Limited Liability Company. Bojan Pavlek Research and Teaching Assistant Law Department

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1 Limited Liability Company Bojan Pavlek Research and Teaching Assistant Law Department

2 DEFINITION A limited liability company is a company into which one or several legal or natural persons have invested their capital contributions, participating in the share capital which was agreed upon earlier.

3 CHARACTERISTICS Legal entity Company No liability Minimum capital

4 COMPANY ESTABLISHMENT How many founders? One founder -> deed of establishment Two or more founder -> company agreement Who can be a founder? Natural person Legal entity

5 COMPANY ESTABLISHMENT When the company is founded? Founders conclude company agreement in the form of notarial deed One founder sign a deed of establishment in form of notarial deed Only simultaneous establishment

6 CONTENT COMPANY AGREEMENT/ DEED OF ESTABLISHMENT 1. name, surname or firm name, domicile or seat of the founder, and if the founder is a natural person, his national registration number; 2. firm name and seat of the company; 3. object of activity of the company; 4. aggregate amount of the share capital and the amount of each individual founder's capital contribution. If certain objects or rights have been contributed, their detailed description as well as their value shall be indicated; 5. provisions specifying whether the company is formed for a definite or for an indefinite period of time; 6. the rights and responsibilities of members toward the company, in addition to their obligation to make their contribution, and the rights and responsibilities of the company toward the members.

7 Share capital the share capital of the company shall be expressed in kuna the minimum amount of share capital of the company shall be HRK 20,000

8 Capital contributions a minimum capital contribution not less than HRK 200 expressed as a whole number which is a multiple of the number 100 the sum total of all the capital contributions shall equal the amount of the share capital of the company

9 Capital contributions capital contributions shall be made in such a manner to enable the company to dispose of them freely each founder - a minimum of one-quarter of his capital contribution payable in money, the minimum aggregate amount of all payments in money being not less than HRK 10,000.

10 Additional obligations, special benefits and costs of establishment What are additional obligations? additional payments in money or fulfiling other requirements with asset value, in addition to capital contribution payments in the company agreement does not increase the share capital of the company.

11 Additional obligations, special benefits and costs of establishment What are special benefits? compensation granted to a company member for the objects or rights he/she has transferred to the company What are cost of establishment? expenses incurred in connection with preparatory activities or for the establishment of the company prohibited to add the amount of these expenses to such capital as a contribution borne by the founders, in proportion to their capital contributions (otherwise by agreement)

12 Application for entry into the commercial register When is submitted? after the company agreement has been signed contributions have been made in accordance with the company agreement one or more members of the company management board have been appointed after supervisory board has been elected if the company is to have a board

13 Application for entry into the commercial register What does the application for entry into the commercial register include? firm name, seat and the objects; the amount of the share capital; statement of the management board members names of the company members and, if company members are natural persons, their national registration numbers.

14 Application for entry into the commercial register What documents must be attached to the application? a copy of the company agreement, i.e. of the deed of establishment list of members/founders certificate of paid cash contributions list of persons authorized to manage the business of the company a list of its supervisory board members signatures of members of the management board, deposited in the commercial register

15 Examination of the application What does the court examine? whether the company was lawfully established, whether the application includes all particulars prescribed by the law, whether all required documents have been duly attached

16 Business shares How are business shares determined? by the company agreement in accordance with the amount of capital contribution that has been taken over a company member may hold several business shares

17 Business share register What is business share register? Register of business shares and their holders kept by the management board obligation to report, without delay, all changes to the company members or their business shares to the register court

18 Disposing of business shares How can busines shares be disposed? transferred and inherited transferred by a contract entered into in the form of a notarial deed

19 Withdrawal/exclusion of a company member from the company When a company member may withdraw or be excluded from the company? Stipulated in the company agreement Requirements, procedures and consequences action initiated by company member (justified reasons) Company s complaint against its member (just cause) What is the effect of withdrawal or exclusion of a company member cease of rights from membership

20 Withdrawal/exclusion of a company member from the company What are justified reasons for withdrawal? damage caused to the member by other members or by a company body, member being prevented in the exercise of his/her rights in the company disproportionate commitments imposed on him by a company body

21 Withdrawal/exclusion of a company member from the company What can be just cause for exclusion of a company member? behaviour of the member which makes it impossible or much more difficult to accomplish the company s objectives, and which makes this member s membership in the company unbearable for the company Effect of withdrawal or exclusion of a company member cease of rights from membership

22 Company bodies Management board Assembly Supervisory board

23 Management board consist of one or more directors manage the business of the company at its own responsibility operation of the management board is determined by the company agreement joint representation (if not otherwise by company agreement)

24 Management board How is a management board member appointed? any natural person with the capacity to act appointed by a decision of company members

25 Management board How can management board member be removed? Decision of the management bord Decision of the court (just cause) Decision of the supervisory bord Resignation of the member of the management board

26 Supervisory board When Ltd. has to have supervisory board? if the average number of employees in one year exceeds 300; if it has been prescribed by a separate law that a company engaged in certain activity must have a supervisory board. if the share capital of the company exceeds HRK 600,000 and the company has over 50 members; if the company singly manages joint stock companies or limited liability companies which are required to have supervisory boards or participates in them with an immediate share of over 50% in their share capital, and if in both cases the number of employees in any such company or all such companies combined exceeds 200 on average; or if the company is a limited partner in a limited partnership and the average number of employees in the company and in the limited partnership combined exceeds 200.

27 Supervisory board consist of three members more by company agreement, has to be odd number one person may sit in 10 supervisory boards (corporation or limited liability company) elected by members of the company

28 Assembly On which isuess assembly can decide? financial statements of the company, appropriation of profits and covering losses; claims for payments of capital contributions; appointment and removal of management board members; election and removal of supervisory board members, if there is such a board in the company; division and redemption of business shares;

29 Assembly When can assembly adopt decisions? if the meeting is attended by company members or their representatives representing at least one-tenth of the share capital of the company the assembly shall make decisions by a majority vote

30 Amending the company agreement How can the company agreement be amended? only by a decision of the company members In a form of notarial act, a private document certified by a notary public, or notarial minutes not be effective prior to being entered into the commercial register decision made by a majority of at least threefourths of all votes cast