is not effective towards third persons even if published Employees and other representatives Employees represent company to the extent appropriate to their position and tasks as known to the public Anyone who is entrusted with performance of a certain activity within a company is authorized to undertake all legal acts (contracts) which usually occur in the course of this activity; this includes also employees and other persons working for company

INTRODUCTION TO CZECH BUSINESS LAW Acting in excess of representative's power Different consequences depending on a type of representation Statutory body – acts in all matters Employees and other persons – acts binding on company unless the other party knew about excess If the statutes require consent of corporate supreme body to certain corporate legal acts and the consent is not granted the legal act is invalid Invalidity may be claimed within period of time set by law 17

INTRODUCTION TO CZECH BUSINESS LAW Special General Power of Attorney – Procuration Procurator is authorized to perform on behalf of a company all acts in law which occur in the operation of the business even though a special power of attorney might be otherwise required. (Section 450 of the Civil Code) Procurator is authorized to act in everything what is aimed at carrying out the business 18

INTRODUCTION TO CZECH BUSINESS LAW 19 Right to sell or encumber real estate is not automatically included in procuration Procuration must be registered in the Commercial Register Any internal restriction of a procuration is not effective towards third persons Procuration may be granted to individuals only; to one or more persons Procuration granted to more persons – manner of acting must be determin ed

INTRODUCTION TO CZECH BUSINESS LAW Commercial Register Public register – maintains data concerning entrepreneurs prescribed by law Leading principle - principle of publicity Material publicity – any entry in commercial register can be claimed against third person only after its publication (protection of reliance in good faith on published data) Formal publicity – commercial register is available to anybody, any entry must be published 20

INTRODUCTION TO CZECH BUSINESS LAW Commercial register is maintained by courts Czech legislation implemented Directive 2003/58/EC as regards disclosure requirements in respect of certain types of companies Any entry is effective towards third persons upon its publication In case of discrepancy between entered and published data the published data cannot be used against third person but this person may rely on the published data unless the registered entity proves that the third person knew the content of data provided for entry in the commercial register 21

INTRODUCTION TO CZECH BUSINESS LAW The entries into commercial register must be supplied in electronic form Commercial register is available in electronic form and accessible by electronic means Entities entered into commercial register business companies foreign entrepreneurs individuals upon request (except for special professions required by law) entities required by special laws 22

INTRODUCTION TO CZECH BUSINESS LAW Facts to be registered are prescribed by law Main identification data concerning entrepreneur – trade name, seat, legal form, statutory body Data relating to important events and changes in entrepreneur’s structure and business – registered capital and its changes, termination of a company, changes in statutes or founding documents Main purpose of commercial register – to secure transparency and equal position of parties to business relations 23