New Commercial Register Act brings administrative changes

Abolition of the two‑phase registration of free trades

The process of establishing a company will be simplified and shortened. Currently, when a new company is being incorporated and its business activity is considered as an free (unregulated) trade, this trade must first be notified to the Trade Register.

For the purposes of issuing a certificate for a free trade, it is not necessary to prove any professional or qualification competence, unlike in the case of regulated trades. Only after the trade licence has been issued can an application be filed for the registration of the company in the Commercial Register.

For free trades, notification of the trade is therefore an administratively redundant step. Going forward, free trades will be notified simultaneously with the registration of a new company in the Commercial Register. By eliminating the two‑phase process, the establishment of a company becomes simpler and faster.

Interconnection of registers

Public administration is undergoing a process of digitalisation, and communication with state authorities is moving online. State authorities are now able to efficiently search and verify required data in other records administered by the state. The Commercial Register is no exception and, once the new Act becomes effective, its interconnection with other registers will increase.

In practice, this will simplify procedures for entrepreneurs. Currently, certain data required for incorporation and corporate changes must be evidenced by various documents. If such documents are not available or cannot be obtained by the entrepreneur, an affidavit is submitted to the Commercial Register instead.

Under the new rules, so‑called reference registers will be mandatorily interconnected, which will save entrepreneurs time and administrative effort when submitting documents that the state can obtain from interconnected registers. The registry court or registrar will be obliged to verify data that follow from other registers, such as the Register of Public Sector Partners.

Legal binding effect of registered data

As before, data entered in the Commercial Register will remain publicly accessible. Newly, however, data registered and published in this way will be legally binding. Until now, information commonly available in the Commercial Register was of a rather informative nature, and a standard extract was required for legal acts. Under the new rules, data recorded in the Commercial Register will automatically be legally binding and usable for legal acts.

In business transactions, entrepreneurs will therefore no longer be required by law to submit extracts from the Commercial Register, although the option to obtain such an extract will remain. It is questionable how the business community, especially large corporations such as banks, which often have stricter internal requirements than those imposed by law, will react. It is possible that they will continue to require standard Commercial Register extracts for use in legal acts.

Increase in fines

The registration of changes and new facts in the Commercial Register is associated with liability, primarily on the part of individuals authorised to act on behalf of the entrepreneur, typically statutory representatives. One of the basic obligations is to submit a motion to register a change in due time, i.e. within 30 days from the date on which the change occurred (for example, within 30 days from the adoption of a shareholder’s decision).

The maximum amount of the fine for breach of obligations will increase from the current EUR 3,310 to EUR 4,000. Only registry courts have the right to impose fines. Registrars (notaries), however, are obliged to notify the court of facts that may give rise to the imposition of fines. In practice, such fines have been imposed only very rarely, and it remains to be seen whether the approach to imposing fines will change after the amendment of the law.