In this issue of the circular we shall address the topic of the practical impact of Act No. 90/2012 Coll., on Business Corporations and Cooperatives (hereinafter referred to as the “Act on Business Corporations”) on the life of business corporations immediately after it enters into effect. The Act on Business Corporations was adopted in connection with the recodification of private law in the Czech Republic, and it contains for the most part the legal regulation of business corporations and cooperatives previously contained in Act No. 513/1991 Coll., the Commercial Code, as amended (hereinafter referred to as the “Commercial Code”).

Unless the Chamber of Deputies or the Senate hastily postpones the effective date of the Act on Business Corporations, this Act shall enter into effect on 01.01.2014. The transitional provisions of the Act on Business Corporations set out the manner in which the new provisions of the Act on Business Corporations shall be applied to existing business corporations. We shall further address selected individual changes.

First and foremost, all provisions of articles of association, articles of incorporation, foundation deeds (hereinafter referred to as “foundation documents”) that are in conflict with the mandatory provisions of the Act on Business Corporations shall be cancelled on the date the Act on Business Corporations enters into effect (i.e. 01.01.2014). In our opinion, however, there will be a minimum of such provisions. Nevertheless, in such case business corporations shall be obliged to adapt their foundation documents to the regulation of the Act on Business Corporations within 6 months of the date the Act on Business Corporations enters into effect and deliver them to the collection of documents of the Commercial Register. Should a business corporation fail to adapt its foundation documents in accordance with the provisions of the Act on Business Corporations, the registry court shall call upon it to do so and shall set in the call an additional reasonable time limit for fulfilling this obligation; should the additional time limit expire in vain, the court shall, upon a motion by the registry court or by a person who demonstrates a legal interest therein, dissolve the business corporation and order its liquidation.

From a practical point of view, it is more important that provisions of foundation documents which are not in conflict with mandatory provisions of the Act shall remain part of the foundation documents after 01.01.2014. Furthermore, provisions of the Commercial Code which regulate the rights and obligations of members and are not in conflict with the mandatory provisions of the Act on Business Corporations shall also be considered part of the foundation documents.

The Act on Business Corporations allows existing business corporations a so-called general opt-in. Business corporations may, no later than 2 years from the effective date of the Act on Business Corporations (i.e. by 01.01.2016), subject their foundation documents to the Act on Business Corporations as a whole. This fact shall be recorded in the Commercial Register. Given that this constitutes an amendment to the foundation documents, this decision shall have to be made in the form of a notarial deed. Corporations that utilise the general opt-in shall therefore be governed by the provisions of the Act on Business Corporations and the provisions of their foundation documents. Corporations that do not utilise the general opt-in shall be governed by the mandatory provisions of the Act on Business Corporations, the provisions of the foundation documents and also the provisions of the Commercial Code, insofar as they regulate the rights and obligations of members. The dispositive provisions of the Act on Business Corporations shall in this case be applied only if the above-mentioned provisions cannot be applied in a specific case. Corporations that do not utilise the general opt-in may thus “drag along” the historical regulation of the Commercial Code far into the future. Business corporations should therefore carefully consider this issue.

At present, the question remains whether existing corporations that do not utilise the general opt-in will be able to take advantage of certain benefits of the Act on Business Corporations (e.g. share certificates, a more liberal conception of business share, registered capital and contribution).

Mgr. Ondrej Bahník

Law Firm Mašek, Kočí, Aujezdský www.e-Advokacie.cz – on-line legal advisory services

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. 9/2013 intended for members of this association.

This text was translated from Czech to English using an AI translator.