Czech Republic – residence permits and other changes in the Commercial Code

From 1 January 2005, EU and EEA nationals will no longer need to have a Czech residence permit to become registered signatories of a Czech company.

This will enable many Czech companies to register individuals who have been corporate signatories for a long time but were not registered due to the amount of bureaucracy involved. Other companies will be able to consider appointing directors from other member states now that the residency requirement is no longer to apply.

Other amendments to the Commercial Code coming into force at the same time include:

• When granting a power of attorney to change the signatory of or close a bank account, a notarised signature will be required instead of a notarial deed (which made the procedure almost unworkable in practice)

• There are more detailed rules for calculating the effective rate and date of penalty interest charged on late payments in business dealings between entrepreneurs. Also, any assessment whether or not penalty interest is unfair and therefore invalid will take account of the specific circumstances of the case, business practices and practice established between the parties.

• There are new, more detailed rules on financial assistance (affecting credit providers)

• The provisions of the Commercial Code relating to business transfers can no longer be avoided by concluding an agreement which, formally, is a different type of contract but, materially, has the effect of transferring all or a substantial part of a business.

For further information, please contact Jan Rataj at [email protected] or on +420 221 098 871.