• Transferability of business interest
• Pledge over business interest
• Reserve fund

Limited liability companies

In general, the Amendment harmonises legal regulations of limited liability companies and companies limited by shares.

The Amendment eliminates so-called ''chain effect`` of limited liability companies having a sole shareholder. The limited liability company with a sole shareholder cannot be a sole founder or a sole shareholder of other company under the Amendment. Also, an individual (natural person) may not be a sole shareholder in more than three companies. This regulation fully replaced the previous duty to prove fulfilment of tax and customs liabilities, proper payments of health, sickness and pension/retirement insurance, contributions to the unemployment fund and salaries to the employees in case that such shareholder or founder of the limited liability company wanted to establish another company.

The Amendment, in contrary to the current regulation, clearly states in Section 106 that any shareholder's fulfilment based on his/her statutory guarantee for liabilities of the company may be set off against the company's receivable towards this shareholder for payment of his/her/its contribution to the capital of the company. Otherwise, such shareholder may require a compensation from the company. In case he/she/it cannot reach such compensation from the company, he/she/it is entitled to require the compensation from other shareholders in the extent of their participation on the capital of the company. However, the shareholder of the limited liability company may not unilaterally set off his/her/its receivable towards the company against the company's receivable for payment of his/her/its contribution (excluding cases specified in the Section 106).

Transferability of business interest

In respect of transferability of business interest in the limited liability company, the Amendment provides that even in cases when the transfer of business interest to third persons (not being shareholders) is allowed by the MoA, the MoA may stipulate that even so a prior approval the General Assembly (the ''GA``) is necessary. The Amendment also specifies in closer detail a moment of effectiveness of agreement on transfer of business interest (the ''Agreement``) towards the company. Such Agreement is effective towards the company upon its delivery to the company, unless a later effectiveness was agreed in the Agreement, however, not sooner than the approval of the GA is given, if required under the law or the particular MoA.

Pledge over business interest

A new Section 117a of the Amendment introduces a possibility of creation of pledge over the business interest in limited liability companies. In order to create a pledge over the business interest a written agreement with verified signatures of parties to the agreement is required. Creation of pledge over the business interest is excluded in case that the MoA does not allow a transfer of the business interest. If an approval of the GA is required for transfer of the business interest, such approval is required also for creation of pledge over the business interest and the pledge shall not be validly created otherwise. If the MoA requires a fulfilment of some other conditions for transfer of business interest, the fulfilment of the same conditions is required also for creation of pledge over the business interest. However, no approval of the GA is required for transfer of the pledged business interest in a stage of execution of the pledge. The pledge over business interest is effectively created upon its registration in the Commercial Registry. In any case, the shareholder whose business interest in the company has been pledged is entitled to execute his/her rights related to his/her participation in the company during the existence of the pledge.

The Amendment also provides a closer specification of prohibition of acquisition of own business interest by the company itself. The Amendment also contains certain changes in respect of regulation of protection of rights of minority shareholders.

Reserve fund

Under the amended regulation, the limited liability company is entitled to create a reserve fund in the time and in the amount stated in its MoA (the previous regulation required creation of the reserve fund in minimal amount of 5% of the registered capital at the creation of the company). However, if the reserve fund has not been created at the moment of creation of the company, the company is obliged to create the fund from the net profit identified in its annual financial statement for the first year when the profit has been achieved, in the minimum amount of 5% of the net profit and in the maximum amount equal to 10% of the registered capital. The regulation of the total maximum amount of the reserve fund and the rules for its annual supplement have remained without changes.

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