Implementation and scope

The Second Company Law Directive was implemented into Czech law through several acts, particularly by Act No 513/1991 Coll., the Commercial Code, as amended (“Commercial Code”) and its subsequent amendments such as Act No 370/2000 Coll. The Directive was amended by Directive 2006/68/EC, which was implemented into Czech law by Act No 215/2009 Coll.

The scope of the Directive was, to some extent, extended in Czech law beyond the joint stock company (“AS”) to encompass the limited liability company (“SRO”) as well.

Application of Czech law

The incorporation principle applies under Czech law. In other words, a company (its legal capacity, incorporation, maintenance, termination, internal relationships, liability of members or shareholders for company’s obligations etc.) shall be governed by the law of its incorporation (Art. 3 Act No 97/1963 Coll. on International Private and Procedural Law, as amended, in connection with Art. 22 Commercial Code). Following from the above-mentioned, a company shall be governed by Czech law provided it has been incorporated pursuant to Czech law.

In accordance with Article 26 of the Commercial Code, a legal entity incorporated under foreign law in order to perform business activity with its registered office abroad can transfer such registered office to the Czech Republic provided such transfer is permissible under an international treaty binding on the Czech Republic and promulgated in the Collection of Laws or in the Collection of International Treaties. The internal relationships of such legal entity and the liability of its members or shareholders towards third persons shall continue to be governed by the foreign law under which the legal entity was originally incorporated. However, in order to protect the creditors of the respective legal entity, the liability of its members or shareholders shall not be less than the level of liability stipulated by Czech law for an identical or similar form of legal entity.