Czech Republic: changing of the Commercial Code

Alessandro PasutNew provisions of the Corporations Act significantly change the existing rules of the Commercial Code regarding the acquisition of assets between a joint-stock company or a limited liability company and its related parties.

Conflict of interest between a corporation and its representative.
While currently the rules governing these transactions only apply to limited liability and joint-stock companies, the new regulations should apply to all corporate entities. The new Civil Code stipulates an inherent conflict of interest between a corporation and its representative (member of its statutory body, partner or member) or persons close to, or controlled or influenced by the representative.
The representative must immediately disclose any possible conflict of interest to the body she/he is a member of, as well as to the supervisory body, or the supreme body of the corporation. At the same time, she/he must disclose the terms under which an acquisition contract is to be concluded. After being informed about such a conflict of interest, the supervisory or the supreme body of the corporation may suspend the representative from office, or forbid the contract altogether.

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