Czech Republic: New rules for convening the general meeting as of 1 January 2014
The Corporations Act which came into force on 1 January 2014 imposes new requirements on the content of the invitation to the general meetings of limited liability companies (“s.r.o.”) and joint-stock companies (“a.s.”), and in the case of the latter also on the form in which the invitation is to be published.
Limited liability companies convene the general meeting by way of a written invitation which must be delivered to the shareholders (members) at least 15 days in advance. The memorandum of association may stipulate rules that deviate from this statutory procedure (e.g. allowing for an invitation via e-mail, or adjusting the time period, so that it is sufficient for the invitation to be sent, rather than to be delivered, within the set time period). The invitation must state the date, venue, and agenda of the general meeting. A new rule requires that each item on the agenda include the proposed wording for the resolution to be passed by the general meeting. If the memorandum of association anticipates technology-assisted voting at the general meeting, the invitation must specify the terms of such voting in more detail.
The language of the law is somewhat ambiguous on this point, but we tend to believe that limited liability companies are not required to publish the invitation to the general meeting on the internet, even if they entertain their own website.
Shareholders may waive their right to insist on a timely invitation in compliance with the formal requirements.
Joint-stock companies do have to publish the invitation to the general meeting on their website (where it must be accessible up until the moment in which the general meeting takes place), but also send it to the shareholders’ address of record, at least 30 days in advance. The articles of association may replace the distribution to the shareholders’ addresses with an alternative method of notification.
The invitation to the general meeting of a joint-stock company must newly include – aside from the company’s business name and seat, the venue, date, and hour of the meeting, the agenda and the reference (cut-off) date for the right to attend (if any) – also the following information in particular:
(i) for each item on the agenda: the proposed wording of the resolution to be passed by the general meeting, including an explanatory statement of the reason for the proposal, or – if no resolution is expected to be passed in connection with the given item on the agenda – a statement by the board of directors expressing its position on the given issue; and
(ii) if members to the company’s bodies or corporate officers are to be elected: the names and identity of the nominees.
If the statutory requirements associated with convening the general meeting are not met, then the general meeting can only take place if all shareholders so agree (and even then only if the articles of association allow for it).
If a joint-stock company fails to honor the duty to publish the invitation to the general meeting on its website, it exposes itself to the risk of a fine of up to CZK 100’000; in addition, there is the risk that resolutions adopted at the given general meeting may be challenged in court by those who seek their nullification.