Six main changes in the Commercial Code
Changes in the liquidation process of companies and co-operatives, introduction of the deposit for liquidation, winding-up of companies due to overdue filing of their financial statement into the Collection of Deeds or a change in the scope of data registered with the Commercial Register. Those are some of the main changes brought by the amendment of the Commercial Code (Act No. 513/1991 Coll. Commercial Code as amended) and related legal acts aimed at streamlining of the liquidation process of companies and improving the operation of the Commercial Register.
The adopted amendment will take effect partially as of 1 January 2020 and partially as of 1 October 2020. However, the most important changes concerning the Commercial Register and the Commercial Code will become effective as of 1 October 2020.
The amendment brings mainly the following changes:
1. The changes in the liquidation process of companies and co-operatives
According to the new legislation, the liquidation of a company will commence as of the day the liquidator is registered with the Commercial Register and not as of, until now, the day of its winding-up (i.e. the date stated in the decision of the general meeting or the decision of the court).
Regarding the voluntary winding-up of a company, the shareholders or the respective body of the company will be obliged to decide upon appointment of a liquidator altogether with adopting a decision to wind-up the company, but not later than in 60 days as of the day of the winding-up of the company. If the shareholders fail to fulfill this obligation in the stated period, the liquidator will be appointed by the court but only in the case the deposit for liquidation was paid.
The new legislation introduces the deposit for remuneration and expenditures of the liquidator (the deposit for liquidation), that the company will be obliged to pay irrespective of whether the liquidator was appointed by the court or by the shareholders themselves. The deposit for liquidation (the amount of which will be determined in the implementary regulation) will need to be deposited in the escrow account in the form of a notarial deed.
One of the crucial changes is that with the commencement of the liquidation of a company, the unilateral legal acts of the company will cease to exist, especially the instructions, authorizations, powers of attorney and procuracies. The power of attorney granted by the company for its representation at the court will be the only exception that will not be affected by the change.
A liquidator will now be obliged to draw up a list of receivables and a list of assets of a company. Such lists will need to be drawn up not later than 45 days as of the publication of the notice of the commencement of the liquidation of a company and they will need to be filed into the Collection of Deeds. Such obligation will also apply to the liquidators registered with the Commercial Register prior to 30 September 2020. However, the liquidation process in these cases will be completed under the legislation effective until 30 September 2020.
The amendment of the Commercial Code regulates in more detail the current regulation of an additional liquidation. The additional liquidation can only be initiated upon the motion of a person proving to have legal interest in its order. A person requesting an additional liquidation will be also obliged to pay the deposit for liquidation. Such motion must be filed not later than 4 years after the deletion of the company from the Commercial Register, otherwise the asset of the company will fall to the state.
2. Winding-up of a company due to overdue filing of its financial statement
Nowadays a company may face winding-up due to a failure to file its financial statements into the Collection of Deeds for at least two consecutive accounting periods.
Under the new legislation, a court will wind-up a company in case of more than six months’ delay with filing its financial statement into the Collection of Deeds. A company must file its financial statement into the Collection of Deeds within nine months of the day of its preparation.
The proceeding on winding-up of the companies and co-operatives will be regulated by the Code of Civil Non-Dispute Procedure (Act No. 161/2015 Coll. Code of Civil Non-Dispute Procedure as amended) in more detail.
3. Exclusion of persons, against whom the execution is conducted, from the possibility to establish a limited liability company
According to the new legislation, a person against whom the execution is conducted cannot establish a limited liability company. This change will also affect transfer of share. A person against whom an execution is conducted cannot acquire nor transfer its share to another person, not even to a shareholder.
Likewise, such a person cannot become a managing director in a limited liability company.
4. The change in the scope of data registered with the Commercial Register
The new legislation completely excludes filing of motions for the registration, change or deletion of registered data in paper form. Only the electronic motions will be available.
Under the new legislation, the signature of the real estate owner on its consent with registration of the registered seat of a company will have to be notarized, otherwise a court will reject the registration with the Commercial Register.
The personal identification number of a shareholder or a date of birth (in case of foreign individuals) will also become a subject of registration. However, these data will not be published despite their registration. The companies will be obliged to register these data with the Commercial Register when filing their next motion for a change of the registered data, however, not later than by 30 September 2021.
According to the amendment the registration of any restriction to act on behalf of a company as a statutory body, such as an approval of the general meeting prior to transfer of company’s real estate, will no longer be possible. Restrictions of acting are already ineffective towards third parties under the current legislation, therefore, the companies will be obliged to delete such restrictions not later than by 30 September 2021.
Pursuant to the applicable legislation, a legal entity is established for an indefinite period, unless it is expressly stated that such entity is established for a definite period. The definite period will need to be registered with the Commercial Register.
5. The changes in registration of individuals and organizational units of enterprises (branch) with the Commercial Register
Currently, individuals – entrepreneurs (sole traders) can in addition to their registration with the Trade Licence Register, register themselves voluntarily also with the Commercial Register. Such an option will, however, be no longer available following the entry into force of the amendment.
According to the amendment, registration of a branch of the Slovak legal entity with the Commercial Register will be voluntary. The branch of a foreign legal entity will, however, still need to be registered and the right to conduct a business in the Slovak Republic by the branch will still arise as of its registration with the Commercial Register.
Persons acting on behalf of branch of the Slovak or a foreign legal entity will be obliged to confirm the registered data on the branch by 30 September 2021 by filing a motion with the Commercial Register. In case of failure to fulfill this obligation, the branches will be deleted from the Commercial Register.
6. Deletion of inactive companies from the Commercial Register
As a part of measures aimed at cleaning-up the Commercial Register, the registering court will delete inactive companies from the Commercial Register, for example those that (i) do not fulfill their obligation to convert share capital and nominal value of the shares from Slovak Crowns into Euro even by 1 December 2020 or (ii) branches of foreign legal entities or branches of Slovak legal entities that fail to confirm the data registered with the Commercial Register by 30 September 2021 at the latest.