AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
THE VOLATIVELY SUBJECTIVE NATURE AND VALUE OF STOCK – CZECH CASE STUDY
a
EVA DANIELA CVIK,
b
RADKA MACGREGOR
PELIKÁNOVÁ
a
Czech University of Life Sciences, Kamýcká 129, Praha 6,
Czech Republik, email: cvik@pef.czu.cz
b
University of West Bohemia,
Sady Pětatřicátníků 14, Plzeň,
Czech Republic, radkamacgregor@yahoo.com
Abstract: A joint-stock company is a legal fiction with a long history and with a
successful present. Although the capital type joint stock aka Plc. is one of the most
popular forms for business, its stock and share of its stock do not have a unanimously
accepted objective nature and value. A holistic multi-disciplinary Meta-analysis
reveals, thru the use of a Czech case study, that in contrast to the EU and Czech
legislative and academic wording, a Plc can have personal features and that shares of
stock can be a passive investment as well as instrument of control and even of the
ownership.
Keywords: Shareholder company, nature of stock, value of stock.
1 Introduction
A joint-stock company is a legal fiction with a thousand years-
long history. Typically, it is a legal entity oriented towards
business in which different numbers of shares of the company´s
stock are owned by shareholders, but its centralized governance
is separated from these
shareholders (Duračinská, 2017). Thus, a
joint-stock company has a different legal (juridical) personality
from its shareholders, some shareholders can have more shares
than others and can transfer their shares. Following the indicated
legal fiction, a joint-stock company has its own separate legal
personality, its own liability and perpetual existence even if all
the shares are owned by one single shareholder who is a natural
person (human being) or a legal entity (another company or
corporation). Both legislation and academic literature points out
that a company has members and not owners, and that nobody
can own a company as, since the abolition of slavery, one person
cannot own another.
In Western civilization, joint-stock companies started to emerge
in the 13th century in continental law jurisdictions, namely in
France, e.g. Société des Moulins du Bazacle (Sicard, 1953), and
in Sweden, e.g. Stora (Groom, 2015). However, the true
blooming of modern types of joint-stock companies began in
common law jurisdictions in the 16th century, namely in the
colony acquisitive England, e.g. the Company of Merchant
Adventures to New Lands and East India Company (Irwin,
1991). The Amsterdam Stock Exchange soon became the place
for trading shares, such as of the Dutch East India Company. In
the following decades and centuries, the creation and existence
of joint-stock companies separated from direct state participation
and the role of the state became reduced to the registration and
following recording process.
The post-Lisbon EU follows the Strategy Europe 2020 and, both
at the EU level as well as the national level, fully recognizes the
significance of joint-stock companies, while distinguishing
between the typical capital style joint-stock company, called a
public limited company, aka Plc, and its personal style parallel,
called a private limited company, aka Ltd or LLC. Due to
restricted space, further attention will be paid only to the capital
style joint-stock company (“Plc”) which often has the word
“share” or “stock” in its legal description (shareholder company,
Aktiengesellschaft, akciová společnost, etc.). Namely, the focus
will be oriented towards a five year long period in re the stock,
control and management evolution of a Czech Plc with over 511
shareholders and this real case study and its results will be
confronted with the conventional perception of these phenomena
as suggested by the legislation and the academic literature in the
EU. The central leitmotif reflects the hypothesis that even the
capital style joint-stock company, i.e. Plcs, can have personal
features and, more specifically, the underlying hypothesis is that
the legal fiction about its independence can be contrasted by the
business reality even in the case of the involvement of more than
one or a few shareholders. It is suggested that, despite a strong
legislative and theoretic academic wording and in contradiction
to well-established law theories, after all shareholders might
reach the status of true owners of a Plc and they are ready to pay
(even some extra) for a stock in order to pass from a control
level to the level of ownership. Indeed, the subjectively
perceived nature and value of a stock can have a truly objective
impact.
2 Sources and methods
A scientific, academic and practical exploration of the nature and
value of stock and the ultimate meaning and objective
consequences of the acquisition of a certain amount of shares in
the light of a real Czech case study requires a deep and holistic
understanding of the business as well as law setting. An open-
minded and yet still sufficiently oriented approach needs to
explore the general setting and move to a concrete situation in a
given jurisdiction. A real Czech case study has to be explored,
and both accounting and the actual paid value of the stock
critically discussed in the context of the practical, as well as
legislative and academic, understanding of the control and even
ownership of a Plc. Such a combination of general theory on
fundaments with a real life experience with stock valuation can
be highly beneficial, bringing fresh ideas, provided that
appropriate data and methods are used. The data in such types of
presentations needs to mirror the cross-disciplinary and multi-
jurisdictional nature (EU and Czech) of the topic and thus needs
to be extracted from a multitude of resources. Primary resources,
especially the inside data linked to the case study, have to be
explored, along with secondary resources, such as legislation,
standard settings and academic articles presented by authors
from various EU member states.
The methods must reflect the nature of the topic and the
underlying hypothesis that the nature and value of stock is highly
subjective and that this has an objective impact. Namely, shares
needed to pass a legislative milestone, set regarding the control
and management of a Plc can be, for certain shareholders,
extremely valuable, while basically worthless for other
shareholders. In particular, when no dividends are paid and
controlling power takes place, the accounting value of the shares
is overshadowed by the subjective desire and drive for control,
and ideally the ownership of the company. Therefore, methods
have to work with the data generated by the indicated open-
minded and multisource research. Indeed, the yield of data
generated or indicated by research is to be processed by Meta-
Analysis (Silverman, 2013), while using a holistic approach, a
critical comparison of laws and confronting the concepts with
the reality of the Czech case study. Due to the inevitable fact that
economic, legal and technical aspects are involved, attention
must be given to both qualitative and quantitative data and the
deductive and inductive aspects of legal thinking (Matejka,
2013), as well as business and sociological aspects, must be
respected. As a result, the quantitative research and data is
complemented by qualitative research, along with a critical
closing and commenting and refreshed by Socratic questioning
(Areeda, 1996). Ultimately, a vacuum becomes partially filled in
with at least some suggestions about the extent and meaning of
the subjective nature and value of stock and the objective impact
of that.
3 General perception of the nature of stock and its Impact –
legislative and academic overview
Separation of the legal personality of shareholders and
separation of centralized corporate governance from
shareholders is one of the fundamental features of a Plc
(Duračinská, 2017), regardless of whether these Plcs are, or are
not, listed on stock exchanges. The governance and management
of a Plc is entrusted to directors, who are agents of shareholders,
i.e. shareholders are principals (Kothari et al., 2010). These
directors and their governance is supervised by the members of
the supervisory board and ultimately by all shareholders during
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