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JOURNAL OF INTERDISCIPLINARY RESEARCH
creditor to the controlled party. It means that both parties would
avoid external financial resources.
The individual levels of the influence of controlling corporations
are the influence, controlling and group of companies. The
influential party refers to each party that significantly influences
the conduct of the business corporation by its decision-making.
The influential party is according to S. 74 (1) Act No. 90/2012
Sb. a party that may exercise a direct or indirect crucial influence
in the specific business corporation. The highest level is the
group of companies. The English literature often terms this level
as ‘holding’ (Fialová, Fiala, 2011). It refers to a group of legal
entities with one or more controlling parties (holding
corporations) and several controlled parties (Šelleng, 2018).
Moghaddam et al. (2011) argues that holding corporations are
one of the most important structures of legal entities which meet
requirements for the stable economic growth. On the other hand,
Cho (1998) declares that the ownership structure influences
investments within corporations and thereby influences their
total value.
Pursuant to S. 79 (3) Act No. 90/2012 Sb. the group of
companies shall publish its existence on the internet websites.
Together with this, a report on the compensation for potential
injury to the controlled party within the group of companies
must be published. In the event of injury, BCA allows
compensation not only in the form of financial compensation,
but also in the form of any other consideration including
demonstrable benefits arising from the membership in the group
of companies (Korotvička, 2013).
According to S. 75 (2) Act No. 90/2012 Sb. the controlling party
must have no less than 40% of all votes in the business
corporations (Czech Republic, 2012b). Under S. 75 (4) Act No.
90/2012 Sb. it is stipulated that the controlling party may also
become a party that alone or together with parties acting in its
behalf disposes of no less than 30% of rights to vote; in addition,
this proportion represented more than 50% of rights to vote of
the parties present at the sessions of the supreme body in the last
3 consecutive years.
S. 151 – S. 167 of Act No. 89/2012 Sb. stipulates a legal
definition of legal entities. It further imposes conditions that
legal entities shall observe in order to become a member of legal
entity body or to represent another legal entity within this body
(Czech Republic, 2012a).
The issue of the review of the report on relations between
controlling and controlled parties is the subject-matter of the
following case study.
3 Materials and methods
The model case describes selected groups of legal entities that
entered into specific contracts and whose legal relations in the
issue of the controlling and controlled party are regulated under
Act No. 90/2012 Sb.; firstly, the model case will demonstrate the
identification of the controlling and controlled party from the
report on relations drawn up by the controlling party within the
specific accounting period.
The analysis of documents will thereby be carried out. The
analysis of documents is a set of methodological procedures
used for gaining information from documentary sources in the
study of social phenomena and processes to explore specific
research issues in order to deal with specific research issues. It is
a highly practical method of analyzing that was devised for data
collection when carrying out a research in which documents can
be used as primary or secondary source of information. It is
assumed that the documents are or can be considered as reliable
evidence of phenomena that occur in the real world. This is
closely connected with official documents, yet it can also relate
to unofficial ones. Nevertheless, when carrying out a research,
all documents that were used in the research should be subject to
critical consideration.
What also needs to be observed is the legislation that governs
rights and obligations of controlling and controlled parties. It is
in particular S. 71 – S. 86 Act No. 90/2012 Sb. and related
regulations that need to be complied with. In. No. 89/2012 Sb., it
is S. 151- S. 167, where rights and obligations of legal entities
and individuals that represent them are stipulated, that will be
used as a relevant material for the review (Czech Republic,
2012a).
The key goal of the article is to decide whether injury was
inflicted on the controlling party or other members of the group
of companies according to S. 71 and S. 72 Act No. 90/2012 Sb.,
and to decide whether the report on relations complies with
formal rules under S. 82 Act No. 90/2012 Sb.
The model case demonstrated a high assumed probability of
injury inflicted on the controlled party in the form of inadequate
financial performance under contracts made between the
controlling and controlled party. All the same, by this conduct,
injury can be also inflicted on a party involved, in this case TC
(Transport Corporation), which is the minority owner.
The review of prices charged by contracts of lease made between
the controlling and controlled party will be carried out by
comparative methods after the usual prices have been identified.
What will also be carried out is the inspection of payments of
these contractual prices according to financial statements of the
legal entities concerned. The integral part of the review of
contracts that were made will be also other types of contracts
that were issued within the group of companies. What will be
compared is the adequacy of the required and performed
consideration. At the same time, it will be reviewed whether
obligations arising from the contracts are duly performed.
Furthermore, we will focus on the analysis of issued and
received invoices of the controlled party XYZ. What will be
further drawn up is the list of all contracts received or issued by
the controlled party XYZ. Based on the Report on relations all
issued and received invoices for which a financial consideration
was performed will be calculated. The subsequent structure of
issued and received invoices will refer to financial relations
between the controlling, controlled and other involved parties. In
this way it is easier to decide whether injury was inflicted on one
of the parties.
Based on scientific observations a qualitative and quantitative
research will be conducted in both areas of the analysis of the
Report on relations and the list of issued and received invoices
by the controlled party XYZ.
3.1 Structure of relations between parties
In the event of considering legal relations between corporations
it is always necessary to correctly identify controlling and
controlled parties. According to the available information
regarding these legal relations between the controlling and
controlled party, corporation ABC is considered to be the
controlling one. Corporation ABC holds 70% of shares of
controlled corporation XYZ which means that corporation ABC
is the majority owner of XYZ and thereby meets the
requirements for exercising the right of the controlling party
according to S. 75 (2) Act No. 90/2012 Sb. (Czech Republic,
2012b). It is in particular the value of 2,100,000 CZK from the
total registered capital of XYZ Corporation, which equals to
3,000,000 CZK. However, the structure of the corporations has
yet to be completed. ABC Corporation is controlled by another
corporation which is corporation DEF with a residence abroad.
Corporation XYZ is a member of international group DEF
dealing mainly with outdoor advertising. The next significant
shareholder and, at the same time, the minority owner of
corporation XYZ is an unnamed transport corporation
(hereinafter ‘TC’) which holds 28% of shares which equals to
840,000 CZK. Pursuant to S. 75 (2) Act No. 90/2012 Sb. TC is
not therefore the controlling party. However, there is another
minority shareholder (hereinafter ‘Z’) who owns 2% of shares
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