In brief
Corporate Law Measures Due to COVID-19
As the COVID-19 pandemic develops, so do the legal measures introduced in the Czech Republic. After adoption of the most urgent measures primarily focused on protection of public health, the Czech Government and Parliament now focus on protection of business, which has also been severely affected by the pandemic.
One of the adopted measures is Act No. 191/2020 Coll., on Certain Measures to Reduce the Impact of the Coronavirus SARS CoV-2 Epidemic on Participants of Court Proceedings, Injured Persons, Crime Victims and Legal Persons and on Amendment of the Insolvency Act and the Civil Procedure Code (hereinafter “Lex Covid”), that, among others, introduces a temporary special framework with respect to decision-making by legal persons, terms of office of members of corporate bodies and discussion of annual accounts by business corporations. Lex Covid entered into force on 24 April 2020.
This temporary framework under Lex Covid, which is only applicable for the duration of the extraordinary pandemic-related restrictions as a result of which physical meetings of the relevant corporate body are prohibited or substantially complicated, however not longer than until 31 December 2020, includes the following measures:
Extension of the deadline to hold annual generals
The general statutory deadline for holding annual general meetings of corporations, i.e. 6 months from the end of the previous fiscal year, in order to discuss the annual accounts of such fiscal year is under Lex Covid extended until the expiry of 3 months following the suspension of the extraordinary pandemic-related restriction, but no later than 31 December 2020.
Holding general meetings and meetings of elected bodies without physical presence
Under Lex Covid, during the pandemic-related restrictions corporate bodies of legal persons may adopt decisions even without the physical presence of the individual members at a meeting of the corporate body.
Therefore, it is temporarily possible to hold general meetings and meetings of elected bodies of legal persons (e.g., boards of directors or supervisory boards) either outside of the meeting by correspondence (i.e., per rollam) or through technical means (e.g., through telephone, Skype, Zoom, WebEx etc.) even in case the company’s founding document does not allow so.
Extension and renewal of the terms of office of members of elected bodies
If the term of office of a member of an elected corporate body expires during the current pandemic-related restrictions or within 1 month after their suspension, his/her term of office is automatically extended for a period of 3 months following the day when the restrictions shall have been suspended.
If the respective member of the elected body disagrees with this extension, he/she shall deliver his/her disagreement to the company before the expiry of the term of office and the term of office shall not then be automatically extended.
Furthermore, if the number of members of an elected body does not fall below half, the body may under Lex Covid, by an agreement of all its current members, appoint (i.e., co-opt) its substitute members until the next meeting of the body that is entitled to elect its members, even if the company’s founding document does not allow so.
If the term of office of the member of the corporate body has already expired between the date of adoption of the extraordinary pandemic-related restriction and 24 April 2020, his/her office shall be renewed if he/she agrees with such renewal and no other member of such body has been elected in the meantime. The office of the member of the elected body is renewed on the day of delivery of his/her consent with the renewal of his/her office to the company and expires 3 months following the suspension of the pandemic-related restrictions.
We will be happy to answer any follow-up questions related to the subject matter of this alert and to other issues related to the COVID-19 outbreak and its impact on the Czech legal system.
