January 2017 – On 30 December 2016, a new act, No. 460/2016 Coll., was published in the Collection of Laws. Act No. 460/2016 Coll. amends Act No. 89/2012 Coll., the Civil Code, and other related regulations. The amendment will primarily bring greater transparency in the area of trust funds, but it will also clarify certain issues regarding legal acts and the acquisition of shareholding interests.
The form for a power of attorney will depend on the form of legal act
The most important practical change is the establishment of the rule (as inferred from case law) that a power of attorney that has been granted in writing and that bears an officially certified signature suffices for those legal acts that require the form of a public deed; this has been a persistent subject of discussions by legal professionals. Therefore, it will no longer be necessary to issue a power of attorney in the form of a notarial record. The purpose of this provision is both to facilitate legal representation and to reduce related costs. This rule will also apply to powers of attorney that were granted before the effective date of the amendment, provided that the legal acts for which they were granted will only be performed after the effective date of the relevant provision of the amendment, i.e. after 28 February 2017.
Legal acts of a legal entity with respect to its employees
Another welcome change is the repealing of Section 164 (3). Under this provision any legal entities with a collective body and employees had to authorise one member of the governing body to perform legal acts with respect to the employees; if not, this authority would be exercised by the chairperson of the governing body. Applying this provision in practice was relatively complicated, as it was not entirely clear how the acts of a member of the governing body who had not been authorised by the legal entity to perform legal acts with respect to employees would bind the legal entity. This provision has been repealed with no replacement.
Acquiring shareholding interests while married
The legislators also removed certain doubts in relation to a married individual acquiring a shareholding interest in a company where the manner of acquisition did not establish the spouse’s exclusive ownership. The amendment expressly sets out that, upon the acquisition of a shareholding interest in a company by a married individual, the other spouse will only become an obligee in relation to the value of the shareholding interest that forms part of the marital property, but the acquisition will not establish the other spouse’s participation in the respective company or cooperative. This rule will apply to all companies except for housing cooperatives.
New regulation of trust funds
The legal regulation has been significantly amended because of the anonymity of the ownership structure of trust funds and their potential for being misused for the purpose of money laundering. The amendment introduces a trust fund registration system; any new trust fund will only be founded upon its registration in the registration system. The Ministry of Finance will maintain the registration records and they will be public, although certain data (e.g. information about beneficiaries) will only be available in the non-public section, which will only be accessible to certain bodies and authorities. The legislators decided to remove the anonymity given to beneficiaries of trust funds that were established for private purposes; the effect of an appointment or any other form of determining a beneficiary will now occur only upon registration of the trust fund in the trust fund registration system. Existing trust funds must be registered in the trust fund registration system within six months from the effective date of the amendment; if an application for registration is not filed by the deadline, the respective trust fund will cease to exist. The same deadline also applies to registrations of beneficiaries of trust funds that were established for private purposes.
The introduction of the trust fund registration system will also impose another duty, namely the duty to file an application for the deletion of a trust fund from the trust fund registration system within thirty days after its cessation; the statutes of a trust fund must now include the number of trustees and a specification of the manner in which they act.
Other changes
In addition, the amendment specifies in detail that constructions such as water pipeline systems, sewerage systems, energy pipeline systems or other similar systems that affect by definition several plots of land do not form a part of those plots of land and that these systems include the structures and technical facilities that relate to them from an operational perspective. Another concept that has been renewed is the statutory pre-emptive right of co-owners that arises upon the transfer of a co-ownership share in real estate (with effect as of 1 January 2018). The ban on setting off of receivables against an employee’s receivables (salary) from their employer has been cancelled, and the conditions governing an agreement on making deductions from a salary or wages have been made more flexible.
For more information, please contact Petr Měšťánek, Know-how Lawyer, at .