The amended Commercial Code introduced a new company form in Slovakia as of 1 January 2017 – the simple joint-stock company (JSA). It is intended to satisfy the needs of start-ups by offering a simpler and more flexible form of joint-stock company, with specific features such as:
low capital requirement, starting from €1 (but with low capital it becomes very important to keep
Braňo Mikulay
a close watch on the company’s debt-to-equity ratio to remain compliant with the rules concerning a ‘company in crisis’ - that is when a company is considered insolvent or at risk of insolvency),
no supervisory board is required and the management board can be a one-person board, meaning that only 1 person is needed to form the mandatory bodies of the company
can be established by one or more persons,
the option to issue specific classes of shares (e.g. shares with differing rights to dividends or differing voting rights, separate employee shares),
option to limit or exclude the transferability of shares,
option to incorporate into the company’s statutes the particular reasons for which the company can be wound up,
option to set up various shareholder rights with a greater degree of enforceability than was previously possible. These rights were previously available, but only under an agreement and with dubious enforceability. The Act now expressly governs, but only for the JSA, tag-along rights, drag-along rights, and shootout rights, directly recognising the judicial enforcement of these rights. In addition, the tag-along and drag-along rights (not shootout rights) may be registered in new registers created by the Central Depository, which means these rights can take contractual, unregistered, or registered form.
Daniel Futej
Registered rights are not subject to a limitation period, are binding on subsequent owners of the shares, and enjoy enhanced legal protection. The Act only lays down a basic framework for these rights, therefore the shareholders agreement must set out detailed terms and conditions under which they can be enforced (e.g. the extent of these rights, right of pre-emption in respect of the rights, concurrence of rights). Other types of rights not provided for in the Act can also be incorporated into the shareholders agreement (such as a call option, put option, or shootout, but only in unregistered form), as well as other matters such as the shareholders’ nomination rights in respect of the company’s bodies. Although the Act only governs these rights in terms of the JSA, that does not mean that these and other rights cannot be applied in a standard joint-stock company or other types of company; the difference is there would be no option to register the rights (or enjoy the benefits of registration) and the rights would not enjoy enhanced legal protection in that judicial enforcement is not provided for directly in the Act as it is for the JSA
This new legal company form is best suited
when there are numerous shareholders that wish to create various rights associated with the sale of their shares, the JSA offers them greater legal enforceability,
if an investor wishes greater anonymity (for a JSA, a shareholder is listed in a publicly accessible commercial register only if the company has a sole shareholder; shareholders are listed only with the Central Depository which is not as widely available to the public),
if an investor is seeking more flexibility as regards certain provisions - such as the possibility of issuing various classes of shares to which varying degrees of rights are attached in respect of rights to dividends, voting rights, etc. - this can be used, for instance, by a start-up company with an idea that is looking for an investor whilst retaining control over the company, regardless of capital contribution; this can be achieved by the issuance of various classes of shares.
if an investor does not have the people necessary to fill positions on the company’s boards (for a standard joint-stock company, at least 1 person on the management board and 3 persons on the supervisory board; for a JSA, just 1 person on the management board).
