Overview Of The Recent Important Changes In Czech Legislation

September 2018 - We have prepared a brief overview of important changes in Czech legislation and the most significant high court judicial decisions issued over the past few months that might affect your operations in the Czech Republic or that may be of interest to you.

Changes in company law and corporate governance

Concurrency of employment relationship and performance of the executive director's office. After many years of back and forth, the Czech Supreme Court has resolved that it is possible for an executive director to also have an employment contract with the company, under which he/she performs business management tasks. Nevertheless, the employment contract does not establish an employment relationship between the parties, and some serious grey areas remain where the rights and obligations between the parties to the employment contract are unclear. Therefore, we recommend avoiding a situation in which an employment contract is in place between an executive director and the company. Instead, the parties should enter into an agreement on performance of the executive director's office, covering all parties' interests. Executive directors and proxy holders acting together. The Czech Supreme Court has decided that a provision in the company bylaws that requires executive directors and proxies to act together on behalf of a company is void. Circular resolutions. In cases when general meeting minutes on certain resolutions (e.g. changes to a company's bylaws) must be executed in the form of an official public deed (i.e. notářský zápis in Czech), this formal requirement does not apply to individual votes by shareholders in the event of a circular resolution (known in Czech as a per-rollam decision). Each voting shareholder must certify the signature on his/her reply (e.g. on a letter by which he/she votes). The resolution as a whole should then confirmed by a notary at the end of the circular resolution proceedings. Criminal liability of legal entities. The Supreme Public Prosecutor's Office has issued methodology on corporate compliance with the Act on Criminal Liability of Legal Entities that outlines compliance issues and the possibility of exculpation, which allows a corporation to shield itself against unlawful conduct of an individual acting on behalf of that company (e.g. an employee, executive, etc.).

Changes in contractual matters and various business-related law

Pre-emptive right of co-owners of a real estate property. A change...