Case 1: Legal Tools PDF

lOMoARcPSD|46849812 CASE 1: LEGAL TOOLS ABOUT LAWS WHAT IS LEGISLATION? A set of laws proposed by a country’s government and then approved by the Parliament. They are created with a specific purpose and then applied in a specific territory. Legislation can also be a law or a set of laws waiting...

lOMoARcPSD|46849812 CASE 1: LEGAL TOOLS ABOUT LAWS WHAT IS LEGISLATION? A set of laws proposed by a country’s government and then approved by the Parliament. They are created with a specific purpose and then applied in a specific territory. Legislation can also be a law or a set of laws waiting for approval, which in this case would be called a “bill” (proyecto de ley). These laws or sets of laws regulate the government of a state, the relationship between the government organs and the subjects of the state, and the relationships between each subject of the state. There exists a legal lack; some cases cannot be solved with the laws that have been previously approved. That is why we create new laws. Therefore, the main purpose of a legislation is to solve equal problems applying the same solution and conditions so it is fair for everyone, and to solve different problems with different solutions and conditions. DO WE HAVE DIFFERENT TYPES OF LEGISLATION IN THE EUROPEAN UNION, SPAIN, CATALONIA, AND INTE RNATIONALLY? WHAT IS THE RELATIONSHIP BETWEEN THEM? All laws/legislations must be coherently linked and cannot contradict each other; there exists a hierarchy between them. The European Union legislation must be followed by all the European countries that decided to join this international organization (Spain joins the European Economic Community in 1986 when the Treaty of Accession was signed). European treaties (international agreements) have to be included in the states’ national legislations in order to establish cohesion of the main European directives. Consequently, Catalonia legislation cannot contradict the Spanish legislation (since the first level of the Catalonia legislation, Estatut d’Autonomia, is an organic law included in the Spanish Constitution), which, as it has been said previously, has to have regard to the European Union principles. In every country, the most important law is the national one, and all laws must respect the constitution of its country. A government can not sign an agreement that is against constitutional rights. PYRAMID OF REGULATIONS OF THE EUROPEAN UNION  Primary: Treaties / Secondary: Regulations, directives and decisions  No council, no parlament. the international treaties are approved by the states.  International agreememts must have a formal approval after they are signed. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 PYRAMID OF REGULATIONS OF SPAIN  Constitutions of europe must have the same rights and principles PYRAMID OF REGULLATIONS OF CATALONIA  Both spanish and catalan legislations have the same power, they treat different topics. there is no conflict because they're different.  The EU takes a case that affects only one country only if the possible damage can also be affecting other countries.  A) Estatut d'autonomia: organic law  B) Laws: ordinary law  The damage of a case may be located only in one country but it can affect others so thats why the EU can be the one who direct that case WHO CREATES THE DIFFERENT LEGISLATION: LEGISLATIVE POWER /EXECUTIVE POWER? Legislation can be only created by the higher authorities, so in this case, it is the European Parliament and the European Council the ones that approve the legislation proposed by the European Commission. The laws created by these institutions are mandatory for all countries inside the European Union to follow since they chose to be part of it, so there is no need for these to be regulated at a national level. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 The citizens of the different country members of the EU approve these legislations when they vote for the entry of that country to the organization. They also approve the Constitution and national laws of its country. International agreements between a European country and a non-European country are supervised by their national Court of Justice. The different regulations are created by the executive power because they are aimed at enforcing laws and written instruments that contain laws. In a nutshell, regulations ensure or explain the details so that laws come into effect. They are the responsibility of the executive power. HOW CAN WE DECIDE WH ICH “RULE” IS TO BE APPLIED IN A CASE? Laws were created to regulate the actions of members of a particular country or community. A legal hierarchy was formed, as there are laws more important than others, and when a law contradicts a higher one is considered worthless. In Spain, for example, the legal hierarchy is the Spanish Constitution, next to the EU treaties, and the EU regulation, then the Organic law, ordinary law, royal decree (Ley orgánica, ley ordinaria, Real Decreto and Real Decreto Legislativo, all at the same level) and the Spanish Regulations (Reglamentos). After that come the regional laws: Statute of Autonomy (Estatut D’autonomia in Catalonia) and the law, decree-law and legislative decree (Ley, Decreto ley and Decreto legislativo in Catalonia) and lastly the Regulations (Reglamentos in Catalonia). Thus, depending on the subject matter of the case, a more or less important law will be used. On the other hand, you have to take into account the hierarchy that is used, since depending on where you are solving the case, you will have to consider different laws, regulations, constitutions, etc (EU, Spain,...) ABOUT COURTS CAN YOU EXPLAIN THE HIERARCHY OF THE COU RTS IN EUROPEAN UNION, SPAIN AND CATALONIA? EUROPEAN UNION COURTS:  Civil service tribunal: it deals with litigation that involves the EU civil service.  Specialized courts/European Comission: they are formed for specific topics. hear cases at 1st instance, then appeal to General Court.  General Court: it is the EU’s trial of general jurisdiction. It is formed by 28 members and each one from a different country member of the EU. It deals with cases which affects the EU’s institutions.  Court of justice of the European Union: It is the highest tribunal and the court of final appeal. Its goals is to make sure the uniform application of the laws of the EU. It is also formed by 28 judges (one from each member country) Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 SPANISH AND CATALAN COURTS:  First instance court: It is the first in resolving a case and the resolution can be appealed. Treats different topics and is taken to the courts near the place the individual lives, the main office or near where the damage was produced. o First Instance Court: in Catalonia that there are more than one in some cities and each one is specialized in an area.  Provincial audience: It is the highest judicial body in the province, but it is limited to civil or criminal topics. o Provincial Audience Courts: one in each province’s capital and solve criminal and civil case.  Superior Tribunal of Justice of Catalonia: (in charge of Autonomous Community) Is the highest tribunal body in the Catalan courts; it is adopted to the competencies of the territory, and it is divided into three sections. o Civil and Criminal Chamber o Administrative Litigation Room o Social Room  Sumpreme Court: The supreme court is the highest judicial body of the Spanish territory; it is composed by its president, the chamber of presidents and the Magistrates and some resolutions from the provincial audience or the superior courts of justice can be applied to this court. Difference between Supreme Court and Superior Tribunal of Justice of Catalonia: If the laws applied to the case are Spanish ones, the final decision will come from the Supreme Court; otherwise, if the laws applied are Catalonian ones, the final decision will come from Superior Tribunal of Justice of Catalonia. Both of them have different capacities; they deal with different topics. Therefore, the decisions approved by both institutions have the same importance.  Spanish conflicts will be solved by the Spanish Court of Justice (ECJ cannot enter).  European conflicts will be solved by the European Court of Justice (SCJ cannot enter). HOW IT IS DECIDED WHICH COURT IS THE ONE PREDETERMINED TO SOLVE A CASE? There are many different courts to solve cases in every country, because they tend to specialize on different situations. The usual criteria to decide on which court will judge the case are the role played by the court, so how important the court is, the nature of the object of the process, commercial in our case, and the territory that each court covers. Using these three criteria some superior institution, for example in Spain the “Órgano inmediato superior común” is the one with the final decision when discussing in which court a certain trial will take place. Finally, if the client is not satisfied with the resolution of the accusation, is able to go beyond that Court and that the accusation is sent to a higher court in the hierarchy. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 CASE 2A_ Corporations: General concepts. Types. Constitution. Social contribution. 1- BUSINESS PERSON Business Person: A business person is someone who does the commercial activity and gets the rights, liabilities, and profits in the market. It can be either physical or juridical person (. It cannot be a non -profit legal persons. To be called a business person they have to create a commercial activity and get profits and often. A business person has and must do, according to the code of commerce: art. 1 c.co. private autonomy often profits deed of incorporation bylaws (a rule made by a company or society to control the actions of its members.) registration - commercial register 2- JURIDICAL VS PHYSICAL PERSON: The difference between legal and business person is that a business person has profits rather than a legal person, who has not. Juridical person: Entity, as a firm, that is not a single natural person, as a human being, authorized by law with duties and rights, recognized as a legal authority having a distinct identity, a legal personality. They have a different registrer. Physical person: An individual in his/fer full legal capacity and enabled to act, as according to the current law. How to convert a physical to a juridical person? To become a juridical person, they have to join in the mercantile register. After that, the juridical person will have to do a commercial activity from what will get profits. What about a non-profit organization? It can be a juridical person but is not a business person (they don’t get profits) 1 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 3- TYPES OF BUSINESS PERSON: PERSONALIST CAPITALIST General Partnership Limited Share Partnership Limited Partnership Joint Shock Company Limited Liability Company A Personalist Business Person is regulated in the Code of Commerce, whereas a Capitalist Business Person is regulated in the Corporate Enterprises Act. PERSONALIST CAPITALIST General Partnership: Limited Share Partnership The creation of a general partnership requires at least A partnership limited by shares is a hybrid between two partners. These partners have unlimited a partnership and a limited liability company. accountability with their personal assets for the The capital and ownership of the company is divided liabilities of the company. A minimum capital is not between shareholders who have a limited liability and required. In order to set up the company, it is one or more partners who have full liability for the necessary to establish a social contract that will be remainder of the company's debts. The partner(s) will certified by a notary. Created with full legal capacity, usually direct the operations of the company while the the company is recorded in the Spanish Commercial shareholders are passive investors. Registry. Joint Shock Company Limited Partnership: The largest companies in Spain are joint stock companies (Sociedad Anónima (S.A.)). They differ A limited partnership consists of two or more substantially from the aforementioned companies partners. A limited partnership requires a general through their additional publication requirements. A partner, who has unlimited liability for the debts of the joint stock company requires at least one company and a limited partner who has limited liability shareholder. The liability of shareholders for company for the debts of the company. A minimum capital is debts is limited to their contributions. The statutory not required. The establishment occurs by means of minimum capital amounts to € 60.000, from which a notarial deed and the registration of the company, only 25% must be paid at establishment. The through which the company acquires its own legal establishment requires notarial authentication and personality. registration of the company. Limited Liability Company Limited liability is a type of legal structure for an organization where a corporate loss will not exceed the amount invested in a partnership or limited liability company (LLC). In other words, investors' and owners' private assets are not at risk if the company fails. Business Person → Social name (INDITEX) + Type of capitalist person SA (JSC) Requested officie = Main As. 2 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 PERSONALIST: Regulated in Code of Commerce GENERAL PARTNERSHIP LIMITED PARTNERSHIP Law: Code of Commerce (art 125-144) Law: Code of Commerce (art 145-150) Type of partners (personalists): Type of partners: o General partners (GP) o General partners (GP) o Worker partners (WP) o Worker partners (WP) Capital: o Limited partners (LP) (capitalists) o (GP): invest 100% of the capital. Capital: o (WP): don’t invest capital. o (GP): majority of the capital. Profits: o (WP): don’t invest capital. o (GP): depend on the capital invested. o (LP): invest some capital. o (WP): only receive if the GP want to. Profits: Losses: o (GP): depend on the capital invested. o (GP): depend on the capital invested. o (WP): only receive if the GP want to. o (WP): none. o (LP): depend on the capital invested. Decisions: Losses: o (GP): have the right to decide. o (GP): depend on the capital invested. o (WP): only if the GP allow them to decide. o (WP): none. Liability: o (LP): depend on the capital invested. o (GP): unlimited. Decisions: o (WP). o (GP): have the right to decide. Minimum required: none. o (WP): only if the GP allow them to decide. o (LP): are not involved in the business decisions. Liability: o (GP): unlimited. o (WP) o (LP): limited. Minimum required: none Additional Information: General partners- mandatory to invest and to be in board of directors 3 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 PERSONALIST: Regulated in Corporate Enterprises Act LIMITED SHARE PARTNERSHIP JOINT STOCK COMPANY LIMITED LIABILITY COMPANY Type of partners: Type of partners: Type of partners: o General partners (GP) o Shareholders (capitalists): they are the investors o Stakeholders (capitalists) o Worker partners (WP) and the owners of the company. Capital: o Shareholders (capitalists) Capital: o Stakeholders: 100% of the capital (divided by Capital: o Shareholders: 100% of the capital (divided by stakes) (GP): minority of the capital. shares) Profits: o (WP): don’t invest capital. Profits: o Stakeholders: depend on the capital invested. o Shareholders: majority of the capital. o Shareholders: depend on the capital invested. Losses: Profits: Losses: o Stakeholders: depend on the capital invested. o (GP): depend on the capital invested. o Shareholders: depend on the capital invested. Decisions: o (WP): only receive if the GP want to. Decisions: o Stakeholders: the power of decision depends on o Shareholders: depend on the capital invested. o Shareholders: the power of decision depends the percentage of capital invested (majority of Losses: on the percentage of capital invested (majority the capital). o (GP): depend on the capital invested. of the capital). Liability: o (WP): none. Liability: o Stakeholders: limited. o Shareholders: depend on the capital invested. o Shareholders: limited. Decisions: Minimum required: €3 000. o (GP): have the right to decide because they are Minimum required: €60 000. in the board of directors. o (WP): only if the GP allow them to decide. o Shareholders: right to vote and decide in the general meetings, but they are not part of the board of directors, so they can only decide some questions. Liability: o (GP): unlimited. o (WP): limited. o Shareholders: limited. Minimum required: €60 000. Additional Information: Capitalist investors don’t have Additional Information: to be in the board of directors. Invest money, limited There aren’t worker partners or general partnerships. liabilities, not mandatory for them to take decisions. 4 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 4- CONTROL: Abuse of juridical business person. Occurs when a legal person is created in order to avoid applying the law or avoid paying taxes and not for commercial purposes. The Corporate Veil Theory is a legal concept which separates the identity of the company from its members. Therefore, shareholders are protected from the acts of the company. Criminal liability of juridical business person. Occurs when someone does a criminal behavior through the company. 5- PROCESS OF CONSTITUTION OF CAPITALIST TYPE OF COMPANIES: Types of corporate enterprises: 1. Limited Liability Companies 2. Joint Stock Companies 3. Limited Share Partnerships. Requirements for their constitution: Must be commercial organisations Must carry out the commercial activity often Minimum capital Name Nationality Minimum capital Limited Liability Companies: 3.000€ o The capital is divided in stakes. o The liability of the partners is limited. Joint Stock Companies: 60.000€ o Capital divided in shares. o Shareholders’ liability: limited. Limited Share Partnerships: 60.000€ o Capital divided in shares. o Majority of capital owned by capitalist investors. o Liability: ▪ Capitalist investors: limited. ▪ General Partners (at least 1): unlimited. !) All companies MUST have at least the minimum amount of money necessary. In the deed of incorporation can’t be set a quantity of capital lower than the legal minimum. The only case in which a company can have less capital than the minimum established is if it’s resulted from complying a law 5 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 Name: The name of the corporation ought to include, in each case: Limited Liability Companies: “Sociedad de Responsabilidad Limitada / Sociedad Limitada / S.R.L / S.L”. Joint Stock Companies: “Sociedad Anónima” / “S.A.”. Limited partnerships: It can use a name that includes the names of all or at least one of their general partners or any other name if it has in it: “Sociedad Comanditaria por Acciones” / “S. Com. por A.” Regardless of the name chosen, it can’t be equal to the name of a company that already exists. Nationality: Are considered Spanish all the corporate enterprises whose offices are registered in Spanish territory, even if they were created in a foreign country. The offices must be registered in Spain if the main business establishment of the company is located in Spain. 6- PROCESS OF CONSTITUTION OF CAPITALIST TYPE OF COMPANIES: SPECIAL CASES OF SINGLE MEMBER COMPANY AND CORPORATE GROUPS Single Member Companies A corporation is a Single Member Company if it fulfills one of these conditions: It has just 1 partner or shareholder (it can be an individual or a corporation). It has 2 or more partners, shareholders, or stakeholders if all stakes/ shares are transferred to one person. It must be notified to the Mercantile Registry when a company becomes a single member company, or it loses the status. The identity of the sole partner must be known by the Mercantile Registry as well as all changes in it. Single Member Companies must express this status in all their documentation, bylaws, correspondence, and other documents. The sole partner / shareholder has unlimited liability if after 6 months after the transmission of the shares/stakes there’s just one partner. 6 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 Corporate groups: A corporate group is considered to exist if any of the following situations is given: A corporation manages another company which can be included to a corporate group by applying the proportional integration method. (In proportion to the % of its share capital held). In the corporate group: The business persons are registered separately in the Mercantile Register. One of them is predominant and controls the others. 7- PROCESS OF CONSTITUTION OF CAPITALIST TYPE OF COMPANIES 1) Formation of corporate enterprises If there are two or more partners: with deed of incorporation. Single Member Companies: unilaterally. 2) Registration in the Mercantile Register Partners/shareholders are responsible for submitting the deed of incorporation to the Mercantile Register until 2 months after the date of formalisation. If they don’t submit it they must bear all consequences. To pay all the taxes during registration is responsibility of partners/shareholders. Company registration is published in the Official Journal of the Mercantile Registry. It involves the information given in the deed of incorporation. Companies in the process of formation Until the company is officially registered in the Mercantile Registry: Capital can’t be increased. Shares can’t be sold. Stakes can’t be transferred. Partners, shareholders, directors or any person able to make decisions have unlimited liability for all agreements and acts made in order to register the company. Companies in irregular situations If partners refuse or refrain from registering the company in the Mercantile Register and any paperwork is made in a maximum period of a year after the formalisation of the deed, the company will be regulated by the rules of non- mercantile organisations. Any partner/shareholder of a company in an irregular situation has the right to ask for dissolution in a commercial court and get his/her share refunded. 7 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 8- PROCESS OF CONSTITUTION OF CAPITALIST TYPE OF COMPANIES: NULLITY When can a company be declared null? When partners/shareholders don’t reach an agreement during the formation of the company (at least 2 partners/shareholders if there are the several). Incapacity of all founding partners or shareholders. When partners’ or shareholders’ contributions have not been included in the deed of incorporation. When the company name has not been included in the deed of incorporation. If the corporate purpose hasn’t been included in the bylaws or it is incompatible with law. The bylaws don’t include the minimum legal capital or if partners aren’t able to pay it. What happens if a company is declared null? First step in liquidation proceedings. Debts continue being in force and they will be paid with liquidation proceedings. If a Limited Liability Company is declared null because it doesn’t have the legal minimum of capital, partners must pay for the missing capital. If a Joint Stock Company that has been declared null for not paying the capital in full has to pay its debts with third parties, shareholders must provide the necessary money. 9- WHAT IS THE DEED OF INCORPORATION? It’s a document where the founding partners express their willingness to set up a company. It must be signed in presence of a solicitor by all the founding partners and shareholders. Contents: The names and information needed to identify partners and shareholders. The type of body corporate. The contributions in capital made and therefore the number of stakes/shares that each of the shareholders/stakeholders has. The company bylaws. The identity of the people initially chosen to work in the management of the company. Specific cases: If the bylaws of a Limited Liability Company include several options, the deed of incorporation must specify the one chosen. Joint Stock Companies must include all start-up expenses (outlays and those necessary for registration) 8 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 10 - WHAT ARE THE BYLAWS? They are the rules created in a business corporation in order to regulate it. Contents: Company name. Purpose of the corporate enterprise, detailing its activities. Registered office. Capital: Number of stakes/shares into which it’s divided and its par value (if decided). o Limited Liability Companies: in case a company doesn’t have the minimum legal capital, it must be stated in the bylaws. It will be stated in all records and documents of the Mercantile Register. Also, if stakes aren’t equal, the rights that each stakeholder has must be detailed. o Joint Stock Companies: the bylaws must state the type of shares, their par values, the payment method, the deadline and if they’re represented by certificates or book entries. Number of directors, their remuneration, etc. The method used to make decisions. Operational start-up: usually the date of formalization of the deed of incorporation (not before) Duration: If not said the contrary, indefinite. Financial year. Privileges for the founders of Joint Stock Companies (they have financial nature, not easy to transfer) Agreements that the founding partners/shareholders consider necessary for the company. (Those that are not included in the bylaws won’t be effective) Founder liability. 10 - WHAT IS THE MAIN FUNCTION OF THE COMMERCIAL REGISTER? The main function is to state the registration of all acts related to corporations or business men/women such as: Creation of business corporations Changes in the capital Modification of the bylaws Control annual accounts Etc. All this information is gathered by the Mercantile Register and is made public with the aim of guaranteeing transparency in commerce. 11 - SOCIAL CONTRIBUTIONS OF CAPITALIST COMPANIES: 9 Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 CASE 2C: Corporations, nancial concepts and other questions Financial Statements The company’s directors shall issue the nancial statements, the management report and the proposed distribution of earnings. The nancial statements shall comprise the balance sheet, income statement, statement of the changes in the net worth for the nancial year, cash ow statement and the respective notes. Must be approved by the Board of Directors and the General Meeting. The Board only has the power to purpose, but it must be approved by the General Meeting. All changes in the by-laws must be approved by the General Meeting. Auditors External person from the company who has to control the nancial situation of the company. Must be appointed in the General Meeting and the Board of Directors. Must verify whether the nancial statements presented are true and fair. Must present a report in the General Meeting. (Auditor’s report) Causes for partners or shareholder to exit and exclusion 1. Causes according to the Corporate Enterprises Act (art. 346) Partners or shareholders who are not voting in favor of the respective decision can be entitled to exit the company in any of the following circumstances: a) Supersession or amendment of the corporate purpose. b) Extension of company term. c) Company reactivation. d) Creation, amendment or early cancellation of ancillary commitments, unless otherwise is provided in the by-laws. In LLcs, partners that do not vote in favor if amendment of the arrangements for the transfer of stakes can also leave the company. 2. Causes in the by-laws (art. 347) Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 The by-laws can establish other causes for exit. Legal Financial Concepts Art 273: Appropriation of earnings Indicates that the Board of Directors purpose to distribute the earning between the investors, the General Meeting must approve the decision. It can’t only be decided by the Board of Directors. Equity should not be less than the social capital after the distribution of the earnings. Social capital: capital initially invested in the formation of the company. Good economic situation: equity > social capital Types of reserves that a capitalist company has: Restricted reserves: the general meeting decides to invest x% of the prots for a particular project. It cannot be used for any other activity that is not that one. Unrestricted reserves: can be used for dierent purposes. Approved by the General Meeting. Legal reserves (art. 274): they are mandatory and established by the law. Particular % of the capital every year that is invested as a warranty to pay creditors. If there are no legal reserves, the company should be dissolved. The legal reserve may not be used to oset losses unless it exceeds twenty per cent of the capital and no other sucient reserves are available for such purpose. a) Minimum: 10% of the registered social capital. b) Maximum: 20% of the social capital. Must be reached in the last year. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 Distributable reserves: amount that the General Meeting can distribute. Capital reduction Mandatory Reduction (Art. 327): If the capital is decreased, the type of company has to change. It is mandatory to reduce the capital when Equity is less than the 2/3 of Social Capital and 1 nancial year has nished. Capital increase Maximum amount that can be increased is the 10% of the social capital. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 After increasing the capital, the legal reserves should be the 10% of the new capital Dissolution A company must be dissolved when: 1. Losses = equity < ½ Capital 2. Non-voting shares > 50% capital Majority of capital will not be able to vote because it has no right to vote. Causes of Dissolution Interruption of the activity. Termination of the mission that constitutes its corporate purpose. The achievement of the corporate purpose is manifestly impossible. Due to governing body standstill, rendering it impossible to conduct business. Due to losses that reduce its equity to an amount lower than one half of the share capital, except where the capital is increased or decreased as required and application for insolvency protection is not warranted. Due to a capital reduction to a sum below the legal minimum, except as in compliance with a legal provision. Because the par value of non-voting stakes or shares exceed one half of the paid-up capital and the due proportion is not recovering within two years. Liquidation process: once the General Meeting agreed on dissolving the company, they have to start the liquidation process. This process is done by a specic person called liquidators, who are appointed in the General Meeting. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 Extinction of the business person: the company has to ask the Mercantile Register to publish that the business person has been extinct. Downloaded by Roger Garcia ([email protected])  lOMoARcPSD|46849812 Social Contribution in Corporations. Types: cash, non-cash (from art. 58...) Title III, Chapter I: for a company to be qualified as a capitalist type, all its capital can only be economical valued. Work or services given cannot be part of the capital of a company. If it is not valued in that way, it cannot take part of a contribution to the enterprise capital. Title IV, Chapter I, Section Two, Subsection One and Subsection Two (from article art. 61-66): On one side, cash contributions have to be denominated in euros. If not, its equivalent must be calculated. It is stipulated that every cash contribution must be substantiated before the public notary in a document which certifies the deposit of the funds. On the other side, non-cash contributions must be specified in the deed of incorporation or instrument on capital increase. They can be a property, loans or a company. Stakes/ Shares: voting, non-voting (from art. 90,..) Title IV, Chapter II, Section One (Art. 93): shareholders (to shares and stakes) have the right to attend and vote at general meetings. Article 98: “Limited Liability Companies and Joint Stock Companies can create non-voting stakes or shares, respectively, if the value is less than half the capital.” Partner and shareholders rights (art. 93) Article 93 (on Title IV, Chapter II, Section One): the partners’ and shareholders’ rights. It can be subjected to exceptions, but the general rights are: “a) To take part in the distribution of company earnings and in the equity resulting from liquidation. b) To acquire new stakes or subscribe new shares or convertible bonds under preferred conditions. c) To attend and vote at general meetings and challenge company agreements. d) To be duly informed.” Transmission of shares /stakes. Limits (art. 107) Article 107 (Title IV, Chapter III, Section Two): only specifies about stakes. It must be a voluntary transmission. If it’s a familiar, there is free transmission. If not, there are some rules. Any partner who wants to transfer a stake should write it down to the administrates, with the number, characteristics, and details of the stake. The transfer must be approved by company authorisation. The company chooses the identity of the partners or extern people that the stake is going to be transferred to, and if not, the company can keep those stakes without any person holding them. The price and other conditions are specified by the transferor and accepted by the company, and it must be fully paid to take hold of the stake. The public instrument of transfer must be formalized maximum one month after the communication of the transfer. Any partner will be able to transfer the stakes in the communicated conditions if three months after the disclose the stake has not an identity. The transmission of shares (as indicated on art. 120) is subjected to specified on the Code of Commerce art. 545 10 Downloaded by Roger Garcia ([email protected]) a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 EXTINCTION OF BUSINESS PERSON: the general meeting or the courts of justice go to the mercantile register and present the petition of extinguishing the business person. This means that the company has to ask the Mercantile Register to publish that the business person has been extinct. CASE 3. INTELECTUAL PROPERTY When we talk about intellectual property, we talk about ideas, things that we own. The right of property means that you have the right to be the owner of material things or non-material things. The ideas and the ideas applied to the industrial property are known as intellectual property. WHAT CAN BE PROTECTED? - Industrial Property / Intellectual Property In Spanish law: - Intellectual property → copyright (ideas or mind creations) - Industrial property rights → creations with industrial application (Commercial Name, patents, utility models, design…). WHAT IS INTELLECTUAL PROPERTY? - Creation of the minds – IDEAS (inventions, literary and artistic works, symbols, names and images used in Commerce) - Protected by laws with exclusive rights – ACTIVITY PRODUCT (such as Commercial Name or tradename, patents, copyrights, trademarks and design). They enable people to get financial benefit from what they have created (used in the market). DISTINCTION: - To protect the activity of the company: commercial name - To protect the product: o In the market: trademark o Invention: patents and utility models o External appearance: design. COPYRIGHT – protect the ideas and the creation of something unique. If I have an idea, I will be recognized as the owner of that idea. But at the moment when I sell that thing/idea, I don’t have the property of that thing anymore. If you have copyright, you only have protection nationally. Author rights: rights of authors literary and artistic works. - Moral rights (author of the book): protect the non-economic interests of the author - Copyrights (economical rights): allow the rights owner to derive financial reward from the use of his works by others. o There’s no protection in the European Union o The right is born when the work is published o Registration is optional and it gives stronger protection Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 If I create something in Spain, I will only have protection in Spain. If I want to protect my idea in other countries, I have to register in my country at the Spanish Intellectual Property Register, and also ask for the recognition in WIPO, that offers national protection in specific countries. o If I want to play my music in USA, I have to go to the register in Spain, and then I have to present an application in the WIPO in order to have the Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. protection in USA. Then, the WIPO will send the information to the national office of the USA. If I want to sell my music in more than one country, I have to go to the Spanish register and the present a single application to the WIPO for all those countries. Then the WIPO will send the information to the national offices of those countries. WIPO – World Intellectual Property Protected by copyright throughout the world include: - Literary works (novels, poems, plays, reference works, newspaper, articles…) - Computer programs, databases - Films, musical composition and choreography - Artistic works (paintings, drawings, photographs, sculpture, architecture…) - Advertisements, maps and technical drawings. Copyright protection extends only to expressions (NOT ideas, procedures, methods of operations or mathematical concepts) Copyright may or may not be available for a number of objects such as titles, slogans, or logos, depending on whether they contain sufficient authorship. In the majority of countries and according to the Berne Convention, copyright protection is obtained automatically without the need for registration or other formalities. - WIPO doesn’t offer a copyright registration system or a searchable copyright data base. Most countries nonetheless have a system to allow the voluntary registration of works. - Can help to solve disputes over ownership or creation - Facilitate financial transactions, sales, and the assignment and/or transfer rights. Commercial Name: It has to be registered in the OEPM – Oficina EspaÒola de Patentes y Marcas. Commercial name: logo of Apple, CaixaBank, Zara, Caprabo… With the protection of the Commercial Name we protect the activity of the company. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 CASE 4. ADVERTISEMENT AND PUBLICITY Advertisements are designed to convince people to buy a product or service. People see every day countless varieties of advertising: magazines ads, posters, television commercial, internet commercials,.. Advertising law explains how should be done the communication information to the public. The Spanish legislation of advertisement is the General Advertising Law (Ley General de Publicidad). According to the Spanish law, advertisement means → any form of communication done by a natural or juridical person, public or private, in the exercise of a trade, business or craft profession in order to promote, directly or indirectly, the acquisition of property, services, rights and obligations. Recipients of advertisement: People to whom reaches the advertising Goals of advertisement legislation: - To protect the principle of truth information in advertisement - To avoid unfair trade practices. It applies to marketing and advertising strategies across different mediums TYPES OF ILLEGAL ADVERTISEMENTS: 1. Violates the dignity or the values and rights established in the Constitution. o Example: advertisement that show women in a vexatious or discriminatory way, either using their body or parts of it in particular and directly as a mere object o Racism discrimination o Sex discrimination 2. Misleading advertisement: induces or may mislead recipients and may affect their economic behavior or injure a competitor. 3. Unfair Advertisement: that hurts other people or companies, particularly competitors. o Unfair Competition Law 4. Subliminal advertisement: stimuli perceived unconsciously but which can alter the behavior and attitudes of the consumer. 5. Violates the provisions of the legislation governing the advertising of certain products: health, gambling, drugs, alcohol exceeding 20 degrees (are prohibited on TV and on places where its use is not allowed). 6. Surreptitious advertising: to disseminate information or opinions or display products brands through the media: in news programs, movies or other programs without a prior contract of an advertising space. - As a non-illegal advertisement we have sponsorship, when a trademark sponsors an event. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 MISLEADING ADVERTISEMENT Any advertising which, in any way, including in its presentations is capable of: - Deceiving the persons to whom it is addressed - Distorting their economic behavior - Or as consequence, harming the interest of competitors. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. When determining whether advertising is misleading, several factors shall be taken into account: - The characteristics of the goods and services concerned - The price - The conditions of delivery of the goods or provision of the services involved. - The nature, attributes and rights of the advertiser. COMPARATIVE ADVERTISEMENT They are permitted if: - Are no misleading - Compare “like with like” – goods and services meeting same needs or intended for the same purpose. - Objectively compare important features of the products or services concerned - Do not discredit other companies trademarks - do not create confusion among traders. SUBLIMINAL ADVERTISEMENT - A subliminal message is a signal or message designed to pass below the normal limits of perception. - Against the consumers because the message is unperceived consciously but perceived unconsciously. - In audiovisual media is not allowed. ADVERTISEMENT OF CERTAIN PRODUCTS Some products need specific protection because: - They may affect the public health - They may affect the children - Products, tobacco, alcohol, medicines EU Directive 2010/13/EU on the coordination of laws and regulations concerning the provision of audio visual media, sets out criteria that television advertising of alcohol must comply with. These include that the advertising: - must not be aimed at minors or depict minors drinking - it must not link alcohol with enhanced physical, sexual or social performance - and it must not encourage immoderate consumption. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 SURREPTITIOUS ADVERTISING – PRODUCT PLACEMENT - Surreptitious advertising is to disseminate information or opinions or display product brands through the media: in news programs, movies or other programs without a prior contract of an advertising space. o Product placement will be permitted as long as it meets certain criteria. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. o Surreptitious advertising, on the other hand, will still be prohibited. EU REGULATIONS: - Misleading and comparative advertisement: Directive 2006/114 December 12 o To protect traders against misleading advertising and its consequences o To lay down the conditions under which comparative advantage advertising is permitted. - Unfair Commercial Practices: Directive 2005/29, may 11 o To boost consumer confidence and make it easier for businesses (especially small and medium sized) to carry out cross border trading. o Thank to this directive, national enforcers have been able to curb a broad range of unfair business practices, such as providing untruthful information to consumers or using aggressive marketing techniques to influence their choices. - Communication of EU Commission 2012, November 17 o Protecting businesses against misleading marketing practices and ensuring effective enforcement. - Subliminal advertisement: Directive 1989/552, October 3 o Regulates about audiovisual media services - Directive 2003/33, May 26 o Related to the advertising and sponsorship of tobacco products. - Directive 2010/13/EU o Related to the coordination of laws and regulations concerning the provisions of audio-visual media. NATIONAL REGULATIONS: Each country should have laws that regulate the advertisement in general, and some specific laws for particular products. - Spain: o General de Publicidad. o Competencia Desleal. o ComunicaciÛn Audiovisual o Por la que se modifica el rÈgimen legal de la competencia desleal y de la publicidad para la mejora de la protecciÛn de los consumidores y usuarios. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 Who participates in the advertising? Advertisers: firms or individuals attempting to find customers for their products and services. Advertising agency: Independent service organization that contracts with advertisers to manage their advertising. Historically, advertising agency services are of a creative nature, but the agency concept has expanded to include research services and media planning and buying. Supplier of advertising time or space: such as a communications media representative or the communications medium itself. Types of contracts:  Advertisement agency contract: o Agreement drawn between a supplier of advertising time or space, such as a communications media representative or the communications medium itself, and an advertiser, which specifies in detail the content, cost, and placement of the advertising and binds both parties to the stated terms. o This agreement may be drawn between an advertising agency, on behalf of a client, and said supplier, or directly between the supplier and the advertiser.  Advertising sponsorship agreement: o A Sponsorship Agreement is a contract that governs the legal relationship between a Sponsor and those entities that offer a service of general interest, like sports, education, … o The Sponsor will cover part of the cost of the activity. o Issues that arise under a Sponsorship Agreement are: ▪ The definition of benefits to the sponsor ▪ Any payments due under the contract ▪ The circumstances in which trademarks/logos of the Sponsor should be used/displayed ▪ The rights of each party, including termination clauses CONFLICTS: - National Courts of Justice will solve the conflicts: 1. First Instance commercial court of Justice 2. Provincial Audience 3. Supreme Court Special entities help (AsociaciÛn para la regulaciÛn de la ComunicaciÛn Comercial), but they don’t substitute the Courts of Justice. You can ask the Courts of Justice for actions against the advertisement. Action to… - Stop unfair behavior or prohibition of its future repetition. - Remove the effects - Rectify misleading, incorrect or false information - Compensation of damages Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 CASE 5. INTELLECTUAL PROPERTY II: COPYRIGHT 1. What does the copyright law protect? The copyright law protects original works of authorship including literary, dramatic, musical and artistic work. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. WHOM? To authors, artists, and other creators of their literary and artistic creations, commonly referred to as "works." WHAT? Protects original works of authorship. RIGHTS - They have the full right to use or allow others to use the work during the agreed period. Many types of works are protected by copyright and related rights laws that require mass distribution, communication, and financial investments for successful publication. The right is born when the work is published. Registration is optional and it gives stronger protection 2. Look for the different laws in Spain and Internationally  National Protection: o Spanish register of Intellectual Property o Spanish Intellectual Property Law.  International Protection: o NO protection in the European Union. o Berne Convention: offers copyright protection automatically in the majority of countries without the need for registration or other formalities. This is useful to help to solve problems in those countries that don’t have a system that allow the voluntary registration of works. 3. Courts of Justice that will solve the case 1. First Instance of Commercial Court 2. Provincial Audience 3. Supreme Court *If a company doesn’t like the resolution of the case of the Supreme Court, it can’t do it anything else. The case is over once the Supreme Court has given its final word. 4. Difference between “industrial property” and “intellectual property”  Industrial property: includes patents for inventions, trademarks, industrial designs and geographical indications. Industrial property is part of intellectual property.  Intellectual property: is about copyright and covers literary works, films, music, artistic works and architectural designs. Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recording, and broadcasters in their radio and television programs. The term intellectual property refers to the creations of the human mind. Intellectual property rights protect the interest of creators by giving them property rights over their creations. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 CASE 6. ANTITRUST Antitrust means Strong damage in the market. We need to protect the competitors and the consumers. Agreements are done by companies in order to develop the unique company in a market Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. (monopolist). If the position of the company studied is not strong in the market, then we are not in front of an antitrust behavior. Legislation that is trying to avoid any type of behavior that could damage the efficient competition of the market and the consumer welfare. The antitrust law is formed by rules that are designed to promote fair competition and better consumer protection – Consumer and Competitors Welfare (banning companies from agreeing to charge artificially high prices and from abusing their position). For example, introducing severe terms and conditions if they are dominant in the market. The antitrust laws have these main objectives: - Protect the process of competition for the benefit of consumers - Making sure there are strong incentives for businesses to operate efficiently - Keep low prices - Keep high quality The antitrust Law (nationally in Spain and in the European Union) is oriented to big companies that can make big damages, that use its dominant position in the market to put restrictions on other companies that want to enter into a competitive market. For small businesses it will apply the unfair competition law. Use its dominant position in the market to put restrictions on other companies that want to enter into a competitive market. Antitrust is no considered a crime in Spain but it is in other countries. However, is a very grave infraction. MARKET STRUCTURE MONOPOLY OLIGOPOLY 1 agent (unique supplier). Lack of Few agents competition Monopolistic power. Price-searchers. Monopolistic Power – fix price: price- Big companies control the market and makers. Ability to fix the price. smaller ones have to follow what they Unique product. There’s no other say. products similar to this one. Quite unique product Barriers: Barriers → natural or legal - Natural: huge investment. Cost of enter in a market. - Legal: IPR’s. No one can use your patent. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 MONOPOLISTIC COMPETITION PERFECT COMPETITION A lot of agents (many suppliers) A lot of agents No barriers No barriers Product differentiation Product homogenous: identical product Monopolistic power No monopolistic power Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. The Courts of Justice will first study the market, define in which type of market the company is situated: TYPE OF BEHAVIOURS: AGREEMENTS Requirements: - Two or more companies - Any type of agreement - Any type of restraint - Independent  Legislation: EU legislation: art. 101 EUT National legislation: art.1 Spanish Antitrust Law  Institutions: EU Commission ComisiÛn Nacional de los Mercados y de la Competencia / Autoritat Catalana de la CompetËncia / National Courts of Justice. ABUSE OF DOMINANT POSITION Requirements: - 1 company or group of companies - Dominant Position. Accepted. - Abuse. Affect competitors and consumers  Legisaltion: EU legislation: art. 102 EUT National legislation: art. 2 Spanish Antitrust Law  Institutions: EU Commission ComisiÛn Nacional de los Mercados y de la Competencia / Autoritat Catalana de la CompetËncia / National Courts of Justice. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 MERGER Requirements: - Agreement - Different companies - One center of decision - Mergers accepted. Control.  Legislation: EU regulations on Mergers National legislation: arts. 7-10 Spanish Antitrust Law  Institutions: EU Commission ComisiÛn Nacional de los Mercados y de la Competencia / National government. Effects of the behavior in the particular market for the own company and for the other companies (quality of products, position of the company in the market…) a) Agreements and exemptions - Own company: has an agreement with another company but each conserve their separate business. - Other companies: have an agreement with our company. It would be an antitrust behavior if the antitrust law is not followed. b) Abuse of dominant position - Own company: has, for example, 30% of the market power - Other companies: come together and get the 70% od the market power, so they can decide which price is better to fix. That would be an abuse for those firms of their dominant position. c) Mergers - Own company: create a new legal entity by combining our company with another one - Other companies: combine their business entity with our own company. It would be an antitrust behavior if the antitrust law is not followed. 1st: determine the market structure 2nd: Determine the behavior: - Agreements → restraint competition - Abuse if dominant power EU Treaties - Control of mergers o Territory o Volume of sales 3rd: result → Antitrust Institution, Antitrust Law. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 CASE 7. INSOLVENCY PROCESS - Insolvency is the financial condition when a legal entity or a person’s liabilities (debts) exceeds their assets, or when they cannot longer meet their debt obligations on time as they become due. o Insolvency is the moment in which a company is not able to pay their creditors Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. at the current moment or in the future. The company in this case, would be dissolved. The goal is trying to avoid this situation before is too late and the only solution is to dissolve the company. - A state of insolvency can lead to bankruptcy, that is a legal procedure that will try to help that person or legal entity may be able to continue the commercial activity in the market. o Insolvency doesn’t necessarily lead to bankruptcy, but all bankruptcy debtors are considered insolvent. - In an insolvency process a company have the opportunity to pay the creditors. The purpose is to make sure the company can continue their activity in the market and that they have enough time to consider all the options in order to save their company. If it’s not possible to pay the creditors, the last solution is to dissolve the company. Voluntary insolvency process: When the own company present the petition of an insolvency process to the Court of Justice, it’s a voluntary insolvency process = Legitimacy: debtor. From the moment you know you will not be able to pay your creditors, you have to: 1. Inform the general meeting (directors and investors) 2. Do and early proposal of composition: try to reach an agreement with creditors. (You don’t have the guarantee they will accept but once they accept it and you go to the courts of justice they cannot back down). 3. Opening insolvency proceedings: present the petition, within two months, to the Courts of Justice. *Until the end of the insolvency process, creditors have no right to ask for their money. Creditors can ask for an insolvency process to the court of justice if a company is not paying for them. In this case, we would talk about compulsory insolvency process. Legitimacy: creditor. Once the petition to the courts of justice is done, the insolvency proceeding are declared by the judge of the courts and it’s public announced in the Mercantile Register/BOE. Appointment insolvency administration (lawyers, economists and someone representing the interest of the creditors): - Subjective conditions: be neutral, be a lawyer or an economist (have the abilities required), etc. ¿Ganas de que terminen los exámenes? Viaja con Ladrón ¡También podrás ganar un año de producto gratis! a64b0469ff35958ef4ab887a898bd50bdfbbe91a-7244156 - Incapacities, incompatibilities or prohibitions: means that you can’t be the administrator of this insolvency process because you are linked with the directors of the company so you are not objective, for instance. - Remuneration: the asset of the company will be used to pay the administrators as they are not functionaries of the state. - Liabilities: if they don’t act according to the law. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. Effect on the debtor: *Debtor is the business person who has a problem paying the creditors (company). - Suspension of power: if a voluntary process was requested, the directors of the company are able to continue their professional activity, but the insolvency administration will control all the situation. However, of the directors didn’t present the insolvency process petition (didn’t follow the law) and where the creditors who asked for a compulsory insolvency process, then their power in the company is removed. - Provide books and documents: the company has to provide to the insolvency administration all the information about the financial situation of the company. - Assets (Seizure of assets): the financial administration stablish the assets of the company (how much do they have). Personal assets are included in case of compulsory insolvency process. - Partners (social actions): investors may have lost their capital, but they will be the last ones to receive their money back. If you were not informed in the general meeting you