On 14 January 2017, the amendment to Act no. 90/2012 Sb., on Companies and Cooperatives (the Companies Act; “CA”) came into effect. The amendment introduces once again the concept that we know very well from the recent past: the entitlement of employees to participate in the functioning of a joint-stock company. This will once again allow employees to vote and recall a minimum of one third of the members of the supervisory board of a joint-stock company provided that the joint-stock company employs more than 500 employees.
Thus, the CA sets out for joint-stock companies the duty to establish a supervisory board with a total number of members divisible by three, since full employees of a joint-stock company are entitled to vote for and recall one third of these members.
In accordance with the transitional provisions of the amendment to the CA, all joint-stock companies that have more than 500 employees will need to adjust their articles of association and the structure of their supervisory board within two years of the amendment coming into effect (i.e. by 14 January 2019). If a joint-stock company does not comply with the legal requirement, this could lead in extreme cases to liquidation of the company.
The two-year deadline seems to be relatively sufficient for making all of the required changes. However, since certain legal deadlines should be upheld, we would like to call your attention to the individual steps necessary for making the changes that could have an impact on the overall time for processing the changes:
- Convening the company’s general meeting in order to make the changes,
- Proposing and approving the changes to the relevant provisions of the articles of association,
- Informing employees, preparing the employer’s internal regulations,
- Arranging for the election of the respective members of the supervisory board from among the employees, and
- Entering all of the changes in the commercial register.