Effective as of 1 January 2012, there is a new amendment to the Commercial Code coming into force, providing for the following main changes:

Concurrence of members of a statutory body with an employment relationship

One of the most important changes lies in the entitlement of a statutory body of a company to entirely or partly delegate the business management of the company to another person, including employees of the company. In the future, the business management of the company will be allowed to be performed by the employees acting concurrently with the statutory body or its members. It seems that this long neglected issue has finally been resolved and shall not cause any future problems, as both the members of the board of directors and directors shall be now able to enter into an employment relationship with the same company and at the same time. However, by delegating the business management, the liability of the members of the statutory body to act with due diligence shall remain unaffected.

Legal title to premises used for the purpose of a registered seat

An entrepreneur must have legal title to the premises used as its registered office, or place of business when such registered seat or place of business is registered in the Commercial Register. The amendment to the Commercial Code aims to protect the owner of the premises as it has often been the case that a company had physically changed the address of its registered seat but had "forgotten" to inform the Commercial Register. The owners of such premises shall have the right to refer this to the Commercial Court as a means to investigate if the registered seat corresponds to the actual seat of the company. Now, the court is entitled to request that a company provide evidence that the title to the premises is still valid.  If the title is no longer valid and a new address has not been registered the Commercial Court shall be able to dismiss such company.

Financial assistance

There have been textual amendments devoted to provisions related to financial assistance by joint stock companies. If financial assistance is used to acquire shares in the company providing financial assistance, the price for which these shares are acquired must be "adequate" instead of "fair". The aim of this amendment is to ensure consistent use of terminology throughout the entire Commercial Code. A joint stock company may provide financial assistance for the purpose of acquiring shares or interim certificates of the company only if set out in the articles of association of the company and only if at least two thirds of the votes of the shareholders present approve of such in advance.  Previously there was a requirement for two thirds of all the shareholder votes. Therefore the amendment softens the procedural rules for the approval of financial assistance.

§196a

A new subsection 6 was added to Article 196a of the Commercial Code which allows for further alienation of property which had originally been acquired against the rules set out in Article 196a of the Commercial Code. When the original acquisition does not follow the rules set out in Article 196a the subsequent acquisition of property may now be valid provided that the subsequent transferee acts in good faith. This amendment will give greater protection to the subsequent transferee particularly in transactions not governed by the Czech Commercial Code including situations where the subject of transaction is real estate property.

Articles of association

A new amendment provides clarification on when decisions of a general meeting of a company shall not be treated as the decisions amending the articles of association of the company. Clarification is provided, particularly in situations where a general meeting allows the Company to exercise the right to a dividend on a day that is different to usual and in situations when the general meeting determines the decisive date entitling shareholders to attend the general meeting. In such case no notarial deed is necessary, i.e. the decision making process should become cheaper and quicker, limiting the unnecessary administrative burden.

Law: Act No. 513/1991 Coll., Commercial Code

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The original publication date for this article was 05/12/2011.