On February 12, 2015, the Czech Supreme Court handed down a ruling on Act No. 29 Cdo 5347/2014, overturning earlier decisions by the Court of Appeal and a court of first instance. Both these courts rejected an application from a limited liability company which wished to record the number of members in its statutory body in the Commercial Register. The lower courts’ reasoning, based on the amended wording of Act No. 90/2012 Coll., on business companies and cooperatives (the “Business Corporations Act”), was that the company had submitted “only” its Articles of Associations with its application. In the courts’ opinion, the Articles included substantive changes, and not just changes to terminology, and thus, the documents required for registration – i.e. a decision in the form of a notarial deed or an associates’ agreement on changing the Articles of Association – were missing.
The change to the Articles of Association consisted of a statement in words and numerals that the company has three directors; this replaced the original specification of the company’s directors by name.
Drawing on case law, the Supreme Court held that it was already mandatory to include the number of directors in a company in its Articles of Association, even if this did not need to be stated explicitly, under Act No. 513/1991 Coll., the Commercial Code and the associated system.
In the above decision, the Supreme Court concluded that “concerning companies created before the effective date of new Business Corporations Act, the introduction of the requirement to explicitly state the number of directors with a numeral changed the Articles of Association as a matter of law at the time when the Business Corporations Act took effect. Directors should therefore incorporate this change into the text of the Articles of Association. By simply adding the information about the specific number of directors, which is already implied by the content of the Articles of Association, no real (content) change to the Articles of Association occurs.”