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01 February 2021
roadmap
czech republic

General meeting decision-making process to become more flexible

Czech Act No. 90/2012 Coll., on Business Corporations ("BCA") provides that the options for making decisions within the general meeting or outside the general meeting by letter (per rollam) using technical means (e.g. Webex or Skype electronic conferencing tools) must be permitted by the company's constitutional document.

To use such technical means, the conditions for voting/decision-making must allow the person voting at the general meeting and the shares to which the voting right pertains to be properly identified and authenticated.

In practical terms, the procedure is extremely burdensome for general meetings, especially where decisions must be executed in the form of a notarial deed (notářký zápis) by a Czech notary public. It is entirely unavailable for companies with a sole shareholder structure.

COVID-related mitigations

To tackle the disruptions caused by COVID-19, a newly adopted LEX COVID has been introduced permitting decision-making by technical means even where this was not previously permitted in the company's constitutional document.

If the company's constitutional document does not set out the conditions for decision-making by technical means and an applicable law does not provide for these conditions either (unlike decision-making by letter, decision-making by technical means is mostly unregulated), these conditions will be set out by the statutory body (e.g. board of directors or executive director) in relation to supreme corporate bodies (e.g. general meeting) or the corporate body itself in relation to other corporate bodies. These conditions need to be communicated to all the members of the respective corporate body well in advance.

These rules will be in place during the COVID-19 pandemic, although until no later than 31 December 2020.

Further simplification

Effective 1 January 2021, an amendment to the BCA as well as an amendment to the Czech Notarial Code, Act No. 358/1992 Coll. ("CNC") will further simplify the process of adopting decisions at general meetings.
Under the CNC a public notary will be allowed to seek proof of identity of the parties executing the notarial deed (e.g. a chairman of the general meeting) without their physical presence using technical means for distance identification and authentication.

Such identification and authentication will be performed by videoconference, the party's identity being verified by their personal identification document equipped with an electronic chip and having the status of a public document (e.g. ID card). For cross-border identification purposes, personal identification documents recognised under eIDAS1 will also be available.

Furthermore, public notaries will be allowed to execute notarial deeds in electronic form. The certified electronic signatures of the parties will need to be attached.

All this means a further lifting of the current formal rules applicable to the execution of corporate decisions in the form of a notarial deed. We can therefore expect many more corporate decisions requiring the form of a notarial deed (e.g. changes to constitutional documents, incorporation, registered capital changes, etc.) to be executed via technical means allowing remote identification.

Conclusion

The upcoming changes are a breakthrough in how general meetings before a public notary will be conducted. Nevertheless, the participants should still consider the presence of a Czech attorney (representing the participants, conducting the meeting as a chairman, etc.), since these distance meetings will still be governed by Czech law and will need to overcome some initial obstacles before they evolve into the standard solution.

 

1Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC

authors: Vladimír Čížek, Jiří Marek

 

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Vladimír
Čížek

Partner

czech republic

co-authors