1. LIMITED LIABILITY COMPANY
General characteristics
Legal entity
Created by one or more founders (individuals or legal entities);
May be created for business but also for other purposes
Must have registered capital in the amount at least 1 CZK or the amount determined by founding agreement; members required to make capital contributions in the amount stated in founding agreement, no minimal amount stated by law
Internal corporate structure prescribed by law
Liability of members for obligations of the company is limited

2. 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 stated in founding agreement
Repeated performance (works) or services cannot be used as capital contribution
No other limitations as for legal position or number of members

3. 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 by founding agreement

4. LIMITED LIABILITY COMPANY
Transfer of ownership interest to other member is possible without limitations
Transfer of ownership interest to person outside comapny is subject to approval by general meeting
Founding agreement may stipulate more kinds of ownership interests (with different rights)
Each member may have more ownership interests
Ownership interest may be represented by share certificate – security issued in the name of its holder
Transferability of ownership interest evidenced by share certificate cannot be restricted
Company maintains list of members (shareholders)

5. LIMITED LIABILITY COMPANY
Corporate structure
Corporate governance is carried on by specialized corporate bodies
General meeting
Executive director(s)
Supervisory board

6. LIMITED LIABILITY COMPANY
General Meeting
Supreme body comprised all members of company
Powers of general meeting
Decisions pertaining to existence of company
Changes in the founding agreement if required by founding agreement
Increase or decrease of the registered capital
Termination of a company if required by founding agreement
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

7. 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
Member may waive the right to the timely notice of convocation

8. LIMITED LIABILITY COMPANY
Each member has 1 vote corresponding to his contribution equal to CZK 1
Voting can be exercised at the general meeting or outside general meeting through technical means (telephone, electronic communication) or after the general meeting within 7 days after the date of general meeting
Member is not allowed to vote
In matters relating to his position in company (his in kind contribution, remedies in case of breach of his duties)
Cumulative voting allowed for purposes of election of other corporate bodies (executive director or supervisory board)

9. 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
Duty of care and duty of loyalty for executive directors and members of supervisory board

10. LIMITED LIABILITY COMPANY
Duties of members
Obligation to make capital contribution
In the amount prescribed in the founding agreement (no minimum amount stated by law)
Defaulting member
Shall pay a default interest
May be expelled from company
Obligation to refrain from competitive conduct, if stipulated by the founding agreement
Other obligations
Obligation to pay amounts in excess of capital contribution, if requested by general meeting
Member who did not vote for this obligation may resign from company provided he paid his capital contribution in full

11. LIMITED LIABILITY COMPANY
Member may decide to provide additional contribution (voluntary contribution) even if not explicitely permitted by founding agreement; consent of executive director required
Voluntary contribution may be monetary or in-kind
Additional contributions may be returned upon decision of general meeting provided they exceed losses of company

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

13. LIMITED LIABILITY COMPANY
Rights of members
Members have
Right to participate in management of company
Property rights
Members participate in management of company
At general meting – discuss and vote on company matters
Outside general meeting - adopt decisions on company matters subject to certain procedural rules
Draft resolution sent in writing to all members
Approval must be delivered within one month
No reaction = refusal

14. LIMITED LIABILITY COMPANY
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
Information may be refused if it is subject to concealment under law
Is trade secret subject to refusal?

15. 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 company another member in case of delay with payment of capital contribution

16. LIMITED LIABILITY COMPANY
Property rights of members
Right to share in profits of company proportionate to members contribution unless founding agreement sets otherwise
Share in profits is paid in money unless founding agreement or resolution of general meeting sets otherwise
Profit can be distributed upon decision of general meeting
Share in profits cannot exceed economic results for preceding financial year decreased by losses for previous financial years

17. LIMITED LIABILITY COMPANY
Right to liquidation balance
Provided in case company is liquidated
In the amount proportionate to contributions provided
Financial assistance (self financing)
Company may not provide advance payments, loans or secure loans for purposes of acquisition of its own shares if it may cause bankruptcy of company
If financial assistance is permitted it must be provided
under fair conditions
executive director prepares report justifying such assistance

18. LIMITED LIABILITY COMPANY
Termination of membership in company
Resignation from company by member who at general meeting did not agree with
Material change of business objects of company
Extension of term of existence of company
Obligation to provide additional contribution into company’s assets
By agreement among all members of company
By court decision upon company’s proposal regarding member who grossly violates his duties
By court decision upon proposal of member if it is not fair to insist on continuation of his membership in company
In case of member’s bankruptcy by termination of bankruptcy proceedings for lack of member’s assets

19. LIMITED LIABILITY COMPANY
Disposition with ownership interest of member who terminated his membership
Company shall sell this ownership interest
Other members have preemptive right proportionate to their ownership interests
Terminated member shall receive settlement share
Proportionate to his ownership interest
Calculated on the basis of company’s financial account as of the date of member’s termination

20. LIMITED LIABILITY COMPANY
Termination of limited liability company
By decision of all members unless founding agreement grants this authority to general meeting
By transformation
Merger
Amalgamation
Dissolution