SLOVAKIA Law and Practice Contributed by: Lukáš Michálik, Peter Makýš and Šimon Hora, Ments s.r.o.
One advantage is the possibility of setting up enhanced internal processes and internal corpo- rate bodies. A significant advantage is the man- datory establishment of a supervisory board, which controls the functioning of the company for the shareholders. Another advantage is the possibility of an enhanced shareholding struc- ture for the company and distribution of the indi- vidual types of shares and rights associated with these. An advantage may also be that the list of shareholders of a joint-stock company is not publicly available. 3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale Several types of liquidity events are used in the of the Slovak Republic and in the start-up environment, the most common, traditional and conservative being the entry of investors into a company. Types of investors are varied and include the following: • private equity funds, such as local PE funds, as well as funds from neighbouring countries, particularly the Czech Republic and Poland); • local business groups, such as large local business conglomerates encompassing doz- ens of companies; • competitors of the target company (ie, invest- ment on horizontal axis); and • silent partners, who have access to a share of the economic benefit of the target company in exchange for a certain level investment. In the case of technology companies or, for example, engineering companies, it is also pos- sible to structure a liquidity event as the sale of part of the know-how or the granting of a licence for a certain product provided by the company.
In return, the company receives money from investors, which is then used for further busi- ness development. This type of liquidity event is then often combined with the creation of a joint-venture partnership, which takes the form of a stand-alone company. The investor contrib- utes money to the JV and the company/start-up contributes the know-how/product/technology to the JV company. Initial public offerings (IPOs) are infrequent in Slovakia due to the somewhat conservative behaviour of Slovak entrepreneurs and because market liquidity is weak. That said, several inter- esting companies in Slovakia have opted to car- ry out IPOs on neighbouring stock exchanges where liquidity is much stronger. 3.2 Choice of Listing Although several dozen companies are listed on the Slovak stock exchange in Bratislava, the Slovak stock exchange has relatively low trad- ing volumes, which makes it unpopular among investors and companies pursuing a liquidity event. However, the competitiveness of the Slo- vak stock exchange is gradually improving, and a number of measures are being taken to make it more attractive. The most popular stock exchange among Slo- vak companies seeking a listing tends to be the Prague Stock Exchange in the Czech Repub- lic. The most notable example would be Slovak company Gevorkyan a.s.that deals in powder metallurgy, one of the most innovative and competitive companies in the Republic, which was the first Slovak company to be listed on the START market on the Prague Stock Exchange. In so doing, it achieved a record issue. Recently, this company became the first company to jump from the START market straight to the Prague
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