1. GENERAL PARTNERSHIP General Characteristics
Quintessential representative of personal companies
Can be created only for business purposes by at least two founders
Emphasis on personal involvement and abilities of members
Designed for small businesses (restaurants, travel agencies, crafts)

2. GENERAL PARTNERSHIP Establishment
Legal act necessary for establishment - founding agreement
Incorporation - upon registration in the Commercial Register
Contributions into company’s assets not mandatory, must be made only if required by the founding agreement
Members (partners) - both individuals and legal entities

3. GENERAL PARTNERSHIP Corporate organization
No specific corporate bodies created
Management of the company carried out by members (partners)

4. GENERAL PARTNERSHIP Rights and duties of members
Right to participate in management
each member is authorized to manage the company and act on behalf of the company in all matters
founding agreement may grant the management right only to one or more members
“managing members” are liable to other members for proper management of the company
“non-managing” members have the right to be informed and to inspect the books and other documents of the company
right of one or more members to manage the company can be terminated by the decision of majority of members
the “managing member” may resign from his position

5. GENERAL PARTNERSHIP
Matters pertaining to the existence of the company may be decided only by all members or majority of members stated in the founding agreement
Examples of such decisions:
change of founding agreement
termination of a company
approval of financial statements
disposition of major assets
appointment of one or more “managing members”
other matters stated in founding agreement

6. GENERAL PARTNERSHIP Property Rights
right to participate in profits of the company; each member participates equally in profits unless founding agreement states otherwise
in case of liquidation - right to participate in liquidation balance

7. GENERAL PARTNERSHIP Duties of members
Reflect the personal character of general partnership:
obligation to participate in carrying out the business of the company
each member – natural person, must have trade authorization relating to business activity carried out by the company
obligation to perform member’s tasks with due care
obligation to provide contribution in company’s assets – only if provided for in the founding agreement
obligation to share losses of the company
obligation to refrain from carrying out outside the company business activity identical or similar to that carried out by the company (ban on competition conduct)

8. GENERAL PARTNERSHIP Liability of members for obligations of a company
All members are personally and fully liable for obligations of the company
Liability is joint, several and unlimited
General provisions on suretyship are applicable to liability of members for obligations of the company:
member may be requested by the company’s creditor to pay only if company does not perform
member has a subrogation right towards the company
member has a right to be compensated by other members in proportion to their liability

9. GENERAL PARTNERSHIP Specific remedies Each member is authorized to:
claim on behalf of the company damage caused to the company by the other member
seek with the court decision on termination of the company for important reasons, in particular, if the other member materially violates his obligations
Company may seek with the court expulsion of member who materially violates his obligations

10. GENERAL PARTNERSHIP Termination of general partnership
For reasons applicable to all companies
decision of all members to terminate the company with liquidation
decision of all members on termination through a transformation
decision of a court
For reasons specific only to general partnership
upon the death of a member (natural person), unless the founding agreement permits that the company may continue with the heir and at least two original members remain
upon termination of a member (legal entity), unless the founding agreement permits that the company may continue with the legal successor of the member and at least two original members remain
upon declaration of bankruptcy over assets of a member

11. New Act on Corporations – General partnership
Concept remains the same – personal company, personal liability for obligations of company
Several new rules reflecting traditional regulations in other European countries and pre-war regulations in Czechoslovakia
Requirement of trade authorization for all members abandoned
Person whose property was subject to insolvency or member of statutory body of company declared insolvent within last 3 years cannot be a member in general partnership

12. New Act on Corporations – General partnership
New rules relating to contributions in general partnership
Member who is in delay with contribution
is obligated to pay a delay interest
may be expelled from the company by a decision of all other members
If permitted by founding agreement the contribution may be done by providing services or works for company

13. New Act on Corporations – General partnership
Modification of rules for distribution of profits
concept of equal distribution maintained
member who provided contribution is entitled to profit equal to 25% of his contribution
if aggregate profit does not suffice, it is divided among contributing members pro rata their contributions and the rest equally among other members
Each member is authorized to be reimbursed for costs expended for arranging corporate matters

14. LIMITED LIABILITY COMPANY
General characteristics
legal entity
created by one or more founders (individuals or legal entities); number of members limited to 50
may be created for business but also for other purposes
must have registered capital at least in the amount prescribed by law, i.e. minimum CZK ; members required to make capital contributions
internal corporate structure prescribed by law
liability of members for obligations of the company is limited

15. LIMITED LIABILITY COMPANY
Establishment
Legal act necessary for establishment - founding agreement or founding deed
Incorporation - upon registration in the Commercial Register.
Members obligated to make capital contributions each in the amount of at least CZK
One natural person may be a sole member only in three limited liability companies
Limited liability company with a sole member cannot become a sole member in another limited liability company (“chaining” of single member limited liability companies is prohibited)

16. LIMITED LIABILITY COMPANY
Members’ participation in company
Rights and duties of members incorporated (embodied) in ownership interest
Ownership interest represents:
right to participate in management of the company
right to share in profits of the company
right to share in liquidation balance in case of company’s liquidation
Extent of member’s rights is determined by the size of the member’s capital contribution, unless the founding agreement states otherwise
Ownership interest is transferable to other members or persons outside the company; transferability may be restricted

17. LIMITED LIABILITY COMPANY
Corporate structure
Corporate governance is carried on by specialized corporate bodies:
general meeting
executive director(s)
supervisory board

18. LIMITED LIABILITY COMPANY
General Meeting
Supreme body comprised all members of the company
Powers of general meeting
decisions pertaining to existence of the company:
changes in the founding agreement
increase or decrease of the registered capital
termination of a company
decisions concerning rights and obligations of members:
participation in profits
determination of voting requirements
imposing duty to contribute to company’s assets amounts in excess of capital contributions

19. LIMITED LIABILITY COMPANY
Decisions concerning corporate governance:
election of executive directors or members of supervisory board
remuneration of executive directors and members of supervisory board
Convocation and proceedings of general meeting are subject to strict rules guaranteeing equal treatment of all members:
notice of convocation must be sent to members within legally prescribed deadline
only matters included in the agenda contained in the notice of convocation can be discussed and decided

20. LIMITED LIABILITY COMPANY
Executive Director
Statutory body – decides all matters not entrusted to general meeting, acts on behalf of company
Elected by general meeting - one or more executive directors
Supervisory Board
Controlling body – its existence is not mandatory
Elected by general meeting

21. LIMITED LIABILITY COMPANY
Duties of members
Obligation to make capital contribution
in the amount prescribed in the founding agreement (minimum CZK )
defaulting member
shall pay a default interest
may be expelled from the company
Other obligations
Obligation to pay amounts in excess of capital contribution, if requested by general meeting (up to 50 % of the registered capital)
Obligation to refrain from competitive conduct, if stipulated by the founding agreement

22. LIMITED LIABILITY COMPANY
Liability of members for obligations of the company
Limited by the aggregate amount of unpaid capital contributions as registered in the Commercial Register
Liability is joint and several

23. LIMITED LIABILITY COMPANY
Rights of members
Members participate in management of the company
at general meting – discuss and vote on company matters
outside general meeting - adopt decisions on company matters subject to certain procedural rules
Each member has the right
to inspect company’s books
to ask questions and require information and explanations about company’s matters from executive directors

24. LIMITED LIABILITY COMPANY
Each member may
request the court to declare the resolution of general meeting invalid if the resolution is adopted in contradiction with law or founding agreement
sue on behalf of the company executive directors for damages incurred as a result of breach of their duties
sue on behalf of the company another member in case of delay with payment of capital contribution

25. LIMITED LIABILITY COMPANY
Termination of limited liability company
For reasons applicable to all companies:
decision of general meeting to terminate the company with liquidation
decision of general meeting on termination through a certain form of transformation

26. New Act on Corporations – Limited Liability Company
Liberalization of internal structure – to reflect new trends in European states legislation
Change in concept of registered capital
minimum amount of registered capital is abandoned
member may invest even CZK 1
valuation of in kind contribution by expert only designated by parties

27. Change in concept of ownership interest
one member may own several ownership interests of different kind
special rights may be attached to a certain ownership interest
a share certificate (security) may be issued to document ownership interest; this certificate cannot be traded on regulated markets

28. Voting outside general meeting is more flexible
or telephone participation in general meeting is permissible
communication in writing during general meeting is permissible

29. Regulation of additional contributions outside registered capital is more flexible
voluntary contribution may be provided without specific authorization in founding agreement with executive director’s consent
voluntary contribution may be monetary or in-kind
member who disagrees with mandatory contribution may step out from company under certain conditions

30. Cumulative voting introduced
for the purpose of election of executive directors or supervisory board number of votes of each member is multiplied by number of elected candidates