CZECH REPUBLIC Law and Practice Contributed by: Petr Mlejnek, Robert Klenka, Matěj Manderla, Jan Wagner, Ivo Hartmann and Arbër Balliu, Tenacta, advokátní kancelář, s.r.o.
3.3 Ongoing Reporting and Disclosure Obligations Companies in the Czech Republic are subject to sev - eral continuing reporting and disclosure requirements. Typical obligations include: • filing annual financial statements; • maintenance of beneficial ownership information; • accounting compliance; and • tax reporting obligations. Companies must also register certain changes in the Commercial Register without undue delay. Such changes commonly include: • appointment or removal of directors; • amendments to constitutional documents; • changes in registered capital; and • changes concerning registered offices. Beneficial ownership information must also be main - tained and updated. Failure to comply with reporting obligations may result in administrative sanctions and practical complications in dealings with authorities or commercial counterparties. In particular, where the beneficial owner is not properly registered, the rel - evant beneficial owner may be prevented from exer - cising voting rights or receiving profit distributions. Czech law further provides mechanisms allowing courts to review discrepancies between the actual beneficial ownership structure and the information recorded in the register of beneficial owners. Incor - rect or incomplete registration may therefore lead to judicial proceedings concerning inconsistencies in the registered data and related corporate consequences. Additional obligations may apply to regulated entities and businesses operating within specific sectors. 3.4 Management Structures Management structures differ depending on the selected legal form. In both private limited liability companies and joint stock companies, the general meeting composed of the shareholders acts as the highest corporate author -
ity and decides fundamental matters relating to the company. A private limited liability company generally operates through a relatively simple management structure consisting of one or more executive directors respon - sible for the company’s day-to-day management and external representation. A joint stock company may adopt either: • a dual-board structure consisting of a management board and supervisory board; or • a monistic (one-tier) structure consisting of an administrative board. The choice of governance structure frequently depends on shareholder expectations, internal group policies and the desired allocation of management and supervisory functions. The Business Corporations Act also allows significant flexibility in adjusting internal governance arrange - ments through constitutional documentation. 3.5 Directors’, Officers’ and Shareholders’ Liability Members of corporate bodies are generally required to act with due managerial care, in good faith and in the best interests of the company. Directors are expected to exercise appropriate care, maintain sufficient information for decision-making purposes and avoid conflicts of interest. Failure to comply with these duties may result in personal liabil - ity. Potential consequences may include: • liability for damages; • obligations to return benefits received; • restrictions on performing management functions; and • specific insolvency-related consequences. Although Czech law does not formally recognise the common law doctrine of “piercing the corporate veil”, certain statutory rules may, in specific circumstances,
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