The amendment to the Commercial Code effective as of 1 January 2018 introduces certain new rules that broaden the liability of statutory representatives and shareholders of companies. According to the legislator, the objective is to foster the protection of companies and creditors against certain practices by statutory representatives (present or former) and to prevent undue interference in company’s affairs by shareholders.
The new rules can be summarised as follows:
- If the sole statutory representative of a company resigns or is dismissed and the new representative is not appointed within 60 days past the time limit within which he should have been appointed, the former statutory representative must file, within 30 days, a motion for the winding up of the company.
- If a statutory representative ceases to meet the requirements for the performance of his office, as laid down in the Trade Licence Act (e.g. clean criminal record or specific conditions laid down for carrying out specific business activities), his office shall be deemed terminated as of the day on which he ceased to meet the criteria.
- Former statutory representatives remain obliged to provide necessary cooperation to the courts, tax authorities, the Social Insurance Company, health insurance companies, bankruptcy trustees and court-appointed enforcement officers insofar as such cooperation relates to the period(s) of their term of office. Such representatives are entitled to the reimbursement of expenses incurred in connection with the cooperation.
- Persons acting as statutory representatives without having been formally appointed to such positions are liable to the same extent as proper members of statutory bodies. This applies in particular to the so called “de facto directors” who manage corporate affairs even though the company has other formally appointed managing structures.
- Statutory representatives are liable to the creditors of the company for damages suffered due to the breach of their duty to file a petition for bankruptcy in due time.
- The breach of the duty to file a petition for bankruptcy on time may lead to the “disqualification” of an individual statutory representative. In such case, the statutory representative may be judicially disqualified from acting as a member of statutory or supervisory bodies of any company for 3 years. Disqualified persons will be registered with the Register of Disqualifications maintained by the Žilina District Court.
- The same sanction – disqualification may be imposed by courts on an individual statutory representative for the breach of the duty to provide necessary cooperation within bankruptcy or enforcement proceedings.
- The signatures of all statutory representatives and members of other bodies on the signature specimen containing consent of such persons to being appointed, deposited with the Register of Corporate Deeds kept by the commercial registry court, must be notarised.
- Company shareholders and controlling persons are liable to creditors for damages suffered due to insolvency of the company provided that such insolvency is attributable to their conduct. Creditors may claim damages directly from shareholders or controlling persons; the claims become statute barred after 1 year. The respective persons will not be held liable only if they prove that they acted in good faith and with due professional care.
- The amendment introduces a new type of criminal offence of ‘unfair liquidation’, which is committed by a person who, with the intention to frustrate the purpose of the company’s proper liquidation, procures or intermediates another person who, by merely lending his name and identity, appears to have assumed the rights and obligations of the company knowing already at that point that he would not exercise those rights or honour those obligations. The criminal offence of unfair liquidation is punishable by imprisonment of up to five years.
Boris Brhlovič, Dominika Schweighoferová