Act No. 173 / 1988 Coll.
Act on an enterprise with foreign equity participation
Valid
Effective from 01.01.1989
173
THE LAW
of 8 November 1988
on an undertaking with foreign equity participation
The Federal Assembly decided on this bill:
GENERAL PROVISIONS
(1) An undertaking with a foreign shareholding (hereinafter referred to as "the undertaking ') is a legal entity having an economic activity which has its registered office in the territory of the Czechoslovak Federal Republic, provided that a foreign participant is involved in or after its establishment.
(2) A foreign participant for the purposes of this Act means a legal person with a registered office and a natural person residing outside the territory of the Czechoslovak Federal Republic, who is involved in an equity contribution on the holding.
(3) A Czechoslovak participant for the purposes of this Act means a legal person with a registered office and a natural person residing in the territory of the Czechoslovak Federal Republic, who is involved in an asset deposit alongside a foreign participant in the enterprise.
(4) The provisions of this Act shall also apply to cases where an undertaking is set up or is engaged exclusively by a foreign participant.
The creation, legal form, legal circumstances and demise of the enterprise is governed by Czechoslovak law.1)
(1) The undertaking is liable for the breach of its obligations and other legal obligations by its own property.
(2) The undertaking does not guarantee the liabilities of the State or of other legal entities, and the State and other legal entities do not guarantee the liabilities of the undertaking; This shall be without prejudice to any liability arising in accordance with the relevant generally binding legislation.
AUTHORISING THE ESTABLISHMENT OF THE UNDERTAKING
An undertaking may be established only on the basis and within the limits of the authorisations granted by the Federal Ministry of Finance in an agreement with the Ministry of Finance, Prices and Wages of the Republic in whose territory the undertaking is to have its registered office (hereinafter referred to as the "authorisation '). In the area of banking, the State Bank of Czechoslovakia grants authorisation.
(1) Any party may submit an application for authorisation. The application shall specify:
(a) the name, registered office, legal form and subject matter of the undertaking's business;
(b) the name, address and, where appropriate, residence and business of the participants;
(c) the amount of the capital, the amount of the shares of each participant, the form and currency of those shares, the amount of the reserve fund, the representation of the participants in the bodies of the undertaking, where its determination is permitted by the legal form of the undertaking, as well as the method of allocating profits and covering losses, in so far as this does not result from the legal form of the undertaking.
(2) Where an undertaking establishes more than one person, the application for authorisation shall be accompanied by a draft contract establishing the undertaking and a draft of its statutes or statutes.
(1) In deciding to grant an authorisation, account shall be taken of whether the activities of the established enterprise are expected to be in line with the interests of the Czechoslovak economy and that, in economic activity, it will generate sufficient financial resources in the Czechoslovak currency and foreign currencies.
(2) The authorisation may be granted for economic activity in all areas of the national economy, except those which are important for the defence and security of the Czechoslovak Socialist Republic.
(3) The authorisation decision is issued in administrative proceedings (2) no later than 60 days after the application has been submitted.
An authorisation granted pursuant to Article 5 shall replace the authorisation necessary for its economic activity in accordance with the special rules for the establishment of the establishment where the authorisation provided for in Article 5 is granted by the authority which is entitled to issue the said authorisation for the economic activity and the authorised object of the activity of the establishment includes that activity.
COMPATIBILITY
ECONOMIC ACTIVITIES
The company cannot be provided with obligations in the State Economic and Social Development Plan.
Legal relations in economic cooperation between an undertaking and Czechoslovak legal persons shall be governed by the Economic Code, except for provisions which, without the consent of the parties, provide for the creation of an obligation to conclude, amend or revoke a contract or the power to establish, amend or withdraw obligations, as well as those provisions which do not conform to the nature of the undertaking or which conflict with its legal status as defined by this Law. This is without prejudice to the subject matter of the regulation of the International Trade Code.
FINANCIAL MANAGEMENT
The undertaking is subject only to tax obligations laid down by law.
The undertaking shall, after its establishment, establish a reserve fund in the amount and manner specified in the Statutes or Statutes. The fund shall supplement at least 5% of the profits resulting from the payment of taxes annually up to the amount specified in the Statutes or Statutes. The minimum reserve amount shall be 10% of the capital. The holding is obliged to provide foreign exchange funds for part of the reserve fund.
Following the fulfilment of tax obligations and the allocation to the fund (Section 12), the company may use the profit to be distributed among the participants.
(1) The annual accounts and the management of the undertaking for each year are subject to two verifiers (auditors).
(2) Verifiers (auditors) are required to perform their activities impartially and to use the necessary expertise.
(3) The details of the activities of verifiers (auditors) and their appointment by the competent authority of the State Administration will be adapted by the Federal Ministry of Finance by a generally binding legislation.
ENVIRONMENT
The undertaking shall be subject to the tender obligations laid down in the foreign exchange regulation.3)
The company may set up accounts in foreign currency with the Czechoslovak Foreign Exchange Money Institute or with the approval of the Czechoslovak State Bank with the foreign bank.
The recalculations between the Czechoslovak currency and the foreign currency shall be carried out according to the rates declared by the Czechoslovak State Bank.
An undertaking may accept a foreign currency credit from the Czechoslovak Foreign Exchange Money Institute; a foreign bank may accept such a loan on the basis of the assent of the Czechoslovak State Bank.
SOCIAL ECONOMIC INFORMATION
The undertaking shall:
(a) establish a system of socio-economic information in accordance with the relevant generally binding legislation applicable to Czechoslovak organisations with similar sectoral activities;
(b) keep accounts in the Czechoslovak currency in accordance with generally binding legislation; where applicable, exemptions from those rules, justified by the nature of the undertaking or its legal status as defined by this law, may be authorised by the Federal Ministry of Finance;
(c) provide accounting and statistical data to the competent authorities to the extent, in the manner and within the deadlines laid down by generally binding legislation.
TRANSFERS OF ENVIRONMENTS TO FOREIGN
(1) The foreign participant is entitled to freely transfer the proceeds of the share of the company's assets in the event of liquidation or in the event of the disappearance or reduction of its holding in the holding up to the amount of the remuneration of its share of the capital in the currency of that remuneration.
(2) From the foreign exchange funds of an undertaking, a foreign participant may transfer its share of the profits and, in the event of the liquidation of an undertaking or the disappearance or reduction of its participation in an undertaking, its share of the assets of an undertaking which exceeds its share of the capital.
(1) Workers of an undertaking residing abroad shall be entitled to freely transfer their income arising from the work of the undertaking.
(2) The company is entitled to freely transfer the amounts of social insurance of its workers residing abroad, or to transfer those amounts according to the instructions of those workers, unless such insurance is carried out in the Czechoslovak Socialist Republic. Social insurance for the purposes of this Act means sickness, pregnancy and childcare insurance, accident and pension insurance and unemployment insurance.
(3) The company will maintain pension insurance abroad for its workers who are not resident in the Czechoslovak Socialist Republic.
(4) Only the undertaking's own foreign exchange funds may be the source of transfers made under the preceding paragraphs.
(1) The property of the company may be expropriated in the territory of the Czechoslovak Socialist Republic, or the property rights of the company may be restricted, only by law.
(2) For the measures referred to in paragraph 1, a foreign party shall be granted without delay a refund corresponding to the actual value of its assets affected by those measures at the time it was implemented; the refund will be freely transferable to the foreign country in the currency in which the foreign participant has paid up its share of the capital of the undertaking, otherwise in the currency of the State of residence or, where applicable, the residence of the foreign participant.
DETERMINATION OF THE UNDERTAKING
(1) Dissolution is required for the company. The purpose of the liquidation is to settle the assets of the cancelled firm.
(2) The liquidation of an undertaking in overindebtedness is governed by the provisions of Sections 352 to 354 of the Civil Code. 5)
(1) The undertaking proposes the registration of its liquidation and the liquidator it has appointed in the company register. During the period of liquidation, it uses its name with the addition "in liquidation."
(2) The date on which the liquidator was registered shall be the date on which the company's authorities cease to exist. The liquidator shall be entitled to act on behalf of the undertaking in matters relating to liquidation.
(1) On the date of the start of the liquidation, the undertaking shall draw up the accounts and forward them to the liquidator and the competent authorities.
(2) The liquidator shall, within 30 days of its registration, draw up an opening balance sheet at the date of the start of the liquidation and forward it to the participants, together with the liquidation plan, the liquidation budget and the inventory entry on the extraordinary inventory of the economic resources carried out on the date of the start of the liquidation.
(3) The liquidator must in particular:
(a) to concentrate money on one Czechoslovak money institution;
(b) complete normal matters;
(c) to settle taxes and charges;
(d) settling liabilities and debts;
(e) to monetize or otherwise dispose of the property of the undertaking in the most economical and fastest manner, as decided by the participants;
(f) submit quarterly and annual reporting to participants on the course of the liquidation, supported by quarterly and annual accounts.
(1) The liquidator shall draw up the accounts at the end of the liquidation and submit them to the participants for approval, together with a final report on the entire course of the liquidation.
(2) Liquidator after examination and clearance of accounts by participants and after fulfilment of tax obligations
(a) dispose of the final balance of the liquidation as decided by the parties;
(b) ensure secure storage of the file material and accounting documents;
(c) notify the Court of First Instance of the termination of the liquidation of the application for the removal of an undertaking from the company register.
PROVISIONS COMMON, TRANSITIONAL AND FINAL
The provisions of this Act shall apply only if there is no other international treaty which the Czechoslovak Socialist Republic is bound by.
The Government of the Czechoslovak Federal Republic may provide for a regulation whereby an undertaking may be set up without authorisation or, by way of derogation, modify the conditions for granting such authorisation.
Undertakings established under the conditions in force before the application of this Act shall be deemed to be incorporated under the conditions laid down in this Act.
Paragraph 389a of the Economic Code is deleted.
This Act shall take effect on 1 January 1989.
Husák v. r.
Indra v. r.
Adamec v. r.
1) Act No. 104 / 1990 Coll., on Equity Companies. Act No. 101 / 1963 Coll., on Legal Relations in International Trade (International Trade Code). Economic Code, as amended by Act No. 103 / 1990 Coll.
2) Act No. 71 / 1967 Coll., on Administrative Procedure (Administrative Regulations).
3) Paragraph 12 (1) (a) of Foreign Exchange Act No. 162 / 1989 Coll. Decree No. 169 / 1989 Coll., implementing the Foreign Exchange Act.
4) Paragraph 15 (1) (b) of Act No. 142 / 1970 Coll.
5) Act No. 99 / 1963 Coll., Civil Code of Judicial Procedure, as amended by it amending and supplementing it.
Sign in for notes, favorites and notifications
Regulation Information
| Citation | Act No. 173 / 1988 Coll., on an enterprise with foreign equity participation |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 14.11.1988 |
|---|---|
| Effective from | 01.01.1989 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
Comments 0