Measures to reduce impact of the COVID-19 epidemic on legal entities

At the time of the COVID-19 epidemic, it may be difficult to call a general meeting, or a meeting of the supervisory board, especially if the memorandum of association or the statutes do not allow the option of remote voting – the so-called voting per rollam. Such a situation is problematic especially in cases, when a financial statement needs to be approved or a member of a company body needs to be re-elected, because his term in office is ending. The government endeavoured to alleviate the difficult position of legal entities in relation to the above, and it therefore approved a draft bill on 31 March 2020 on some measures to reduce the impact of the COVID-19 epidemic on persons participating in judicial proceedings, aggrieved parties, victims of criminal acts and legal entities and on a change of the insolvency act and the enforcement code (hereinafter the “Act”).

What are the proposed changes relating to corporate aspects of legal entities?

Decision-making of bodies of legal entities – simplification and enabling of remote decision-making

• A body of a legal entity may decide remotely in written form or using technical devices (in a regularly called meeting using remote communication - e.g. Skype, Microsoft Teams, WebEx etc.), although the memorandum of association or the statutes do not allow it.
• If the law or the instrument of incorporation do not stipulate the conditions of decision-making, they will be set by the statutory body in case of the highest body, and in case of another body, this body will specify the conditions itself.

Members of elected bodies – term in office

• If the term in office of a member of an elected body of a legal entity ends after the time the emergency measure was in effect or within one month after its end, his term in office is automatically prolonged until the time when 3 months have elapsed after the end of the emergency measure during the COVID-19 epidemic.
• If a member of an elected body delivers his disagreement with prolongation of the term in office prior to the end of the term in office to the legal entity, his term in office is not prolonged.
• The law enables so-called co-option even in case the memorandum of association or the statutes do not allow it.
• If the term in office of a member ended in the period between the date of adoption of emergency measures during the COVID-19 epidemic and the date on which the Act took effect and no new member has been appointed, it is possible to renew the office of this member; but the respective member needs to agree with this. The office will be renewed before three months have elapsed from the end of the emergency measure during the COVID-19 epidemic.

Discussion of the financial statement – prolongation of deadline

• If the statutory deadline for discussing the regular financial statement of a limited liability company, joint stock company or a cooperative should have expired earlier than 3 months after the end of the emergency measure during the COVID-19 epidemic, it will expire only 3 months after the end of this measure, but by 31 December 2020 at the latest.

Karel Nejtek
David Fafián