06.01.2025 15:00
On 11 December 2024, the Supreme Court of the Czech Republic published a resolution, Case No. 27 Cdo 3391/2023, in which it held that all commercial corporations are obliged to define the objects of their business registered in the Commercial Register in such a way as to reflect the founding legal deeds, such as the Articles of Association or by-laws.
According to the Supreme Court, the content of the information entered in a public register must be discernible from the public register itself. Therefore, the purpose of the business cannot be registered merely, for example, by referencing other documents, registers or language of a law, even if these are publicly available sources. At the same time, the content of the entry in the public register must correspond to the content of the founding legal deeds (Memorandum of Association, Articles of Association, by-laws).
The decision of the Supreme Court will affect a large number of companies which have, over the last several decades, defined their business in their founding deeds by referencing the definitions in the Trade Licensing Act. According to the interpretation of the Supreme Court of the Czech Republic, these companies should now register all types of trades which, according to the referenced sections of the Trade Licensing Act, are included in the purpose of their business. In practice, this requirement implies the need to register many dozens of different types of trade which the relevant corporation does not operate and has never considered operating.
The business corporations may be invited by the registry court itself to make such a registration, and, in case of a failure to do so, the company may, in the extreme case, be ordered to be wound-up.
We will be happy to assist you with updating the incorporation documents and their registration in the Commercial Register.