Despite more than three years elapsed since the effective date of the New Civil Code, the new legislation still involves several unresolved issues. One of them is the question of whether or not it is permissible for legal persons established in non-EU/EEA countries to transfer their registered office to the Czech Republic. Nonetheless, this issue has been gradually clarified.
During the term of effect of the former Commercial Code (Act No. 513/1991 Coll.), no foreign legal persons other than those falling under the definition provided in Section 59b (3) in conjunction with Section 3 (1) of Act No. 125/2008 Coll., on transformation of companies and co-operatives (the “Transformations Act”), were permitted to transfer their registered office to the Czech Republic under the then-applicable laws. The definition referred to legal persons governed by the laws of, or having its registered office, actual seat or main establishment in, a Member State of the European Union (“EU”) or another country within the European Economic Area (“EEA”). This was because the Commercial Code referred to the provisions of the Transformations Act as the exclusive lex specialis. However, the New Civil Code (Act No. 89/2012 Coll.) removed the former restriction to EU Member States and EEA countries by virtue of its Section 138 and thus enabled a wider definition of foreign legal persons permitted to transfer their registered office to the Czech Republic, without stipulating any territorial limitations.
We are of the opinion that given the absence of any special regulation concerning non-EU Member States and non-EEA countries, the general provisions of the New Civil Code shall apply subsidiarily since Section 1 (3) of the Transformations Act stipulates that any matter not provided for in the Transformations Act shall be governed by the law regulating legal relations of companies and co-operatives and by the provisions of the New Civil Code concerning transformation of legal persons or transfer of registered office. Nonetheless, the wording of the legal regulation remains unclear and does not unambiguously indicate whether the legislator in fact intended to remove the aforementioned restrictions or whether this was rather a mere legislator’s omission. The professional public does not have a uniform opinion in this respect and we thus have to await the relevant case-law to provide for this issue.
As we believe that the current Czech laws permit such cross border transfer of the registered office, we describe below an example of a successful transfer of the registered office of a company established outside the EU and EEA, specifically in Switzerland, arranged by our law office.
Having regard to the above, we relied on the provisions of the New Civil Code in arranging the cross border transfer of the registered office, which stipulates less strict requirements in this respect than the Transformations Act. Nonetheless, for the sake of due procedural care and given the absence of any special regulations providing for such cases, we complied, by analogy, even with the requirements for transfer of the registered office to another jurisdiction that must be met under Sections 384a et seq. of the Transformations Act.
In the case at hand, the cross border transfer of the company’s registered office was approved by resolution of the General Meeting in Switzerland, issued in the form of a notarial deed, which included in the annex a plan of cross border transfer of the registered office together with the amended Articles of Association. In the framework of the plan of cross border transfer of the registered office, we also prepared a plan of a change of the company’s legal form inherently associated with such transfer. Indeed, the company’s internal legal relations must be governed by the laws of the Czech Republic after it has transferred its registered office to the Czech Republic. In connection with the cross border transfer of the company’s registered office, three notices had to be given to its creditors, inviting them to register their receivables against the company within two months of the notice.
Since the company was to be transformed to a Czech joint-stock company, it was further essential, in our opinion, to have the company assets valuated by an expert as of the date of the plan of the change of legal form. The valuation aimed to make sure that the assets of the company being transferred at least equalled the minimum amount of the company’s registered capital required after the cross border transfer of its registered office. To this end, we applied to the court in the Czech Republic to appoint an expert.
We primarily had to fulfil the requirements set out in Section 138 of the New Civil Code, particularly:
1) to prove that the Swiss laws permitted a transfer of the registered office of a Swiss company to another jurisdiction;
2) to prove that the company was not a prohibited company in the sense of Section 145 of the New Civil Code; and further
3) to submit a decision of the company’s governing body on the selected legal form of a Czech entity and the foundation deed that would become effective upon registration of the company in the Czech Commercial Register.
The described cross border transfer of the Swiss company was subject to further specific requirements, in particular the duty to obtain a confirmation from the Cantonal Administrative Board concerning ownership of real estate. This was required because Switzerland regulates ownership of real estate by foreign nationals by a special law, which stipulates, inter alia, that a legal person wishing to transfer its registered office to another jurisdiction may not own any real estate in Switzerland at the time of the transfer. Consequently, it is necessary to bear in mind that other jurisdictions might impose additional requirements by special laws, apart from the general statutory provision permitting cross border transfer of the registered office.
Following the fulfilment of all the conditions stipulated by the Swiss laws, we obtained a confirmation on fulfilment of the conditions from a Swiss notary. We were thus able to provide the Czech notary with satisfactory evidence on compliance with the requirement. The notary, having been presented with the confirmation together with the above-specified documents and other underlying materials, issued a notary certificate for the purpose of registration of the company in the Commercial Register; the transfer of the registered office thus became effective upon the registration of the company in the Czech Commercial Register.
Consequently, the practical experience shows that transfer of the registered office from a non-EU Member State and/or a non-EEA country to the Czech Republic is indeed possible, as the above example concerning a Swiss company clearly documents. Naturally, it is not easy to predict whether or not the same procedure can be used for transfer of companies from other, mostly non-European countries. Nonetheless, having regard to the principles on which was the above mentioned cross border transfer of the registered office based, we believe that similar procedure could be successfully applied.