Financial statement on the way to the Collection of Documents?

The ministry of justice presented a draft bill on 23 February 2018, which amends act no. 90/2012 Coll., on trade corporations and some other acts. These other acts also include act 304/2013 Sb., on public registers of legal entities and natural persons, where this draft bill is to bring a new tool for enforcement of obligations, which also includes filing documents (regular or extraordinary financial statement) into the Collection of Documents. The amendment also aims at resolving the issue of business corporations, which generate no economic activity and exist only formally (“empty shells”).

A disciplinary fine up to CZK 100,000 can currently be imposed for failure to fulfil the above-mentioned duty, and if this is repeated, the court maintaining the register may initiate a proceeding for winding-up of the registered entity with liquidation. The option of winding-up of the entity even without liquidation is being proposed as a new tool, if it turns out that the assets of the company do not suffice for covering the costs of liquidation at minimum.

Based on settlement of the comments to the amendment, it should be possible to use the process of winding-up a business corporation without liquidation only in case a company does not present a regular or extraordinary financial statement for a minimum of 2 subsequent account periods for filing in the Collection of Documents, and at the same time it is “contactless”, meaning that it is not possible to deliver summons requesting rectification of this fact, either.

We will continue to monitor further development of this amendment for you.