Wealthy families abroad often raise successors from a young age. Entrepreneurs in the Czech Republic don’t do that much yet. “The often ultra-wealthy foreign families are preparing to transfer ownership and manage their collections, and this is a fundamental difference that I see in Czech families,” says Stanislav Servos, a lawyer who focuses on managing and protecting family property.
You are dealing with family transfer. What are the options for transferring assets after the death of Peter Kilner to a PPF?
I assume assets will remain concentrated in the PPF group. I understand from the statement by Mr. Bartoníek of the PPF Group that the shares of the PPF Group are directly owned by Petr Kellner, therefore, if the transfer rules, which could theoretically have already been fulfilled, had not been determined, before, it would be the subject of the inheritance.
Since Peter Kilner had four children, they were the primary heirs, or heirs of the indispensable, who should receive the legally prescribed portion of the property. Unless otherwise specified, the wife will also share in the inheritance. In this regard, it is my understanding that Mrs. Kilner acts as the representative of the family of future heirs and shareholders. Of course, I suppose there is another will or acquisition in the event of a death, where the terms will be set, how the heirs should take care of the property and how they should work together.
Although I do not expect this in terms of the latest information, it is possible that the acquisition, for example, could lead to the creation of a trust or trust fund or institution under Czech or foreign law and the property would be invested there. This is with the goal of preserving the unity of ownership in the future and, to some extent, reducing the risk of shareholder disputes.
What option would you consider more likely, also in terms of tax benefits, etc.?
This is hard to estimate, as Peter Kilner was so keen on privacy and little is known about his plans for the future.
Given Kellner’s age, I can probably more than most likely imagine, in the context of his contingency plan, if it were put in place, that he gave heirs shares of his property, laying down rules for them to act jointly as shareholders in a sizable ownership, and perhaps set terms for management for a certain period. With regard to the fact that the tax burden on inheritance is from father to children, respect for it. Because his wife is equal to zero in our country, so this skeleton will practically imitate the one that Peter Kilner is using at the moment.
However, a new and decisive fact in the future is that the group will have more shareholders. This will be eliminated if the trust or the foundation structure is chosen.
Stanislav Servus (44)
A lawyer who has focused on managing and protecting family property for twenty years
– Since 2020, you have been a partner of the Wardens Group, which specializes in succession projects
Co-author of the book “Current Succession Issues in Family Businesses”
Graduated from the Faculty of Law, Charles University, postgraduate studies at the University of Regensburg in the Federal Republic of Germany, and graduated from the Family Firm Institute (USA)
Are there any details for super-rich family businesses, like PPF?
Usually, foreign ultra-wealthy families prepare to transfer ownership and management of their collections, and this is a fundamental difference that I see in Czech families. Often times, foreign entrepreneurs prepare their relatively young grandchildren for the future management of family property, using both courses at top universities and courses specially designed for them. However, there are always differences between the first founding generation and the second or next generation.
Ultra-wealthy families have so-called one-family offices, which provide families with support in managing their possessions, but also in managing their family affairs, including support for education, charitable work, etc. (The largest single family in the world is The Walton Companies, which was founded by Sam Walton. Walmart founder, note red.) After all, even in our country, these structures are gradually appearing.
Do they make sure someone else continues to manage their property in a qualified manner?
Yeah. Many wealthy business families have set up structures for so-called family business governance, including related platforms within the family, and the strong legal structures associated with them. The goal is always to eliminate the destructive internal conflicts within the family and the chaos and vulnerability that these disagreements can cause.
Among the countries close to us, we can cite especially important German groups such as Haniel or Merck. But even these large families or entrepreneurs are not always ready for everything and everything, and conflicts occur regularly. Unfortunately, sudden dramatic events cannot be ruled out.
Consider, for example, the recent disappearance of Karl Erivan Hope, the president and one of the heirs and shareholders of the Tengelmann Group (he owns like Obi, Kik, etc., family holdings of more than nine billion euros), and disputes about it later continue to this day.
How will the transfer of assets affect the company’s management?
Usually the main role of the owner is to choose the management i.e. the group board of directors, and to participate in the group strategy. Then the group’s board of directors will act as the shareholder or partner in the other companies under the control. In the PPF group, where the shareholder group is very narrow, the shareholders play an important role in the strategic management along with the group’s board of directors. In the case of the PPF, it appears that rules have been in place to transfer roles within the ‘shareholders’ group, with Mr Bartoníek assuming the role of Petr Kellner in this regard.
Other than that, it is of course essential that any management changes be made in coordination and that there is no conflict over who will lead the group. Conflict between heirs or shareholders can inflict material damage on the group. According to recent developments, this appears not to be a threat to PPF.
In this regard, I often show my clients the example of one of the largest groups in India, Reliance Industries, where a conflict erupted after the founder’s death between his grandchildren (interestingly, the group’s largest shareholder). The solution took several years.
What will be the impact on ongoing transactions such as Moneta, Škoda Transportation, or Cetin inclusion? Who will approve the transaction now before the inheritance process is resolved?
If the group’s board of directors is busy and the shareholders and potential heirs agree on who will act as a shareholder at the present time or be the de facto head of the group, then I will assume that neither the succession issue nor the inheritance procedures should prevent these transactions. Of course, there are organizational issues related to the “ultimate owners of the group”, but since the shares appear to be in the family, this is likely not an issue either.
At present, I understand that the management of the group works according to the inheritance group, thus there is no need to worry that the new shareholders will later question the particular transactions or challenge the actions of the management. In this respect also, it is about how to put together the so-called crisis plan, management manual and family, let’s assume the future owners.
You also know about overseas transfers. What was their fate in the case of very rich families?
Peter Kellner’s case is atypical with death at a young age and in an accident in which gradual family intervention has not yet occurred, or we do not know about it. As I said, in many cases, families and groups are ready to transfer ownership and everything goes according to plan, but there are still cases like Reliance Industries, where the founder’s death sparks a power struggle between the caliphs. That is, the conflict over who will lead the group and how the power structures will be created.
After all, the fact that this topic is so vital and interesting in the United States and other western countries is shown by a successful series on HBO called The Succession. However, we also find a lot of interesting and real cases in our German neighbors, whether those “unproblematic” cases, such as Merck, Haniel, Bosch, etc., or conflicting cases, such as disputes between the heirs of VW, Tchibo, etc. .
As for the ownership structure, the above applies. There are two main models – direct ownership as in the case of Merck or Haniel, or control through foundations or trusts as in the case of Aldi and Bosch. Each structure has its advantages and disadvantages, but both are real.
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