What changes brings the amendment to Commercial Code (act No. 351/2011 Coll.)?

Contemplated effectiveness: January 01 2012

Amendment to Commercial Code (act No. 351/2011 Coll.) introduces in addition to changes related to Commercial Register also changes, which have significant impact on commercial practice.

i. Authorization to Management

The amendment establishes into the Commercial Code new Section 66d, which enables company’s statutory body to encharge third party with management of company’s affairs (complete or partial). Management of company’s affairs may be carried out also in a employment relationship. Combination of employment and membership of statutory body is also possible.

However authorization to management of company’s affairs is not limitless and does not include  participation in statutory body’s session, decision-making on primary focus of company’s affairs management or other actions, which Commercial Code entrusts exclusively to competence of statutory body.

ii. Renouncement or restriction of claim for damages

Next newcomer is an option to renounce or restrict a claim for damages even before breach of a obligation, which could result in creation of damage, occurs. Neither renouncement nor restriction of claim for damages, however, apply to damage caused on purpouse.

iii. Duty of having legal ground for use of premises registered as office or place of business

The entrepreneur is newly obliged to have a legal ground for use of premises, which are registered in Commercial Register (or another statutory register in case of entrepreneurs – natural person) as place of business. This obligation lasts as long as the premises are registered for above mentioned usage.

Nonobservance of this obligation can result even to judicial liquidation of company or, in case of entrepreneur – natural person, cancellation of trade licence by Trades Registry.

This amendment intends to reduce cases in which (even against owner’s will) premises serve as registered office or place of business even for tens of companies at once.

iv. Amendment to Section 196a

The objective of modification of Section 196a is elimination of unclearnesses, which occured by application of this provision. In accordance with judicature of Supreme Court of the Czech Republic the necessity of expert valuation of security was removed.

There is also no longer a condition of security  granted by company for obligation of persons mentioned in subsection 1 and 2 to be in compliance with common trade conditions. Newly a assent of general meeting shall be sufficient. Assent of general meeting is still not required if person in control is securing an obligationed of person controlled by her.

The amendment also establishes provision of subsection 6, which extends application of provision in Section 446 of Commercial Code also to transfers of equity within the scope of Section 196a. Newly if there was a transfer of equity, which was inconsistent with subsections 1 to 3 of Section 196a and this equity was transferred further, the new acquirer becomes owner of this equity, if he acquired the equity in bona fide. This provision is applicable also for subsequent transfers within scope of the Civil Code.