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Establishment of the most common form of corporation in the Czech Republic – the limited liability company (in Czech the “s.r.o.”) – has considerably simplified since the beginning of 2014 thanks to the new Civil Code (Act No. 89/2012) and the Act on Business Corporations (Act No. 90/2012) coming into force. In the mid 2014, the media widely reported on further changes due in the spring of 2015 whose objective was to further simplify, speed up and make cheaper the establishment of an ‘s.r.o.’. Under the new plan the ‘s.r.o.’ could be established in as little as 3 days for as little as 3 000 CZK (approximately 110 €).

Employers generally like to make use of overtime as it is a comfortable method to temporarily increase production without the need to look for new employees while being able to take advantage of the skills and people they already know and rely on. Nevertheless, the amount of overtime work that may be performed by employees has its limits and these are firmly stipulated in the Labour Code (Act No. 262/2006 Coll., as amended, hereinafter the “LC”) and apply even to overtime work performed by employees voluntarily.

Czech legislation imposes a number of special obligations on sellers selling goods to consumers; one of them is the obligation to provide information to consumers which, in general terms, is contained in Sections 9 – 13 of the Act No. 634/1992 Coll., on Consumer Protection, as amended (hereinafter the “CPA”). The obligation to inform under the CPA applies to all products in general without exception, while it simultaneously allows for the existence of a divergent regulation, especially with respect to the labelling of the products (as – for example – special European regulations regarding labelling of cosmetics etc.).

Since 1 January 2014, limited liability companies in the Czech Republic are no longer required to create the so-called ‘reserve fund’ of up to 10% of the company registered capital. Nevertheless, should the obligation to create the reserve fund remain in the company founding documents, that follows the now-abolished wording of the old Commercial Code (CCC), the company will remain required to create such a fund without regard to what the new Act on Corporations (AoC) may say. This means that unless shareholders in limited liability company (LLC) do not change the wording of their company founding documents, following the procedure laid down by Section 777 para of the AoC, the company remains obliged to create (or continue to contribute into) the reserve fund also in 2014 and subsequent years in line with CCC (Cf. Section 777 para 4 AoC). We assume that a large number of companies will take this opportunity to abolish the reserve fund; in this connection it will have to resolve how to dispose of the funds that are tied in the reserve fund. One of the most usual solutions will be to transfer the money from the reserve fund into undistributed profit for subsequent distribution between the shareholders. In this connection, the companies should verify under what terms the funds from the reserve fund may be distributed between shareholders.

Non-compete clause (or competition clause) is an agreement between employer and employee concluded pursuant to Sec 310 of the Czech Labour Code (CLC). Such clause obliges employees to refrain, for a certain period of time not exceeding one year after termination of their employment, from being involved in gainful activities that would be similar or identical to the former employer´s business activity or competitive in nature. The employer on the other hand undertakes to provide adequate monetary consideration for each month this obligation is observed. This compensation shall be no less than one half of the employee´s former average monthly earnings for each month the said obligation is observed. The monetary consideration shall be payable on a monthly basis unless agreed otherwise. The clause must be agreed in writing.

The Czech Parliament voted on a battery of the most recent changes to the Labour Code (Act 262/2006) which allow, among other, the so-called “chaining” of employment contracts, or which shortens the mandatory period of continuous rest between two working shifts from 12 to 11 hours.

Czech Republic underwent extensive social and political change during the last 20 years. One of the major legal changes that will affect almost every facet of daily life will be the so far largest reform of the private law coming into force on 1 January 2014.

It’s been more than a year since all three cornerstone statutes were adopted – the New Civil Code (Act 89/2012), Act on Commercial Corporations (Act 90/2012) and Act on Private International Law (Act 91/2012). Adoption of these three key codices capped more than 12 years of practical private law reform efforts. These three Acts are scheduled to come into force on 1 January 2014. Additional legislative changes are simultaneously in the process, in areas of implementing legislation, procedural or tax laws. 

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“Simplified preparation of PPP projects” Study conclusions – part II: Analysis of the needs and options for the amendment of the Concession Act “Simplified preparation of PPP projects” Study conclusions – part II: Analysis of the needs and options for the amendment of the Concession Act. Article written by Dr. Karel Zuska and Mgr. Jaroslava […]

Conclusions from the „Simplification of PPP Project Preparation“ Study – Part One or Analysis of the Possibility of Changes in Relation to PPP Conclusions from the „Simplification of PPP Project Preparation“ Study – Part One or Analysis of the Possibility of Changes in Relation to PPP. Article written by Dr. Karel Zuska and Mgr. Jaroslava […]