Trade licences are the authorizations necessary for the conduct of most business activities in the Czech Republic. According to the Trade Licence Act, legal entities that have obtained a trade licence must notify the Trade Licence Office of certain corporate changes, including changes to its signatories, within 15 days of their occurrence. Violation of this duty is punishable by a fine.
Under the Commercial Code a change in a legal entity’s statutory body triggers a two-step process, whereby (i) the appropriate corporate body (usually the general meeting) adopts and passes the decision to change, and (ii) the appropriate change is registered in the Commercial Register.
Previously, it was unclear whether the 15-day notification period commenced on the date of (i) the decision of the relevant body or (ii) registration of the relevant change in the Commercial Register.
In a recent case the Trade Licence Office adopted an interpretation according to which the notification period begins to run at the date of adoption of the relevant decision by the corporate body. The office imposed a modest fine on a company that had not fulfilled its notification duty within the stipulated period. The company’s extraordinary general meeting decided to change the board of directors in mid-December and notification was carried out at the end of January of the following year, presumably after the change was registered in the Commercial Register.
The company appealed against the decision of the Trade Licence Office. The Ministry of Industry and Trade upheld the decision, as did the Supreme Court.
For further information on this topic please contact Jan Sysel at Altheimer & Gray by telephone (+420 2 24 81 27 82) or by fax (+420 2 24 81 01 25) or by email ([email protected]).