With the anticipated effectiveness from 1 October 2017, several significant changes should be introduced in the Commercial Code (Act No. 513/1991 Coll., the Commercial Code as amended) and other related legislation.
An upcoming amendment of the Commercial Code (“Amendment”) will be focused mainly on the following:
The proposed changes substantially expand the liability of statutory representatives, members of statutory bodies, liquidators or other statutory representatives (“Representative”) of the companies, mainly:
The burden of proof in these proceedings is borne by the Representative (the person who is subject to the discharge proceeding) who is required to prove that the requirements for his / her discharging has not occurred, or that he / she has proceeded with due care.
The Amendment further introduces some additional requirements for intra-group business transactions by establishment of a statutory liability of the controlling person (i.e. a person directly or indirectly holding a controlling ownership interest with the most voting rights attached to it) in connection with the liabilities of the company in crisis, especially if the controlled company (a) has assumed liabilities for the benefit of the controlling person, (b) has acceded to its commitment or has provided for it a different security, or (c) has entered into a contract in its favor which resulted in impairment of the claim of the controlled entity's creditor. Such liability arises to the extent that the recoverability of the claim has been deteriorated.
With regard to mergers of companies, the Amendment introduces several new obligations and constraints, in particular:
The Amendment also introduces a ban on the transfer of a business share in a limited liability company which:
The Amendment finally introduces the concept of a capital fund of a company, which consists of:
The Commercial Code in the proposed wording expressly provides for the possibility not only to create but also to use capital funds under the following conditions:
This alert does not contain an exhaustive overview of all proposed changes. Its aim is to provide an approximate summary of the nature and extent of legislative changes that can be expected in the nearest future.
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