The Czech government is discussing relaxing the requirements for alternative methods of holding corporate meetings while freedom of movement and gatherings are restricted during the Covid-19 crisis. New rules should be introduced by Lex Covid-19, which has already been approved by the Czech government and is expected to be approved by the Parliament and enter into effect shortly.
Under normal circumstances, these alternative methods would typically be allowed only if permitted by a company's constitutional document. Under Lex Covid-19, these will be allowed automatically. The members of Czech limited liability and joint stock companies generally have the following options on how to hold a meeting:
- use a proxy - grant power of attorney to a designated proxy subject to, in particular, rules on conflict of interest;
- go circular - submit votes in writing without any meeting taking place (the so called per rollam voting);
- go online - use technical facilities to allow for live remote voting or alternatively submit votes in writing prior to the meeting (i.e. correspondence voting).
Shareholders of a Czech limited liability company can generally use a proxy. Provided it is not limited by the constitutional document, they can also go circular. However, they can only go online if the constitutional document permits. Typically, a limited liability company does not have a board.
Shareholders of a Czech joint stock company may generally use a proxy. Provided the constitutional document permits this, they may also go circular or go online. The members of the board may also go online or go circular only if the constitutional document permits this. Generally, they may use a proxy for a particular meeting, if that proxy is another member of the board.
To change a constitutional document to allow for any of the alternative methods, the shareholders may use a proxy (in this case, the power of attorney requires legalised signature). However, special rules may still apply if the company is to decide in the future on a matter that requires notarial deed (e.g. increase the registered capital, allow contribution in kind, etc.).
If the company’s constitutional document does not already enable the alternative methods of holding a corporate meeting, it may be worth waiting for Lex Covid-19 to enter into effect, which will automatically allow for members to go circular and go online.
In addition, Lex Covid-19 would also extend the deadline for convening annual general meetings in some cases. It will also allow for automatic extension of terms of office for members of elected bodies, such as boards of directors, provided that the relevant member does not oppose to extension of his or her term.
This article has been prepared using information available as of 6 April 2020. For further details, contact your regular CMS advisor or local CMS experts.
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