On 2 February 2022, a bill amending certain laws in connection with the use of digital tools and procedures in company law and the functioning of public registers was approved by the Government and submitted to the Chamber of Deputies as parliamentary print No. 139/0. The proposal aims to transpose Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 as regards the use of digital tools and procedures in company law. In particular, the purpose of the Directive is to enable fully electronic creation of capital companies (limited liability companies at minimum) and to enable the use of digital tools throughout the life of the company.

The proposal provides for the possibility for business corporations to enter data in the public register and deposit documents in the collection of documents fully electronically and to establish branches in other Member States by fully electronic means. The scope of publicly and free of charge accessible data on all capital companies registered in the Member States of the European Union on websites and the exchange of information between the company registers of the Member States is also enhanced. 

The proposal also supports electronic communication with registry courts, the scope of the data to be entered (e.g. the possibility to publish the delivery address instead of the address of the place of residence or domicile or the registration of organisational units of foreign foundations and foreign institutes) or the avoidance of conflicts between identical entries of registry courts and notaries.

At the same time, the proposal introduces the possibility for newly established legal entities to choose at what stage of the establishment process they will declare a trade or apply for a licence, whether before or after filing a proposal for registration of the legal entity in the company register. Entry in the company register will thus not be tied to obtaining a trade licence.

The proposal redefines incapacity to perform the function of a member of an elected body of a business corporation. Until now, the definition of integrity under the Trade Licensing Act has been used for the purposes of holding office. There are now three grounds for ineligibility. They are based on a decision of a Czech or foreign public authority prohibiting the person in question from exercising his or her function, as well as on grounds related to insolvency proceedings or on grounds consisting in a conviction for selected criminal offences. Furthermore, it is proposed to establish a non-public register of persons excluded from holding the office of a member of an elected body of a business corporation, which is anticipated by the European regulation. The purpose of this register is to enable the exchange of information between Member States on persons, who are prevented from exercising their functions. 

This bill is only at the very beginning of the legislative process, so it cannot be ruled out that it may undergo some changes. The proposed effective date is 1 July 2022, while the latest date for the implementation of the EU Directive into Czech law is 1 August 2023.

Author: Veronika Odrobinová, Albert Rychecký