• Employee shares
• Priority shares, convertible bonds
• Acquisition of own shares
• Establishment of a joint stock company
• Rights of shareholders
• Minority shareholders' rights
• Increase in the registered capital
• Decrease in the registered capital
• Reserve fund

Joint stock companies

The legal regulation of joint stock companies has been also significantly modified by the Amendment. The Amendment distinguishes between a ''private`` joint stock company and a ''public`` joint stock company. The public joint stock company is the company that (a) issued all or part of its shares on a basis of a public offer for subscription, or (b) its shares were subscribed by a securities broker under a commission agreement without a subsequent transfer of the shares to pre-stipulated persons in such commission agreement, or (c) its shares have been accepted for trade on a securities market. A public joint stock company that (a) issued all its shares as registered shares (au nom shares), and (b) does not have more that 50 shareholders, and (c) its shares are not accepted by a stock exchange for trade on securities market, may decide, having an approval of all its shareholders, that it discontinues/stops to be a public joint stock company and becomes a private joint stock company. However, should this company either (a) increase its registered capital on a basis of a public notice for subscription of shares, or (b) should its shares be accepted for trade on securities market by a stock exchange, it would become a public joint stock company by operation of law.

Employee shares

The Amendment cancels so called employee shares and introduces new possibilities of offers of shares to the employees of the company.

Priority shares, convertible bonds

Section 160 of the Amendment retains regulation of priority shares with small changes and states that a right for exchange of convertible debentures (bonds) for shares of the company as well as priority right for subscription of shares in case of priority debentures may be subject of an independent/separate transfer to a third person.

Acquisition of own shares

The Amendment also contains an amended regulation of limitation to acquire own shares by the company itself and exemptions from this rule; some of these rules shall be accordingly applied also for cases of creation of pledge over the shares of the company by the company itself. The Section 161e of the Amendment states that the company may not provide any advances, borrowings, loans and guarantees to third persons in connection with acquisition of its shares by these persons. Similarly, as stated in Section 196a of the Amendment, the company may provide a loan, borrowings, transfer or provide for usage of its property or secure liability of a member of the BoD, procurist, or any other person entitled to act for the company or to persons related to them or to persons acting on their account only after a prior approval of the SuB and under the terms and conditions usual in business relations. The approval of the SuB is not required in case of fulfilment of a controlling person to the controlled one.

Establishment of a joint stock company

The Amendment introduces also several changes in the process of establishment of joint stock companies, e.g. under Section 165 para.2, shares may not be subscribed by non-cash contributions in case of subscription of shares on a basis of notice for subscription of shares.

Rights of shareholders

The Amendment amends quite significantly rights of shareholders of joint stock companies. Section 176a et seq. regulates the following principles and rights of shareholders:

• commencement of performance of shareholders' rights by subscribers since the moment of registration of joint stock company in the Commercial Registry or since moment of registration of capital increase in the Commercial Registry (a prior regulation of the Commercial Code required a full payment-up of nominal value of subscribed shares for commencement of performance of shareholders' rights),
• no performance of shareholders' rights to detriment of rights or reasonable interests of other shareholders,
• the duty of the company to treat all its shareholders equally given the same conditions,
• no possibility of unilateral set-off by the shareholder of its/his receivable against the receivable of the company to be paid the issue rate of shares subscribed by such shareholder,
• the right of the company to exclude the shareholder who/which did not pay the issue rate of subscribed shares within the time period stipulated by the BoD (or within 60 days if such period was not stipulated) from the date of delay,
• the right to be paid a dividend can be subject of a separate transfer from the date of decision of the GA on distribution of profits,
• mandatory duty of the company to state the date, place and manner of payment of dividends; if such date is not stated, then on the date demanded by a shareholder; the company must pay dividends on its own expense and risk,
• the shareholders must return to the company any fulfilment to which they are not authorised under the valid law. The company cannot waive the right to the fulfilment and the BoD must enforce such fulfilment;
• the right of shareholder to request on the GA explanations of matters of the company and persons controlled by the company if such matters relate to the agenda of the GA.

Minority shareholders' rights

In addition to the above, the Amendment reduces a threshold for shareholders with minority rights protection. Shareholder/shareholders holding shares with a nominal value of at least 5% of the registered capital (previously 10% of the registered capital) are entitled to require, with reasons stated in writing, an extraordinary GA to be convened. The AoA may decide that the threshold for shareholders with minority rights protection is even lower than 5% of the registered capital.

Increase in the registered capital

The Amendment introduces several major changes in the regulation of increase and decrease of the registered capital of joint stock companies. Under Section 202 para.1 of the Amendment, the BoD does not have any longer an exclusive right to initiate an increase of the registered capital of a joint stock company. Under Section 204 para.1 of the Amendment, a subscription of shares on a basis of public notice may not be performed via non-cash contributions. If the company increases its registered capital by cash contributions, existing shareholders have a priority right to subscribe new shares in proportion of the nominal value of their shares to the amount of the registered capital of the company. Such priority right for subscription of new shares may be subject of an independent/separate transfer from the date of decision of the GA on increase of the registered capital (Section 204a, para. 1 and para. 4 of the Amendment).

Under Section 207 of the Amendment, an extent of a conditional increase of the registered capital of the company through convertible debentures is limited to the maximum amount of 50% of the registered capital. Section 209a of the Amendment introduces an institute of combined increase of the registered share capital of the company. In case of subscription of new shares, the GA may decide that a certain number of subscribed shares may be covered from own sources of the company identified in its financial statements as the equity capital of the company.

Decrease in the registered capital

As for a decrease of the registered capital of the joint stock company, under Section 211 para.1 of the Amendment, the presence of shareholders holding at least 50% of the registered capital is no more a statutory requirement for valid decision of the GA on decrease of registered capital of the company.

Reserve fund

The reserve fund of the company has to be obligatory annually supplemented by the amount stipulated in the AoA of the relevant company, however at least by the amount of 10% of the net profit identified in a proper annual financial statement under Section 217 para. 1 of the Amendment.

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