Development of Share Price in Direct Relation to the Entry of the New Investor in the Management of Business Corporation

Eva Daniela Cvik (), Radka MacGregor Pelikanova () and Otakar Schlossberger ()
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Eva Daniela Cvik: Czech University of Life Sciences, Faculty of Business and Economics
Radka MacGregor Pelikanova: Metropolitan University Prague
Otakar Schlossberger: University of Finance and Administration, Department of Finance

ACTA VSFS, 2019, vol. 13, issue 2, 161-185

Abstract: The existing legal framework laid down by Act No. 90/2012 Sb., the Companies and Cooperatives Act aka Business Corporations Act, provides minority shareholders with tools that may be used to protect their rights and interests; in practice, however, the use of such tools is insuffi cient. The issue of a noctractual consensus regarding selling or buying shares in business corporations is not expressly regulated by the BCA and is wholly dependent on the terms agreed on by the parties. In line with the principle of freedom of contracts, the parties enjoy a considerable amount of discretion as they may agree about anything that is not contrary to the Act. The lack of express legal regulations in re share purchases causes considerable problems in practice. The share purchase price is dependent not only on demand and supply, but also on the fi nancial standing of the respective company, including its internal situation. These aspects may be both positive and negative for the shareholders as regards their shares and the share price. In most cases, share purchases are related to an attempt by the dominant party to take over the business management of the company (a shareholder company in this paper). Therefore, this paper tries to assess what impact this may have on the share price in relation to share purchases by majority shareholders, including share price fl uctuations and the impact on the share price of the company.

Keywords: share; Shareholder Company; book value; contractual share price; minority shareholder; Companies and Cooperatives Act; equity capital (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2019
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