Business Law Essay Corporation

1. Please describe the role of the public notary in the process of registering a business organization?

The primary role of the public notary in the registration of a business organization is the crafting of the establishment contract. PN makes sure the parties are suitable for the registering of the business organization. PN investigates the legally relevant will of the parties. PN must instruct parties as to their legal rights and obligations, and to the consequences of their actions. PN must read the final establishment contract, explaining relevant sections and make sure the parties have understood the relevant provisions.

1. Please describe in as much detail the process of registering a sole proprietorship?

In order to register a sole proprietorship, a sole proprietor must have the necessary skill or necessary expertise, or he must hire someone who has the necessary skill or expertise. Steps to establish the sole proprietorship.

• 1. Filing the necessary paperwork with the municiipal service
• 2. Wait the necessary time
• 3. Make a stamp
• 4. Register with the tax authority and get ID number and activity (goal/purpose) code
• 5. Open a transaction account
• 6. Register employment
• 7. Fiscalization request
• 8.(Conditional) Register for VAT

1. What are some of the legal considerations you should mind when choosing a name for your business organization?

The name of business organization must have a type of organization and must be exaclty the same as you have registerd with the municipal government. It should not be offensive or criminal. It should not mislead the public concerning the company’s activities. You should take care with names which suggest a grand scale of enterprise or impressive connections when this is not matched by reality. The name must not give the public the idea that the company is connected with the government, a local authority or royalty. Before you make your final choice of name, do the name search at least.

1. Please describe in as much detail the process of founding an LLC?

A d.o.o./Ltd can be established either by an establishing contract or establishing decision. If the company is to be established by one person, this will be made by the establishing decision. If there are more founders, the company will be established by the establishing contract. It is necessary to nominate the persons authorized to manage and represent the company and also to submit the application with the documentation and complete other actions required for registration of company in the court register. During the process of establishment of the business entity along with the other documents required for registration, it is also necessary to attach the Certificate of Payment of the founders' equity issued by the bank, not less than 1000KM. Registration shall be done at municipality courts, with territorial jurisdiction according to the seat of the company. After the court registry certificate is obtained you must make a stamp and obtain a market inspectorate certificate. Next steps are registering in the federal institute for statistics and getting tax ID number and VAT registration. After all you must open a bank account, register employees and obtain the service permission.

1. Please describe in as much detail the role and the procedure in regards to the courts when registering an LLC?

Due to frequent abuses in the procedure of business registration, particularly with so-called phantom or non-existent firms, we must welcome the introduction of legal requirements for the registration court. Registration of an LLC shall be done at municipality courts, with territorial --jurisdiction according to the seat of the company. Data entered in the Court Register are the establishment, merging and termination of a subject of entry, the establishment and termination of a part of a subject of entry, all status changes including changes of the form of organization of a subject of entry, data about a subject of entry that are relevant for legal traffic and their changes, data about bankruptcy and liquidation procedures, data on initiated procedure for the removal of a subject of entry as well as other legally prescribed data.

1. Please explain the duty of care and the business judgment rule?

In general, a principal has the obligation to exercise reasonable care to avoid placing the agent in harm’s way in the course of carrying out the agency. The principal has the duty to use care to inform the agent of any danger of physical harm or risks to life or property of which the principal is aware. The business judgment rule is a standard of judicial review that provides that officers and directors will not be held personally liable for honest, careful decisions within their corporate powers. The business judgment rule protects a board of directors from being questioned or second-guessed on the conduct of corporate affairs, except in instances of fraud, self-dealing, or unconscionable conduct.

1. Please explain the duty of loyalty?

Directors must at all times remain loyal to the corporation and its shareholders, acting in a manner that serves the best interest of the corporation, as opposed to a director’s other interests or the director’s personal interests. Directors who are also directors of related corporations or have interests in related businesses may find themselves in a position of a potential conflict of interest from time to time. Directors should abstain from participating in corporate decisions that might give even the appearance of a conflict of interest.

1. Please explain in which situations does personal interest exist within the governing structure of a business organization?

A personal interest exists if a person or a family member of such person:

1. is a party to a legal transaction with a company;
2. has a financial relationship with a party to a legal transaction which enters into contract with a company, or a financial interest in a legal transaction with the company that can be reasonably expected to affect his judgment contrary to the interests of the company; and
3. is under the controlling influence of a party to a legal transaction, or of a person who has a financial interest in the transaction that could reasonably be expected to affect his judgment adversely to the company.

1. Please describe the process for authorization of legal transactions involving conflict of interest?

A person who enters into a legal transaction with the company shall not violate the principles related to conflict of interest and shall not be liable for damages arising from his conflict of interest. Legal transaction is authorized in good faith by either:

1.  all other partners who do not have a personal interest, unless the Articles of Association states that the authorization shall be given by a majority of such partners in accordance with the Articles of Association
2. a majority vote of the members who do not have a personal interest, given at a members' meeting or
3. a majority vote of the members of the board of directors who do not have a personal interest

1. Please explain duty to keep business secret?

Information on operations of a company determined by company's Articles of Association, partnership agreement, company agreement, Articles of Association or statute of the joint stock company, which would obviously result in significant damage to a company if known by a third party are considered to be business secret. Information which is required to be disclosed by law or relates to violation of laws, good business practices and principles of business ethics, including information which is grounds for suspicion of corruption, will not be regarded as business secrets.