Pursuant to Section 128 (1) and Section 184a (1) of the Act No. 513/1991 Coll., the Commercial Code, as amended, the general meeting of a limited liability company or a joint stock company approving ordinary financial statements must be held no later than six months following the last day of the accounting period (unless the Foundation Deed/Memorandum of Association or the Articles of Association of the company require a shorter period).

If a company’s accounting period is a calendar year, this obligation must be fulfilled by 30 June 2012. Should your company fail to meet this obligation, there is a risk of damage and, under certain circumstances, the company could be wound up by the court.

According to the latest Supreme Court case law, which was accepted with reservations, but is recommended to be followed, the general meeting must resolve on the profit distribution within the same deadline. Thereafter, the general meeting is no longer authorized to resolve on the profit distribution. The Supreme Court ruled that where the general meeting has not approved the financial statement, members of the board of directors of a joint stock company (or executive directors in a limited liability company) cannot decide on payment of the dividend. If the executive directors or the board of directors decide on payment of the dividend, despite approval by the general meeting, they are jointly and severally liable for fulfillment of the obligation to return the dividend paid out in contrary to law.

Documents such as annual reports, financial statements and reports on related party transactions (if required by the law) must be filed by the company with the collection of deeds  maintained by the relevant Commercial Register without undue delay after the documents have been drawn up and approved.

In the event that the company is obliged to have its financial statements verified by an auditor, the general meeting approving the financial statements should also appoint an auditor for the upcoming accounting period.