Will digitalization simplify the establishment of business corporations?

26. 5. 2022
Will digitalization simplify the establishment of business corporations?

The Chamber of Deputies is currently debating an amendment to transpose into Czech law the directive on digitalization in company law, which aims to simplify and speed up the establishment of business corporations within the EU. If adopted, it is expected to take effect on 1 July this year (2022). The amendment will mainly affect the Business Corporations Act, the Trade Licensing Act and the Public Registers Act.

The first novelty brought about by this amendment is the introduction of a common European register of excluded persons, i.e. persons who, for any of the legal reasons, cannot become a member of an elected body of a company. This register will be non-public, will only be accessible to notaries and courts, and should include all persons who, for any reason, are excluded from exercising functions as members of elected bodies. This means that when establishing a new company, it will no longer be necessary to submit, for example, an Extract from the criminal record of future executive directors.

Another novelty is the possibility to establish a company before obtaining a trade license (if the company intends to operate according to the Trade Licensing Act); however, it is important to add that if the company does not obtain such a certificate within a specified period of time from its establishment, the court may dissolve it.

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