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2.2 Legal entities established for business enterprise
A legal entity (§ 18-19 of Civil Code) is a subject who has a legal personality and carries out his/her activity in compliance with the relevant legal enactments. It is usually a collective of people.
A legal entity has the competence :
A legal entity obtains both components of a legal personality on the day of the registration into the Register of Companies or into other register set by the law.
Legal entities are :
The Register of Companies is a public list where the data set by the law are registered about :
Nowadays, there is the Register of Companies available even on the internet – http://www.orsr.sk. But this form has no legal obligation because there are usually notupdated data there.
A legal entity acts :
Companies are divided from the legal point of view into :
A brief comparison of the individual kinds of companies is offered in the following scheme :
| Public Owned Corporation (v.o.s.) | Limited Partnership Company (k.s.) | Limited Liability Company (s.r.o.) | Public Limited Corporation (a.s.) |
| Minimally 2 people | Unlimited partners and limited partners | Minimally 1 person, maximally 50 partners | Minimally 2 physical entities or one legal entity |
| Lower financial costs (there is neither a specified amount of the basic capital, nor of the deposit) | Lower financial costs
(there is neither a
specified amount of the
basic capital, nor of the
deposit) Minimal deposit of a limited partner is SKK 10 000 |
Minimal deposit of a partner is SKK 30 000 and minimal amount of the basic capital is SKK 200 000 | Minimal basic capital required is 1 million SKK |
| Unlimited liability, collective and undistinguishing liability with the personal and company’s property | Unlimited partners –
liability with the whole
personal property
Limited partners –
liability only up to the
amount of their
contribution |
Limited liability, only with the company’s property | Limited liability, only
with the company’s
property |
| Lower tax burden, the company as a whole is not under taxation | Taxation of the company as a whole, the share of profits is not under taxation | Taxation of the company as a whole, the dividends are not taxed | |
| Tax 19 % of the tax assessment base after the deduction of the insurance premium if it was not part of the company’s costs | Tax 19 % - unlimited partner Tax 19 % - limited partner | Tax of the company – 19 % | Tax of the company – 19 % |
Public Owned Corporation (v.o.s.)
| Foundation | Minimally 2 people – the memorandum of association |
| Creation | On the day of the registration into the Register of Companies |
| Source of capital | The basic capital is not prescribed by the legislation. In the
memorandum of association they agree upon the deposit and the
profit distribution, if they do not, they halve everything. Liability – collective and undistinguishing with the whole property Profit distribution – they halve it if not agreed upon differently in the memorandum, losses are halved, too |
| Management | Each of the partners if not agreed upon differently |
| Control of activity | Each of the partners has a right to control. If one of them is stated as a statutory body, they decide about important matters, e.g. about the termination of the company or about the changing of the memorandum of association, by voting of all partners of the company (everybody has 1 vote without taking the deposit into consideration if not agreed upon differently in the memorandum) |
| Leaving the company | A partner may enter or leave the company in case of the change of the memorandum of association. However, a partner entering the company takes over even the liabilities before his entering. |
| Termination | With the death of a partner, with a legal entity termination who is a partner, etc. |
| Ways of termination | Without liquidation. With liquidation – partners are entitled to the share of the remaining liquidation balance |
| Dissolution | With the erasure from the Register of Companies |
The advantages of a Public Owned Corporation (v.o.s.) :
The disadvantages of a Public Owned Corporation (v.o.s.) :
Limited Partnership Company (k.s.)
| Foundation | Minimally 1 unlimited partner and 1 limited partner – the memorandum of association |
| Source of capital | The Commercial Code does not create an obligation to have a minimal basic capital, but it is created by obligatory contributions of the limited partners (the statement of deposits – paid and unpaid contributions) |
| Liability | Unlimited partners – unlimited liability with their whole property Limited partners – liability up to the amount of their unpaid contribution |
| Profit distribution | In compliance with the terms agreed upon in the memorandum, otherwise halved between the unlimited and the limited partners. The limited partners divide their share of profit according to their amount of paid contribution and the unlimited partners halve the profit if not agreed upon differently. |
| Management | Unlimited partners |
| Control of activities | Limited partners have a right to control activities, important matters are decided upon by the unlimited and the limited partners via voting. |
| Termination | Reasons and ways of the termination are similar to those of the Public Owned Corporation (but the death of a limited partner or a declaration of insolvency at his/her property is not a reason for the termination) |
| Ways of termination |
The advantages of the Limited Partnership Company (k.s.) :
The disadvantages of the Limited Partnership Company (k.s.) :
Limited Liability Company (s.r.o.)
| Partners | 1 or more people, maximally 50 partners |
| Foundation | 1 person – the charter More people – the memorandum of association (contains: names, signatures of the partners, subject of business, amount of contribution of each partner and receipt, names of administrators and members of the supervisory board). The memorandum of association and the receipt of paid contributions are sent to the Register of Companies to the Registration court. The Limited Liability Company is created on the registration day if all conditions of the Commercial Code are fulfilled Before sending a registration proposal to the Register of Companies, every financial contribution must be paid at least by 30% and the value of all paid contributions must be at least 100 000 SKK. If the Limited Liability Company is being founded by one person only, he/she must pay off the whole contribution before the registration into the Register of Companies. |
| Source of capital | Basic capital – can consist of financial and non-financial
contributions. The minimal amount is 200 000 SKK, 30 000 SKK per
person but at the same time the condition must be fulfilled–
minimally 200 000 SKK. The amount of contributions must be
divisible by 1000 and paid off within max. 5 years. Reserve fund – is created when the company is being established from the value of the basic capital and annually from the net profit up to the amount of 10% of the basic capital |
| Liability | The liability of the Limited Liability Company is the whole company’s property and of the partner up to the amount of his/her unpaid contribution |
| Profit distribution | According to the amount of paid contributions between the partners if not agreed upon differently |
| Bodies | General assembly – the highest body of the Limited Liability
Company that is assembled by the administrators minimally once a
year (meeting of the partners). The partners vote there. A partner
has 1 vote for every 1000 SKK of his/her contribution if not agreed
upon differently. Administrators – a statutory body. He/she may be a person from the company or a different physical entity. But an administrator is not allowed to be a member of the supervisory board. |
| Control of activity | Supervisory board. It consists minimally of 3 members. It controls the activity of the administrators and reports it to the General Assembly. It is established mostly in bigger companies, in the little ones only if it is agreed upon in the memorandum of association. |
| Termination | Termination of the equity of a partner – a partner cannot leave the
Limited Liability Company, he/she may only suggest the termination
of his/her equity to the Court Termination – similar to the other business companies |
| Ways of termination | Without liquidation With liquidation – all partners are entitled to the share of the remaining liquidation balance according to the amount of their paid contributions |
| Dissolution | With an erasure from the Register of Companies |
The advantages of the Limited Liability Company :
The disadvantages of the Limited Liability Company :
Public Limited Corporation (a. s.)
| Definition | Commercial company with the basic capital apportioned to a certain
amount of stocks with the nominal value of a share Stock – a commercial paper that entitles the owner to attend the General assembly and vote there Dividend – a share of profit for the stock’s owner Royalty – a share of profit for the members of the directorate and the supervisory board |
| Special kinds of shares | Employee shares – they are issued on name, are transferable
between the employees of the Public Limited Corporation and the
retired employees. After the death of an employee share owner or
after the termination of the employment, the rights related to this
share expire and this share must be returned to the Public Limited
Corporation. A total sum of the nominal value of all employee shares
which are not liable to be paid off cannot exceed 5% of the basic
capital. Preference shares – are connected with the right for a dividend but their owner has a limited right to participate in the management of the company |
| Foundation | Minimally 1 legal entity – the foundation charter Minimally 2 physical entities – the memorandum of foundation Charter/Memorandum + the articles of association are sent as a registration proposal to the Register of Companies |
| Ways of establishing
without proposals for
subscriptions |
It is a simple single-shot way of the foundation of the Public Limited
Corporation. The founders have a legal status. Decision of the founders must be in the form of a notary registration. The founders are not interested in selling a share and their sum creates the basic capital. Foundation General assembly is not held. |
| Ways of establishing
with proposals for
subscriptions |
Classical way of the foundation of the Public Limited Corporation. The publishing of the proposals for subscriptions, with the stating of the subscription time and place, their nominal value, etc. The proposals for subscriptions can be published e.g. in the press. Subscription to shares is carried out by the registration to the document of subscribers whereby a subscriber binds himself to pay off the value of the subscribed shares, minimally 10% of the share value is necessary to be paid off immediately when subscribing, 30% of the share value must be paid off until the first General assembly is held and the rest one year after the reation of the Public Limited Corporation at the latest. |
| Creation | If all the conditions are fulfilled, a registration proposal is sent to the Register of Companies and the Public Limited Corporation is created on the day of the registration. |
| Source of capital | Basic capital Minimal amount is 1 million SKK. Every change of the basic capital, either decrease or increase must be listed in the Register of Companies, the resolution is up to the General assembly (an agreement of 2/3 of the present shareholders is necessary to adopt a resolution) Reserve fund At the time of the establishing of the Public Limited Corporation – 10% of the basic capital During the following years, 5% of the net profit until reaching minimally 20% of the basic capital |
| Liabilities | Liability of the Public Limited Corporation is the whole property of the company, the shareholders are not liable |
| Bodies | General assembly - – the highest body of the Public Limited
Corporation containing all shareholders. It is held minimally once a
year according to the necessity. It is assembled by the board of
directors and it solves all important matters concerning the Public
Limited Corporation. Decisions made in the General assembly are
made via voting, the number of votes of the shareholders depends
on the value of the shares they own. The General assembly approves plans, decides about establishing and dissolution of the company, increasing or decreasing of the basic capital, appoints or withdraws the members of the board of directors, the members of the supervisory board and the auditors of the statement of finances, the annual set of financial accounts and the profit distribution. Board of directors – a statutory body managing all activities of the company and acting on behalf of the company. It consists of 3 members. It is elected at the first General assembly and assembles every other General assembly. It submits reports about the activities of the company and a proposal for the profit distribution to the General assembly. |
| Control of activity | Supervisory board – supervises the activity of the board of directors and the company activities. It must have at least 3 members who are not members of the board of directors. |
| Termination | General assembly decides about the termination (2/3 of all
shareholders) Ways of termination : Without liquidation With liquidation – the remaining liquidation balance is divided between the shareholders according to the proportion of the nominal value of their shares |
| Dissolution | On the day of erasure from the Register of Companies |
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