Jana Shumakova | 12.11.2024
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The concurrence of functions keeps coming back as a “hot issue” in the Czech Republic. The general practice based on court decisions was to declare employment contracts of statutory body members invalid if their work responsibilities coincided with their statutory body tasks. From 2012 the amendment of the Commercial Code explicitly allowed the performance of the statutory body function along with the employment. From 2014 new questions arose with the new Act on Corporations as it (again) lacks any treatment of the concurrence of functions. In 2015 the Supreme Court of the Czech Republic surprisingly issued a decision allowing the concurrence of a statutory body function (vice-chairman of the board of directors) and employment (sales director). The court explained that the activities of the sales director (responsibility for sales and marketing activities where these were listed in detail in the decision) were different from management-related activities that are usually assigned to the board of directors. As the court decision is based on “old” legislation effective before 2014 and the court decided differently (pro-concurrence of functions) for the first time in such a case, it is recommended that companies avoid the risk of the concurrence of functions by not concluding employment contracts if any activities of the statutory body coincide with work responsibilities.