Company Law NAGY, Csongor István

Types of business entities   Partnerships: general and limited partnership   Limited liability company   Stock corporation (shareholding company)

General Partnership   Unlimited & joint and several liability!   Small, family businesses.   Easy to establish and to administer.   Representative: managing partner.   No minimum capital requirement.

Limited partnerships   The same rules are applicable as in case of general partnerships, with the exception that there is a limited partner.   The liability of the limited partner does not exceed the money he/she invested.   The question whether the limited partner may take part in the management of the company depends on the local law.

Limited liability company Limited liability company (LLC ~ USA), Private company limited by shares (Ltd. ~ UK), GmbH (Germany), Kft. (Hungary), SARL (France) Limited liability of the members, who own shares (called business quota in Hungary). Representation: managing director Transfer of shares: some restrictions may apply, e.g. right of preemption, assent of the members’ meeting.

Stock corporation   Closely & publicly held stock corporation.   Publicly held stock corporation: shares/stock publicly traded on the capital market (stock exchange) ~ in case of a closely held corporation public trading is forbidden (similar to LLC).   Board of Directors, Supervisory Board, Auditors, Assembly.

Competition law NAGY, Csongor István

Fields of competition law Unfair competition law: acts contrary to business ethics Antitrust: – Cartels/agreements in restraint of trade – Abuse of dominant position – Merger control Competition rules applicable to states: – State aid – Market liberalization

Sanction of antitrust violations –competition fine; –actions for damages ; –exclusion from public tenders; –criminal punishment or occupation ban (not in all countries)

Agreements Automatic condemnation / effects-analysis – Hardcore agreements – Agreements subject to effects-analysis (‘it depends’) Horizontal and vertical agreements

Horizontal hardcore cartels Price-fixing between competitors Market-sharing, customer-sharing agreements Reduction of output Holding back technological development Exchange of pricing information

Leniency policy Complete immunity : information that enables the institution of the proceedings, or Information the enables the establishing of the violation Reduction of the fine : evidence of added-value admission of guilt

Vertical hardcore agreements Resale price fixing (minimum and concrete prices, BUT maximum and recommended resale prices are not automatically prohibited) Absolute territorial protection (ban on passive sales); BUT relative territorial protection (ban on active sales) is not automatically prohibited.

Effect type agreements Horizontal Agreements – Joint selling/purchasing – Research & Development – Specialization Vertical agreements – Non-compete clauses

Abuse of dominant position Tying/bundling Predatory pricing Price/Margin squeeze Refusal to deal/essential facilities Loyalty rebates

Mergers Over a certain turnover all transactions are to be notified to the competition authority. EU dimension: Commission; otherwise: national competence. No dominant position may be created by way of merger. Internal growth is certainly not prohibited. Conditions/commitments: divestiture, behavioral commitments.