When it comes to legal representation, the following situation is relatively common among legal entities and has often been considered in case law: a company’s foundation document states that the company must be represented by two (or more) members of its statutory body including when signing documents. One or both of these people then issue(s) a power of attorney to a third party (or the other statutory body member) so that it is authorised to represent the company instead of the principal. Courts have often ruled on the question of whether it is possible to grant a permanent power of attorney to a particular person to exercise the representation powers of the statutory body member and, thus, circumvent the requirements in the foundation documents, i.e. the need for joint action by multiple members of the statutory body to ensure that displays of the company’s will are valid. In this respect, certain questions have also been raised as a result of the new rules valid since January 1, 2014 under Act No. 89/2012 Coll., the Civil Code (the so-called new Civil Code or “CivC”).
In terms of the conflict between the restriction of representation powers on the one hand, and the granting of a power of attorney by a statutory body member on the other hand, nothing has changed on a practical level. Art 164 of the CivC now states that even where the foundation document requires action by multiple members of the statutory board for the company’s representation, it is possible in individual cases to represent the company validly based on a power of attorney granted to only one member of the statutory body. Nevertheless, in our opinion, this wording, which limits this option to certain actions, rules out the creation of a power of attorney which would cover all contracts of a certain type or up to a certain value or based on another broad definition. This was already the established approach before the adoption of the (new) CivC. In other words, the current situation is not new, and the CivC has just endorsed the case law. As such, Art. 164 of the CivC does not bring any significant changes which would explicitly allow the company’s representation (action on behalf of the company) by one member of the statutory board in cases when, according to the company’s foundation document, joint action by two or more statutory body members is required.