Important amendments to Commercial Code and Accounting Act01/03/06 / cata_legal-tax-update

On March 8, 2006, two legal regulations became simultaneously valid and effective which significantly amend the Commercial Code and the Accounting Act and have considerable practical impact in the area of law for commercial companies.

Amendment to Section 67a of the Commercial Code regulating disposals with the company’s enterprise or assets

Act No. 56/2006, Coll., amends Act No. 256/2004, Coll., the Capital Market Trading Act and other related acts, including the Commercial Code. In the above Act, the provisions of Section 67a of the Commercial Code are replaced by new wording pursuant to which consent by participants of the General Meeting must be granted to:

  • an agreement by which an enterprise or a part thereof is transferred;
  • an agreement on lease of an enterprise or a part thereof; and
  • an agreement establishing a lien on an enterprise or a part thereof.

Such consent in the future will be the single condition for realizing agreements through which disposal with the enterprise occurs. The related provisions on merger or division thus fully cease to exist, together with a number of earlier necessary formalities such as reports by managing bodies and expert opinions, among others. Two-thirds (2/3) of the votes of all participants will be necessary for granting consent to a contractual disposal with the enterprise in the case of limited liability companies, and two-thirds (2/3) of the votes of present shareholders in the case of joint stock companies.

This regulation also brings a new form of structuring companies in the Commercial Code called “split by demerger” (Section 69, subsection 4). Split by demerger is possible through the following ways:

  • split by demerger by establishing new companies;
  • split by demerger by merger; or
  • split by demerger through a combination of the above two ways.

In the split by demerger the split company is not terminated or dissolved but rather, the allocated portion of its assets passes to an existing successor company or companies (“demerger by merger”) or passes to a newly established successor company or companies (“demerger by establishing new companies”) and the participants of the split company become the participants of the successor company or companies. The existing provisions on splitting are appropriately applied to such procedure. The assets determined for allocation need not be specified in the project or agreement on splitting, but it is sufficient to precisely set forth the method of determination thereof. Only the demerged portion of the assets must be valued by an expert opinion.

Change in convening the General Meeting and the mandatory publication of final financial statements in the Commercial Bulletin

The Amendment to Act No. 365/2000, Coll., on Information Systems of Public Administration and on a Change to Certain Other Acts, is a newly approved regulation which, according to available information, should become valid and effective in the near future. This act fundamentally amends the provisions of Section 184, subsection 4 of the Commercial Code so that in the case of joint stock companies with bearer shares, in addition to the obligation to convene the General Meeting through a nationwide distributed daily, there is an obligation to announce that the General Meeting is being held in the Commercial Bulletin.

The above act also amends the Accounting Act (No. 563/1991, Coll.) in Section 21a, subsection 4 where a new obligation is stipulated for accounting units that pursuant to Section 20 of the same act must have final financial statements verified by an auditor and publish the entire final financial statements in the Commercial Bulletin. The obligation to deposit them in the Document Register of the Register Court is not affected thereby.