Amendment of business corporations act
Five years have passed since Business Corporations Act came to effect, Act that has replaced Commercial Code and newly governs internal legal relations within Companies. After initial sprint to submit companies under newly effective regulation and following ambiguity of some provision of the new code, a catalogue of questions, inevitable to resolve in corporate charters has been revealed.
Those questions that has not been sufficiently resolved, or are causing troubles in application, are subject of change in upcoming Governmental Amendment Bill to the Business Corporations Act. First reading of the proposed amendment has been included into agenda of 26th Parliament Meeting, which has started on 22nd January 2019. Inter-ministerial comment procedure has been held prior to the first reading, where no details are known so far. Professional public does expect to have final text of the amendment by end of first half of year 2019.
The Governmental Amendment Bill contains some changes of currently effective Business Corporation Act. Amongs those fundamental we do include (i) alternative way of paying up cash contributions in companies with registered capital under 20,000 CZK, (ii) fixed period for decisions of a company’s supreme body to be certified by an authentic instrument, (iii) modifications of member’s defence means against resolution of the supreme body of company, (iv) lift of ban on share transfer in unlimited partnership company, (v) changes within per-rollam decision making process in limited-liability company, joint-stock company and cooperatives.
Other changes of the Business Corporations Act concerns (i) new regulation on expulsion from office of a member of the statutory body of a business corporation, (ii) new ways to appoint executive (managing director) as right connected with particular share in the company, (iii) changes in members withdrawal from company; and most important from point of view of authors of this article (iv) changes within monistic system of governing, namely abolition of managing directors role as governing body.
VGD does very thoroughly follow the process of adoption of above mentioned Governmental Amendment Bill, as well as it does thoroughly follow decisions of courts in corporate law matters. As the evolution of the newly introduced law is fairly dynamic one and given this very likely adopted Amendment Bill, VGD is prepared to discuss with you consequences of the Amendment Bill for your company, as well as review your corporate charters to they will follow current law and also build up sufficient safeguard of your business against outside influences.
Robert Musil, partner of VGD Legal
Dominka Pažoutová, paralegal of VGD Legal