Consequences of not filing financial statements in the Commercial Register

Novinky

On 1 January 2021, the expected amendment to the Business Corporations Act and the related amendment to the Public Registers Act came into force. Among other things, this brings with it a tightening of sanctions for non-compliance with the obligation to file financial statements in the Collection of Deeds of the Commercial Register.

In the event that a business corporation does not submit its regular or extraordinary financial statements in the Collection of Deeds for two consecutive accounting periods, it will be summoned by the registry court to do so within one month. If the corporation does not comply with this request, it may be fined up to CZK 100,000.

An even stricter sanction then arises if the summons to supplement the documents cannot be delivered to a company at all. In such a situation, the court ex officio initiates proceedings for the dissolution of the corporation and enters a record of their commencement in the Commercial Register. If, after the proceedings have been initiated, it is found that the corporation’s assets are not sufficient to cover the costs of liquidation, the registry court shall issue a decision on its dissolution without liquidation. This decision can be issued no earlier than one year after the commencement of proceedings has been entered in the Commercial Register, otherwise the company will cease to exist in liquidation.

In conclusion, we can only recommend increased consistency in filing financial statements to the Collection of Deeds of the Commercial Register, i.e. that companies consistently comply with their obligations and also regularly check their data mailbox so that the situation outlined above does not occur.