Manual COVID-19: Measures to mitigate the impacts of the epidemy on legal entities

In response to the COVID-19 epidemic and the crisis measures, on 31 March 2020 the Ministry of Justice submitted a bill on Certain Measures to Mitigate the Effects of the Covid-19 Epidemic on Litigants, Victims, Victims of Crime and Legal Persons and on Amendment of the Insolvency Act and the Execution Code (hereinafter referred to as the “Act”).

What are the proposed changes concerning legal entities?

Decision-making by bodies of legal entities - simplification and enabling distance decision-making
  • The body of a legal entity may make decisions outside the meeting in writing or by technical means (the meeting convened in a timely and proper manner using distance communication – e.g. Skype, Microsoft Teams, WebEx, etc.), even if the founding legal act does not allow it.
  • If the law or the founding legal act does not stipulate the conditions of decision-making, in the case of the highest body it shall be determined by the statutory body, in the case of another body the conditions shall be determined by this other body itself.

Members of elected bodies – the term of office

  • If the term of office of a member of the elected body of a legal entity expires after the effective date of the Act during an extraordinary period or within 1 month after its expiration, his term of office shall be automatically extended until 3 months after the expiry of the emergency measure within the COVID-19 epidemic.
  • If a member of an elected body delivers an opposition to the extension of the term of office before the expiry of his term of office to a legal person, his term of office shall not be extended.
  • The law allows for so-called co-optation even if it is not permitted by the founding legal act.
  • If the term of office of a member has elapsed between the day of the adoption of an emergency measure within the COVID-19 epidemic and the day of entry into force of the Act and a new member has not been appointed, the member's function may be renewed; however, the member must agree. The function will be restored within 3 months after the end of the emergency measure during the COVID-19 epidemic.

Discussion of financial statements - extension of deadline

  • If the statutory period of time for discussing the regular financial statements of a limited liability company, joint stock company or cooperative should expire less than 3 months after the end of the emergency measure in the COVID-19 epidemic, it will expire 3 months after the end of this measure, but no later than 31 December 2020.

We will be happy to discuss the specific impacts of individual proposed changes to the law on your business and the possibilities of applying them in practice.

Authors: Karel Nejtek a David Fabián