News in the Commercial Register – a clean-up and exclusively electronic filings
The amendment to Act No. 513/1991 Coll., the Commercial Code (the "Commercial Code"), brings changes in two main areas, the first of which is precisely the clean-up and electronisation of the Commercial Register.
As regards electronisation, from the start of 2020 the registry courts will accept only filings in electronic form, whether it be a proposal for registration, a change of details, or the deletion of a company. If you were to deliver such a filing to the court in paper form, the court would disregard it.
From the start of 2020 registry courts accept only electronic filings — a filing delivered in paper form is simply disregarded.
In addition to the greater efficiency that the exclusive electronisation of the Commercial Register should ensure, its transparency will also increase, which should be achieved mainly through its clean-up. The Register will be cleared of inactive companies whose registration in the Commercial Register has lost its purpose.
First and foremost, this concerns so-called historical companies, such as economic establishments or national committees. The clean-up is to be achieved by an exact enumeration of the entities that will be entered in the Commercial Register, and this enumeration no longer includes the aforementioned forms of company.
Sorting will also take place among the current forms of company. Entrepreneurs who still have amounts of registered capital, as well as contribution amounts, stated in the Commercial Register in Slovak crowns should be on their guard. Likewise, companies that entered liquidation before 1 October 2016 and are presumed to be insolvent will be deleted. A warning finger is also raised over foreign entrepreneurs, their branches, and also the branches of Slovak entrepreneurs who, by 30 September 2021, do not confirm the details entered in the Register or do not propose a change to them.
It is of interest that, under the new rules, you will no longer find in the Commercial Register even sole traders and other natural persons who are compulsorily entered in other registers (e.g. the Register of Public Sector Partners), and whose entry in the Commercial Register is therefore superfluous.
Who should be on their guard
- Historical companies — forms such as economic establishments or national committees, no longer in the enumeration of entities entered in the Register.
- Capital in Slovak crowns — companies still stating registered capital and contributions in Slovak crowns.
- Old liquidations — companies that entered liquidation before 1 October 2016 and are presumed insolvent.
- Unconfirmed foreign entries — foreign entrepreneurs and branches (and branches of Slovak entrepreneurs) that do not confirm or amend their entered details by 30 September 2021.
Liquidation will be harder – without an advance you cannot liquidate a company
The second area that is significantly changing as a result of this amendment is precisely the area of company liquidation, to which relatively little space is currently devoted within the Commercial Code. The amendment, however, will change this.
A major novelty is the very start of the liquidation. Whereas under the current legislation a company enters liquidation upon the adoption of a decision / resolution on the dissolution of the company with liquidation, under the new rules the liquidation will begin only upon the entry of the liquidator in the Commercial Register. This step should protect creditors in particular, but at the same time there is a risk of the liquidation process being unduly prolonged.
Key point
Liquidation no longer begins with the decision to dissolve the company. Under the new rules it starts only upon the entry of the liquidator in the Commercial Register.
Probably one of the most criticised changes introduced by the amendment is precisely the obligation of the company's statutory body, most often the managing directors, in the event of the dissolution of the company with liquidation, to appoint a liquidator and to deposit an advance towards their remuneration into notarial escrow. At present, the condition of depositing an advance in this form does not exist, so one must reckon with increased costs both for the advance itself and for the notarial escrow.
Important
Without depositing an advance towards the liquidator's remuneration into notarial escrow, the liquidation cannot begin at all. Expect increased costs for both the advance and the notarial escrow.
In addition to the obligation to deposit an advance towards the liquidator's remuneration in order for the liquidation to be able to begin at all, the course of the liquidation itself is also changing. The liquidator's duties will include not only entering the registered claims in a list, but also depositing this list in the collection of deeds.
Documents that were not previously published will also be published. The liquidator will publish a notice of the preparation of the financial statements and of the proposal for the distribution of the liquidation balance, as well as information that the financial statements or the proposal for the distribution of the liquidation balance have been approved.
Another certified signature
Another document will be added to the category of documents requiring an officially certified signature. This will be the consent to the use of real property. This document is a necessary part of every proposal to change a company's registered seat, since it demonstrates that the company has a legal relationship to the property in which it intends to have its seat. Providing the owner's consent to the use of the property as the company's registered seat without a certified signature will result in the rejection of the entire proposal to register the change of seat.
Despite the legislators' intention to simplify the business environment, several experts are concerned precisely about the prolongation of the liquidation process and about entrepreneurs speculating whether to enter liquidation at all, given that the costs of it have again increased. How business entities will react to the changes and what response this will provoke we will monitor together with you and bring you information about the changes that affect your business.
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Frequently asked questions
In what form must filings to the Commercial Register be made?
From the start of 2020 registry courts accept only filings in electronic form, whether a proposal for registration, a change of details or the deletion of a company. A filing delivered in paper form is disregarded.
Which companies risk being deleted in the clean-up?
Historical companies such as economic establishments or national committees, companies still stating capital in Slovak crowns, companies that entered liquidation before 1 October 2016 and are presumed insolvent, and foreign entrepreneurs and branches that do not confirm or amend their entered details by 30 September 2021.
When does liquidation begin under the new rules?
Liquidation no longer begins upon the decision to dissolve the company. Under the new rules it begins only upon the entry of the liquidator in the Commercial Register, which is intended to protect creditors but may prolong the process.
What new cost does company liquidation involve?
The statutory body must appoint a liquidator and deposit an advance towards the liquidator's remuneration into notarial escrow. Without this advance the liquidation cannot begin, so companies must reckon with higher costs for both the advance and the notarial escrow.
Which document now requires an officially certified signature?
The consent to the use of real property, a necessary part of every proposal to change a company's registered seat. If it is provided without a certified signature, the entire proposal to register the change of seat is rejected.