The recent recodification of private law in the Czech Republic has led to the necessity to establish rules for the application of the new law to existing legal relations. These rules are contained in the transitional provisions.
As regards commercial companies and cooperatives, we must take into account the transitional provisions contained in the new Civil Code regarding legal persons as well as those contained in the Law on Commercial Companies, that specify the general rules. In particular, with regard to obligations deriving from transitional provisions for existing commercial companies, it is necessary to distinguish two instances:
1) The obligatory application of mandatory provisions of law and relative obligation to adapt the provisions to internal documentation – the latter in fact is set out in the Civil Code as well as in the Law on Commercial Companies
2) The opt-in possibility, i.e. the faculty to decide whether to submit entirely to the new rules, regulated only by the Law on Commercial Companies
Mandatory provisions of law apply to operations of commercial companies and cooperatives from the instant in which the Law on Commercial Companies enters into force, so that any provisions in the statute that are in contrast with them will not be applied.
Furthermore, commercial companies have been obliged to adapt the provisions, regarding their internal documentation, to the mandatory provisions of the Law on Commercial Companies by 01/07/2014. This obligation involves primarily the corporate statute or social contract, but the same rule applies also to other internal documentation. If the company does not comply with this requirement – i.e. if it does not adapt the statute or the social contract even after a request by the Court that is competent for managing the Registry of Companies – it will risk being cancelled and ending up in liquidation.
Particularly relevant are the provisional measures regarding contracts for the exercise of statutory board functions. The law on Commercial Companies states that with regard to remuneration – if no contractual provisions have been set down for these contracts, the exercise of the function is to be considered free of charge.
Commercial companies have an opt-in possibility to decide whether to submit completely to the new rules by 01/01/2016. Until the adoption of the decision, company operations will be regulated in some respects according to the old Commercial Code, and for other aspects by the Law on Commercial Companies and particularly by coercive forms of provisions. This state of things, however, is creating a certain amount of uncertainty for commercial companies, because the range of coercive forms of provisions, i.e. those that cannot be derogated from, might vary in view of the different interpretation of the norms themselves.
The development of corresponding jurisprudence may take some time and it is impossible to determine how long it will take. However, serious attempts are actually being made to find the best interpretative ways by means of discussion on the various aspects of the new legislation.
The opt-in provision is a subject of debate, because it has not been defined clearly whether it is a possibility or an obligation and if a company may submit completely to the new rules after the established time.
As stated previously, commercial companies have two options on how to meet their obligations under the new law – either to proceed with the revision of the currently valid statute or to submit completely to the new rules and draw up a completely new statute. In the case of a lack of choice, it is the courts that will require it. However, by not complying with the request, the company risks going into liquidation, initiated ex officio by the court and managed by a liquidator appointed by the same court.
Mgr. Martin Holub, advokát
Mgr. Lucie Miškovská
Law Firm Safra & partneři