Share (Sec. 155 and the following of the Commercial Code) is a security to which is attached the right of the shareholder to participate in the company’s management, its profits and liquidation surplus if the company is dissolved. Shares can be issued as a Bearer share (in Commercial Code terminology a “holder share”) and as a registered (au nom) share (nevertheless, according to Sec. 3 of the Securities Act, even there applies provision on securities upon order). Under the Czech law, there are ordinary shares (“kmenové akcie”) connected with no special rights, and preference shares (“prioritní akcie”) incorporating preferential right to participate in profits and liquidation surplus.

Interim certificate (Sec. 176 and the following of the Commercial Code) is issued by the joint stock company before its entry into Commercial Register to the subscriber instead of all subscribed and not fully-paid shares of one class. Interim certificate thus replaces up to now not fully-paid shares. It is attached with rights arising from shares, which are replaced by such a certificate, and with the duty to pay their issue price. Should the owner transfer it to another person prior to payment of the issue price, he shall guarantee payment of the unpaid portion of the issue price. The provisions on registered shares apply to interim certificates. If an interim certificate replaces registered shares whose transferability is restricted, the transferability of such interim certificate shall be restricted to the same extent. An interim certificate may exist only as a certificated one (“listinná podoba”) and may be transferred by the means of endorsement.

Similarly to an interim certificate, share subscription certificate (Sec. 204b of the Commercial Code) is a secondary security as well. It replaces shares and it is issued upon Bearer. It is attached with the rights of a share subscriber. It is issued before increase in registered equity capital upon decision of the general meeting after payment of the share issue price, but before entering the increase into Commercial Register (after entering the new shares can be issued). Regarding the fact the entering the increase of registered equity capital is a constitutive act, the holder may dispose with replacing security in the meantime, otherwise he would have to wait for entering into Commercial Register and issuing paid shares. One share subscription certificate is attached with the rights arising from subscription of one share. Nevertheless, the general meeting may decide that one share subscription certificate is attached with the rights arising from subscription of more than one share.

Mutual funds certificate (Sec. 8 of the Mutual Investments Act) incorporates participation of a shareholder in assets of mutual fund. For the holder of the mutual funds certificate, the key aspect is, whether the pertinent mutual fund is open, or closed. Open mutual fund does not have restricted number of issued mutual funds certificates and the holder of the certificate has the right of redemption of his certificates by investment company. The redemption has to be carried out within 15 working days. The right of redemption does not arise to the holder of closed mutual funds certificate.

Bonds and their issuing are stipulated by the Act No. 190/2004 (Bonds Act). Some special kinds of bonds are stipulated by the Commercial Code as well. The substance of bonds is close to promissory note. Similarly to that, it incorporates the right of the holder to get payment of owed amount of money and duty of issuer (drawer) to satisfy this right as well.

But in details, there are differences between these securities. Firstly, the difference is in subject that may issue the pertinent security. While range of drawers of promissory note is not restricted, the bond issuer may only be a legal person[1] with certain “history”: at least 2-years existence and at least 2 audited and approved one following the second annual financial statement.

Other differences lay in state supervision over issuing bonds. Not regarding the fact, whether pertinent bonds will be quotated on public security market, they may be issued only after the Securities Commission approves pertinent issuing terms (there is an exemption for the State and the Czech National Bank). Simoultanesly, the Commission carries out state supervision over observance of obligations stipulated by the Bonds Act. Other difference is, that relations between issuer and beneficiary, according to Sec. 7 par. 3 of Bonds Act, are in a subsidiary way governed by the Commercial Code, while as concerns promissory note, subsidiary act is the Civil Code. Limitation period of rights incorporated to the bonds is, compared to promissory note, relatively long and takes 10 years.

Coupon (Sec. 12 of the Securities Act) is issued to claim the right of dividend from share, interim certificate or yield upon bond or mutual funds certificate. It can be issued as certificated and paperless form as well. In case that the coupons were issued in certificated form, they are issued in the form of so called coupon sheet. It can contain talon giving the right to the holder to obtain a new coupon sheet. Coupon may be issued only upon Bearer. Its requirements ensure sufficient information for prospective holder who does not dispose with main security and obtains only coupon. According to the Sec. 12 par. 3 the coupon contains information about its type, yield or way of its determination, date and place for claiming the yield.

Investment vouchers were securities upon name bearing the right to acquire shares/mutual funds certificates within so called “coupon privatisation”. They have no importance any more.

Subscription warrant (Sec. 217a of the Commercial Code) is a security attached with pre-emptive right to subscribe shares which should be issued by the joint stock company to increase registered equity capital, or the right to get exchangeable or preferred bonds.

Bill of exchange/promissory note (Art. I and III BECA) is a certificated (“listinný”) security in which a drawer either promises to pay to a certain person certain financial sum (promissory note), or orders to a drawee to pay (bill of exchange). It can be issued upon order (preferably); on the basis of a special statement written by a drawer it can be issued upon name and is transferable by cession.

Cheque is stipulated by the second and third article of BECA. Its substance is closed to bill of exchange – the drawer orders to the third person, usually to a bank, with which the drawer has open account, to pay certain financial amount. Cheque may be issued only as a certificated security and can be issued upon bearer, holder and upon name as well.

Travel cheque is stipulated by the Sec. 720 and the following of the Commercial Code. It gives to the stated person or to the Bearer the right to obtain certain financial sum upon its presentation for payment according to the terms determined by the cheque drawer. Provisions concerning bill of exchange, promissory note and cheque do not apply to travel cheques.

A bill of lading (“náložný list”) is stipulated by the Sec. 612 of the Commercial Code in connection with contract on the carriage of things. Under such a contract the carrier undertakes to carry a thing or things from a determined place to another determined place. According to the contract, the carrier may be obliged to issue a security for the consignor – bill of lading. The carrier is not obliged to issue a bill of lading unless agreed otherwise in the contract. Differently from agriculture warehouse certificates incorporating proprietary rights, with a bill of lading is attached “only” right to hand over the delivered thing. That is why the bill of lading pertains to the range of “goods securities”. It can be issued upon bearer, holder and upon name as well.

Similar regulation applies to warehouse certificate (“skladištní list”) (Sec. 528 of the Commercial Code) incorporating the right to ask for handing over of the stored thing. It can be issued upon Bearer, holder and upon name as well.

According to the rights incorporated in it, an agricultural warehouse certificate (Sec. 2 of the Act on Agricultural Warehouse Certificates) is a special kind of the securities. It performs proprietary and sometimes mortgage rights to the stored goods. By its transfer, not only right of handing over the goods, but also the proprietary right is transferred.