Fundamental changes introduced by the amendment to the Business Corporations Act

An amendment of Act No. 90/2012 Coll. (Business Corporations Act) will enter into force starting on 1 January 2021, introducing a broad range of restrictive, relaxing and administrative changes into Czech commercial law.

To ease the administrative burden on company founders, this amendment allows a use of other means of capital contribution payment than funding of a special bank account when handling capital contributions of future private limited liability companies. This provision is applicable if the sum of all monetary capital contributions does not exceed CZK 20,000.

The amendment also adds a plethora of new requirements. Most importantly, the obligation to declare involvement in a group (koncern) in the Commercial Register and the tightening of formal rules regarding decision-making outside a meeting of the respective corporate body (per rollam).

Another important change concerns joint-stock companies with a monistic internal structure. Starting next year, such companies will no longer have an statutory director. The administrative board, as the sole executive and supervisory body of the company, will thus gain new powers and responsibilities.

Lastly, the amendment introduces new options for companies to set up their internal regulations. The prohibition of competition can now be either broadened or excluded altogether from the foundation documents of capital companies. A right to either elect or dismiss a certain member of an elected body can now be tied to a specific share when the foundation documents so stipulate.

authors: Vladimír Čížek and Jiří Marek