Joint signature of a statutory body member and a proxy

Novinky

A common requirement of clients for representation of a company is the so-called four-eyes principle, i.e. the interests of the firm are pursued by e.g. at least two executives. (Not only) should a company have one statutory body member (for example one executive), it is often considered that it may be possible to include in the Articles of Association and subsequently to enter into the Commercial Register the fact that the company shall be represented by an executive (a statutory body member) and a proxy (in Czech prokurista). The practice is often used in Germany and Austria, where the national legislation explicitly allows it.

In connection with the new Czech Civil Code and corresponding changes to the legal regulation concerning legal persons, a discussion whether this kind of arrangement may also be agreed in the Czech Republic has been initiated as the Commercial Code did not permit to do so.

A definite answer has been recently provided by the Czech Supreme Court in ruling File No. 29Cdo 387/2016 which states that signing by both a proxy and a statutory body member is an unacceptable representation of a business corporation and may not be entered into the Commercial Register as the positions of a proxy and an executive within the company differ substantially – although the proxy has wide authorization to represent a company, it is only based on a special type of a mandate while the executive has a full legal power to do so.

Due to the fact that the above manner of representing a company is in direct contradiction with both the law and the public order, such provisions of the Articles of Association would be null and void and the respective statutory regulation for legal persons would be applicable (which would be the case even for companies which have already entered the practice of joint signatures into the Commercial Register due to the error of the registration courts).