Commercial Register
The amendment of the Commercial Code and the Commercial Register Act amends numerous provisions. One fundamental change is the fact that petitions to the commercial register can now essentially only be filed electronically (if a document cannot feasibly be filed electronically given the nature of the document or its size, then paper form is still acceptable. In such case, the petitioner shall attach a written statement to their petition for registration in which they specify the reason for which the document could not be filed electronically together with the petition itself.
Inactive companies will also be expunged and there are changes to the mandatory data reported in the Commercial Register itself. Under the new legislation, the Commercial Register will contain specification of if a legal entity was established for a fixed period of time and if so, until when. The date of birth and birth number for each partner will now be entered in the Commercial Register along with their first and last name and place of residence. A natural person authorised to act on behalf of a legal entity must provide such new identification details for the partners and register them in the Commercial Register by 30 September 2021 at the latest.
A list of entities to be expunged from the Commercial Register will be published by the Ministry of Justice of the Slovak Republic for a period of six months in the Commercial Bulletin. These entities include those who failed to convert the nominal value of contributions and the nominal value of their registered capital from the Slovak currency to the Euro.
Consent to the use of property
Legal entities register a registered office in the Commercial Register. They must have either title, the right to use such property (rentals and leases) or consent from the owner of the property to use the property as its registered office in the Commercial Register. As a result of this amendment, written consent to register the property as a registered office in the Commercial Register will require an officially certified signature.
Sole proprietors
The amendment of the Commercial Code and the Commercial Register Act stipulates the establishment and dissolution of business permits for foreign sole proprietors. If a foreign sole proprietor doing business in Slovakia was registered in the Commercial Register in any European Union member state or a member state of the Organisation for Economic Co-operation and Development, they did not need to be registered in the Commercial Register of the Slovak Republic.
Based on the amendment of the Commercial Code, such foreign sole proprietors conducting business activities in Slovakia will have to have a proper trade license.
The amendment to the Commercial Code stipulates that the authorisation of a foreign entity to do business in Slovakia is established on the creation date of their trade license and terminates on the expiration date of their trade license.
Sole proprietors are not registered in the Commercial Register. Those sole proprietors registered in the Commercial Register will be expunged.
Persons subject to distraint proceedings
As a result of the amendment, a person registered who is an obliged party in the register of issued distraint authorisations will not be permitted:
- to acquire an ownership interest in a limited liability company,
- to transfer their ownership interest in a limited liability company to another partner or other person,
- to be nominated as the managing director of a limited liability company (and therefore those persons nominated to be managing director and not those who are already managing director),
- to establish a limited liability company (in such case, this person may also not be registered in the list of taxpayers in arrears or otherwise have arrears with the Social Insurance Administration).
Restrictions on the actions of the statutory body are not registered in the Commercial Register
If an entrepreneur is involved in registering with the Commercial Register, any restrictions involving the statutory body are not registered in the Commercial Register.
Natural persons authorised to act on behalf of a registered entity with restrictions on the statutory body’s authorisation to act on behalf of the legal entity under the legislation in force until 30 September 2020 must align their registration in the Commercial Register with the Commercial Code when filing their next petition to register changes in registered data or by 30 September 2021 at the latest.
Company in crisis
A company at risk of bankruptcy is considered in crisis, and specifically this is defined as a situation where the ratio of equity to liabilities is less than 8 to 100. Under the amendment of the Commercial Code, a company in crisis includes a company from the time of its dissolution until it enters into liquidation.
The amendment of the Commercial Code also expands the definition of companies who may not be classified as in crisis, including collective investment entities, payment system operators, pension management companies, supplemental pension companies, payment institutions and creditors with license to provide consumer credit regardless of scope.
Court-ordered dissolution of companies for failure to submit financial statements
One important change is the court-ordered dissolution of a company they fail to meet their obligation to file their financial statements with the documentation archive.
Currently, failure to comply with the obligation to file financial statements with the documentation archive is only punishable by dissolution of the company if the company violates this obligation for a minimum of two consecutive periods. After the amendment, the court-ordered dissolution of a company will be permitted if the company is more than six months in default with filing its financial statements with the documentation archive.
Company liquidation
Liquidation is focused on satisfying the claims of creditors and other parties with a claim to part of the liquidation balance.
The amendment further specifies aspects of the liquidation process and defines the role of the liquidator, who is now involved in the event of the liquidation of a company’s statutory body. Liquidators will be appointed by a relevant company body or a court.
The requirement to provide an advance payment for liquidation is being introduced. The advance payment is intended to function as security towards the liquidator’s compensation and reimbursement for their costs. The amendment, inter alia, stipulates the procedure for reporting receivables in the liquidation process in a much more detailed and principled manner, and the list of reported receivables, which must be submitted to the documentation archive.
A company enters into liquidation on the liquidator’s petition to the Commercial Register, whereby the business name of the company with the phrase “in liquidation” is used to refer to it until such time that the liquidation is complete. Under the new amendment, the liquidation of a company will no longer be as simple and the process itself will be much more formalised.
Ex-post liquidation
The amendment of the Commercial Code and the Commercial Register Act stipulates the method of ex-post liquidation if a company is determined to still hold property that should be included in liquidation or bankruptcy after it is expunged from the Commercial Register. The phrase “in ex-post liquidation” would then be added to the business name in this case. If a petition for ex-post liquidation is not filed within four years from the expunging of the company from the Commercial Register, title to the company’s residual property transfers to the state.
Disposal of company property after dissolution
Special stipulations are introduced to cover the period from the dissolution of a company to its entry into liquidation. If the value of the company’s property exceeds 10% of the value of the company’s registered capital, the disposal of company property is subject to appraisal by an expert and approval by the company’s supreme body.
Conclusion
Essential portions of the amendment of the Commercial Code and the Commercial Register Act are scheduled to take effect on 1 October 2020. The Commercial Code and Commercial Register Act are set to undergo significant changes. Essentially, the Commercial Register will only accept electronic filings and inactive companies will be expunged as a result of the amendment. Companies will have to enter the date of birth and birth number for each partner in the Commercial Register as well. Persons who are subject to distraint proceedings will have a limited ability to do business through a limited liability company. The amendment significantly amended the formal process of liquidating a company and the tasks assigned to the liquidator.
Please be aware that the details above only provide a brief summary of the adopted amendment to the Commercial Code and the Commercial Register Act and do not represent a legal interpretation. The purpose of this summary is to inform you of the fundamental changes and some of the new obligations vis-a-vis the Commercial Register, especially the obligation to align data. If you find it necessary, we’d be happy to provide you with more information concerning this amendment or provide legal counsel, especially in relation to the newly created changes and obligations.
