Company as a Member of the Board of another Company – New Conditions?

Business activities in the Czech Republic are often organized as a group of companies. Not every individual company needs a person to act as managing director. This position can also be filled by a company. Under Czech law a company that is member of the elected body of another company shall authorise a (natural) person to represent it. Otherwise, this company shall be represented by a member of its statutory body.

According to a draft amendment of the Act on Business Corporations presented by the Government to the Chamber of Deputies, the company being a member of the elected body of a capital company or a cooperative shall without undue delay authorise one (natural) person (that meets the requirements for performance of the function set for the member of the elected body itself), to represent it in this body. In this connection, a registration of the company as the member of the elected body into the Commercial Register would not be possible without registration of the representative of such legal person into the Commercial Register. According to the draft amendment, if the company does not authorise its representative and if such representative is not registered into the Commercial Register within the period of 3 months from the day when its function commenced, the function of the company shall terminate It is important to mention that this would also apply to companies that are already members of such bodies. They would also be obliged to authorise and register one (natural) person within 3 months. And if not, the function would terminate.

As this may seriously affect your business, it is highly recommended to keep a close eye on development of the legislative process relating to this draft amendment.

 

JT

Mgr. Bc. Jaroslava Trojanová