Boscarol filed an initiative to assess the constitutionality of several paragraphs of Commercial Companies Act

26. 02. 2024

On 05/02/2024, Ivo Boscarol (through his attorney Matija Premrl) submitted an initiative to start procedure for the evaluation of the constitutionality of 5., 6. and 7. paragraphs of Article 10a of the Commercial Companies Act., to the Constitutional Court of the Republic of Slovenia.

Article 10a of the challenges law regulates and sets restrictions on the establishment of commercial companies and on the acquisition of the status of entrepreneur or partner. The provisions of Article 10a (paragraphs 5, 6 and 7) of the Companies Act, which are the subject of this initiative (“Contested restriction”), refer exclusively to limited liability companies and regulate restrictions to prevent the so-called “chaining of companies”; namely the person who has founded or acquired a share in a limited liability company, not older than 3 months, cannot become a founder or a partner of a limited liability company for the next 3 months. (5. paragraph 10a Article of the Companies Act)

The 5., 6. and 7. paragraphs of Article 10.a of The Companies Act-1 in interfere with the proposer’s legal position, as they directly and explicitly state that he cannot become a partner of a Limited Liability company, if he established a Ltd. company within the previous three months. In other words, he cannot become a shareholder of the new Ltd within a period of three months after the establishment of the previous Ltd company.

The contested provisions directly interfere with the proponent’s right to free economic initiative and, in this context, to freely make economic decisions at the entrepreneurial level. They only allow him to establish one Ltd. company every three months or the acquisition of a business share in one Ltd. every three months – a maximum of 4 per year.

According to Ivo Boscarol, the restriction (and thus interference with human rights) has other direct consequences, as it prevents a person from investing money in new companies, startups, etc., which could help them in their growth. This significantly reduces individual’s investment possibilities and forces him to invest in other types of assets, such as immovable property, shares and other securities, business shares of companies of third countries or investing through other companies or forms such as a convertible loan.

However, this is not his purpose and also the expectations for him are different. In particular, startups expect that there is a person behind the investment, with a name and surname. The name of Ivo Bosacrol among the co-owners represents greater trust and credibility for the company and the product, as well as a greater motivation for other investors, than if the investment was made through other mechanisms that obscure the personally of an investor.

In Slovenia, there is an incredible number of young companies and future entrepreneurs with exceptional ideas, products and services that need initial seed capital for faster development, sales promotion for rapid growth to medium- or large-size companies, and experience of a successful entrepreneur who has proven himself on an international scale. Ivo has a few dozen interesting cases in the queue, but unfortunately he can only help four per year. That is why he decided to file a constitutional initiative to amend the Companies law and he hopes that it will be adopted as soon as possible.