In this issue of the circular, we shall address the issue of acts by entrepreneurs following the recodification of private law. Together with Act No. 89/2012 Coll., the Civil Code, as amended (hereinafter referred to as the “new Civil Code”) and Act No. 90/2012 Coll., the Act on Business Corporations, as amended (hereinafter referred to as the “Act on Business Corporations”), which shall enter into force on 01.01.2014, the concept in the area of acts by entrepreneurs is changing, particularly with regard to legal persons.
The new Civil Code brings about a substantial change in the area of acts by legal persons pursuant to Section 161 et seq. Legal persons shall no longer act through their statutory bodies directly, but shall be represented in their acts by persons authorised to do so. Thus, either a member of the statutory body, an employee, or a member of another body of the legal person not registered in the public register shall be authorised to act. All these persons shall be required to make clear in their acts on what legal basis they are authorised to act on behalf of the legal person. Documents which they sign on behalf of the legal person should state the name of the legal person, the signature and the function of the acting person.
A member of the statutory body shall be authorised to act on behalf of the legal person pursuant to Section 164 of the new Civil Code in all matters; however, the scope of this authorisation may be determined by law or by the founding legal act. Where the competence of the statutory body belongs to several persons, they form a collective statutory body whereby, unless otherwise provided, the legal person is represented by individual members of the statutory body independently. In relation to the current legal regulation, there has thus been a change consisting in the establishment of general representation of the legal person only to the extent of individual members of the statutory body, not the statutory body as a whole. However, the new Civil Code newly permits that, in cases where the founding act determines that members of the statutory body act jointly, it shall be possible for a member of the statutory body to act independently if he has been authorised for a specific act.
Another innovation brought by the new Civil Code is that a member of the statutory body of a legal person may be not only a natural person, as is currently the case under the Civil Code and the Commercial Code, but also another legal person, whereby this other legal person is obliged to authorise a specific natural person to perform the function of member of the statutory body on its behalf; otherwise, the law provides that this function shall be performed by a member of the statutory body of the said other legal person.
As regards possible internal restrictions on the authorisation to act of a legal person, the Act on Business Corporations essentially adopts the current regulation of the Commercial Code and provides that restrictions on the authorisation to act of their statutory body arising from the articles of association, the statutes or other agreement or from a decision of a body of the business corporation are ineffective against third parties, even if they have been published.
The statutory bodies of companies themselves remain essentially unchanged. Only in the case of a joint-stock company does a duplication of possible systems of management of the company occur. Newly, a joint-stock company shall be able to choose between a monistic and a dualistic method of management. There is thus an extension of the existing legal regulation of the dualistic system of management contained in the Commercial Code to include the monistic system. The latter consists in the company being represented by the board of directors and the statutory director. Here, however, the Act on Business Corporations provides a restriction compared to the new Civil Code, when in Section 461 it prohibits any person other than a natural person from becoming the statutory director. In one of the forthcoming legal circulars, we shall address other situations in the representation of entrepreneurs under the new Civil Code (prokura, representation by employees in the entrepreneur’s establishment, etc.).
Mgr. Lukáš Barnet
Law Firm Mašek, Kočí, Aujezdský www.e-Advokacie.cz – on-line legal advice
This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as legal circular No. 7/2013 intended for members of this association.
This text was translated from Czech to English using an AI translator.