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What will change in a monistic joint-stock company, incorporated according to Czech Law, after the amendment to the Business Corporations Act?
When will the amendment to the Czech Business Corporations Act (“BCA”) be effective?
The majority of changes incorporated by the amendment of BCA will come into effect on 1st January 2021.
According to the existing legislation, two bodies are required to be established in a monistic joint stock company, namely the Administrative Board (in Czech “správní rada”) and the Statutory Director (in Czech “statutární ředitel”).
What statutory bodies will form the internal corporate structure in a monistic joint stock company when the amendment comes into force?
The main change will be the dissolution of the body of statutory director. Under the amendedment, the sole statutory body of a monistic joint stock company will be the Administrative Board. It shall have three members, unless otherwise provided by the company´s Articles of Association. After the amendment of the BCA comes into effect, the position and powers of the statutory director will be transferred to the Administrative Board, which will become the true and only statutory body of the monistic joint-stock company with management and control functions. The function of the Chairman of the Administrative Board will also be abolished.
Is it possible to assign different business management roles to the individual members of the Administrative Board after the amendment to BCA?
No, it will not be possible to divide the powers of business management among the Administrative board members according to certain areas of focus. The Administrative Board shall be responsible for business management and accounting of the company, and it shall be also liable for submission of the financial statements at the General Meeting of the company for approval, and for proposal of distribution of profits of the company.
Who elects the members of the Administrative Board of Trustees after the amendment to BCA comes into effect?
New members of the Administrative Board are explicitly elected and removed by the General Meeting, unless the Articles of Association stipulate that the right to appoint or remove one or more members of the Administrative Board is attached to a share.
What about employee participation in the Administrative Board after the amendment to BCA?
The amendment to the BCA does not provide for the employee participation in the Administrative Board (monistic system).
What is the deadline for the monistic joint-stock companies to bring their Articles of Association in compliance with the amendment?
All the monistic joint-stock companies concerned are obliged to suitably modify their statutes to be in compliance with the amended version of the BCA no later than 1 year from the effective date of the amendment, i.e., by January 1, 2022. After that date, all parts of the statutes that conflict with the amendment shall cease to be valid and effective.
If you are planning to transform your company to the monistic internal structure, the best time is to do it from 1.1.2021. If you already have a monistic joint stock company, you need to harmonize the statutes from 1.1.2021 onwards.
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Stewarts
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Stewarts
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