Czechia: Changed obstacles for the performance in office as the statutory (executive) body and other changes in connection with the “digital amendment”

Effective as of 1 July 2023, Act No. 416/2002 Coll. – an amendment to the Corporations Act and related laws known as the “digital amendment” – brings changes with respect to the obstacles to performance in office as the statutory body.

It continues to be the case that directors must have full legal capacity. In addition, as of 1 July 2023, individuals who are to act as directors must not be subject to any of the following obstacles – which have been substantially rephrased, compared to the previous legal regime (i.e., in particular, acting as director is no longer tied to “integrity” as defined by the Trade Licensing Act, or to the absence of circumstances under which an independent tradesperson would be enjoined from pursuing their trade):

  • (i) Prohibition of acting as member of a management, supervisory, or administrative body of a legal entity, imposed by a decision that was handed down in the Czech Republic or a third country;
  • (ii) Prohibition to pursue business activities within the same line as the company, imposed by a decision that was handed down in the Czech Republic or a third country;
  • (iii) final conviction of a crime from a list of criminal offenses (mostly white-collar / financial crime), irrespective of whether or not there exists a link to the company’s line of business, with the judgment having been handed down in the Czech Republic or a third country;
  • (iv) decision whereby bankruptcy is declared over the respective individual’s estate, handed down in the Czech Republic or a third country.

In connection with the changed obstacles to acting as directors, a list of individuals who are disqualified will be maintained in the Czech Republic and other EU and EEA states, whereas this list can be accessed by courts and notaries in connection with the execution of entries in the Commercial Register. This does away with the need to produce an extract from the criminal register for persons who should be entered in the Commercial Register as directors – including foreign nationals. According to Sec. 13 of the Public Registers Act, the qualification to act as a director shall be proven by submitting a sworn declaration.

Given the amendment to Sec. 13 of the Public Registers Act whereby the provision is cancelled (effective as of 31 December 2022) which required companies to procure their business licenses no later than as at the day on which they are being entered into the Commercial Register, it is newly possible to have business licenses (and lines of business / activities) entered in the Commercial Register as long as they are referenced in the foundation charter of the company, even if the company holds no license for them. Of course, this does nothing to change the fact that the company must obtain the relevant licenses and concessions before it actually engages in the relevant activities. This also applies to trades for which no license is required – these must still be formally notified to the Trade Licensing Office.

Another rather important change: Effective as of 1 July 2024, public registers will show not only the date on which a given entry was made, but also the date on which the entry was visibly made available to third parties. The significance of this change is primarily related to the publication of certain information under government decree No. 351/2013 Coll., according to which the data entered in public registers, and the documents lodged in the collection of deeds, only qualify as published once they can be accessed remotely.

Act No. 416/2022 Coll., on the amendment of certain laws in connection with the use of digital tools and procedures in the law of companies and with the operation of public registers

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