On 3 September 2015, the Government Legislative Council approved a bill amending Act No. 89/2012 Coll., the Civil Code (or “CC”), designed to eliminate certain practical shortcomings that have arisen since the new Code entered into effect.
The amendment, inter alia, focuses on a phenomenon new to Czech law – trust funds. A general tightening of the treatment of trust funds is proposed, the key change being the establishment of a trust fund registry identifying beneficiaries. Information on beneficiaries should in future be accessible to persons who prove a legal interest, who are appointed by government bodies or who are obligated persons pursuant to Act No. 253/2008 Coll. on selected measures to combat money laundering and the financing of terrorism. It will be interesting to see whether the impact of this and other bills renders trust funds less appealing in the Czech Republic.
The amendment should also remove an often cited ambiguity regarding the participation of a second spouse in a business company. A stake in a business company shall be included in marital assets, though only the spouse who acquired the stake will be a partner (having all the rights and obligations appertaining to that position).
The form of powers of attorney should also be definitively clarified. The current CC requirement that a power of attorney take the form of a public document should in some cases be expressly replaced by a requirement for a notarized signature. This will serve primarily to streamline the functioning of business corporations.
The pre-emption right of co-owners of real estate and extended period for a review of reasons to limit legal capacity should also be restored.
After abandoning its plan – presented late last year – to amend a substantive part of all 3,079 provisions of the CC, the Ministry of Justice is now putting forward what it calls a “minor technical amendment”. Still, the submitted bill clearly fails to eliminate all the problematic areas and ambiguities that have come to light during the application of the Civil Code.