rutland ježek, tschechische Rechtsanwaltskanzlei in Czech Bussines & Trade 1/2015 zum Thema tschechische Aktiengesellschaft
Innovations in the Legal Regulation of Czech Joint-stock Companies
In 2014, joint-stock companies underwent fundamental recodification changes. Since 1 January 2014, the legal regulation of joint-stock companies has been contained in the Act on Business Corporations, as well as in the new Civil Code, and provides entrepreneurs with the possibility of adjusting this type of a capital business company more flexibly.
The basic features of a joint-stock company remain unchanged: a joint-stock company is still founded by statutes in the form of a notarial deed, and its registered capital must amount to a minimum of 2 million CZK. The registered capital is divided into shares that may be both bearer and registered shares, and a shareholder is not liable for the company's obligations. Fundamental decisions of shareholders adopted at a General Meeting, such as e.g. an amendment to the statutes or a change in the registered capital, still require the consent of a qualified majority of the shareholders present. What then are the significant innovations?
Incorporation of a Joint-stock Company and Shares
A joint-stock company may now be founded by one individual. The law no longer regulates the foundation by a public offering of shares, since this manner was almost never used in practice. Any subsequent amendment to the statutes by the General Meeting must be expressly permitted in the statutes, otherwise such amendment is only possible by agreement among all shareholders.
In addition to ordinary and priority shares, the company may now also issue other classes of shares bearing special rights, such as, for instance, a fixed, differing or subordinated share in profits or in the liquidation balance. Such special rights and their content must be determined in the statutes of the company. The company may now also issue no-par value shares, i.e. shares that have no nominal value and represent the same proportions of the company's registered capital. Their advantage is an even spread of the share in the registered capital and the facilitation of future changes in the registered capital, which otherwise result in the necessary exchange of shares for new shares. Also the requisite signature on the shares has been simplified: it may be now replaced with its imprint, if the share concerned has elements protecting it from falsification. A shareholder may also request the company to exchange damaged shares, and thus, if applicable, no complex redemption of such shares via a court is required. The statutes may also set out that a share in profits will be paid in a manner other than monetary, e.g. by company products or securities.
A noticeable facilitation of the decision-making process for the company and its shareholders is the possibility to anchor in the statutes the decision-making "per rollam", during which shareholders cast votes via correspondence, without the necessity of attending the General Meeting. The statutes may also reduce the minimum level of quorum of the General Meeting below 30% and adjust the "cumulative" voting for the election of members of the company's bodies, which places minority shareholders at an advantage. A notice of the General Meeting must be published on the company's website, and the statutes may further regulate a suitable form of delivery of the notice other than by post (e.g. by e-mail).
In order to invoke the invalidity of a resolution of the General Meeting, a shareholder must submit a protest at the General Meeting. An exception is in the event of the protest not having been entered in the Minutes due to a mistake of the Minutes clerk or Chairman of the General Meeting, or when the person raising the protest was not present at the General Meeting, or when the reasons for the invalidity of the General Meeting could not be established at that General Meeting.
Bodies of a Joint-stock Company
Shareholders may now select between a monistic or dualistic internal structure. The previous dualistic model, which requires the existence of a Board of Directors and Supervisory Board, no longer requires a minimum number of members of these bodies, and the Supervisory Board may have only one member. However, in view of the incompatibility of posts (offices) in such bodies, it is necessary to have at least two persons to fill such posts. The obligation to have 1/3 of members of the Supervisory Board elected by employees has been revoked without any replacement.
The monistic system consists of a Statutory Director as the statutory body, and an Administrative Board that appoints the Statutory Director and monitors the execution of his/ her post. The Administrative Board may have one member, who may also be the statutory Director, and thus one person suffices for filling both posts in a company with a monistic structure. Such structure may be practical e.g. for a company with one shareholder, who will concurrently be Chairman of the Administrative Board and Statutory Director.
A member of the bodies of a joint-stock company may also be a legal entity. The post of Chairman of the Administrative Board and Statutory Director may only be executed by an individual.
Commencing on 1 January 2014, joint-stock companies are obliged to obtain their websites on which must be published the business name, registered office, Corporate ID No., entry in the Commercial Register, Notices of the General Meeting, and other data set out by law.
Transfer of Property between Related Entities
The obligation to obtain a valuation for a transaction between related entities, the value of which exceeds 10% of the registered capital of the company, which met with great difficulties in practice, has been fundamentally limited. This obligation now applies to only 2 years from the incorporation of the company, and only to a transfer of property from a shareholder to the company. A valuating expert for such transaction does not have to be appointed by a court; an appointment by the Board of Directors suffices. Any other transactions between related entities will be subject to the general principles governing the conflict of interest, setting the obligation of the persons concerned to inform the applicable body of the company and giving such body the possibility of prohibiting the relevant transaction. In the event of a breach of such duties, the general liability for incurred damage will apply.
Joint-stock companies have been affected by other changes that are valid in general for all Czech capital companies. The statutory reserve fund has been cancelled and no longer constitutes a necessary part of the statutes. Advances for a share in profits are possible, subject to certain conditions, as is the so-called financial assistance. Remuneration of members of the company's bodies must now be agreed in writing and approved by the company's supreme body; if such conditions are not fulfilled, the execution of the post of a member of the joint-stock company's body is performed without remuneration, unlike the previous regulation that awarded the entitlement to a customary remuneration.
With a view of these and other extensive changes that have occurred in the legal regulation of joint-stock companies in 2014, one may believe that the actual practical application of changes will take much longer than the end of the statutory deadline for adjusting the statutes of the joint-stock company and remuneration of members of the companies' bodies, i.e. 30 June 2014.