To comply with their obligation to act with due managerial care, members of statutory bodies are recommended to take quickly all necessary actions and implement remedial measures that may differ from company to company.
Measures closely connected to the company law include, inter alia:
> not distributing the profit from previous accounting periods and limiting or suspending payments of bonuses or extraordinary remuneration and other payments of the company’s own resources to shareholders and the group;
> not returning contributions outside of registered capital;
> adapting the business strategy within the scope of business given in the founding documents of the company.
The current circumstances will also likely satisfy the legal requirements for convening an extraordinary general meeting and thereby involve the shareholders in addressing the situation (assuming that the statutory body not only presents an overview of the situation at hand but also proposes measures for its mitigation). Distance voting (per rollam) may be used in individual cases even if the company’s current bylaws do not allow for such form of voting, provided that all the shareholders have been demonstrably notified thereof.
The statutory body should also prepare a recovery plan and, should the corporation find itself in a state of imminent insolvency, consider providing proportional (pro-rata) payments to its creditors in order to minimise the risk of being accused of preferential treatment towards selected creditors.
It may be considered to file for an extraordinary moratorium, as it enables, as priority, pay all company’s obligations immediately connected to ensuring the continuance of company’s business and does not prevent such company from using state support intended for mitigation of the effects of the COVID-19 pandemic.
All forms of state assistance (interest-free and state guaranteed loans, deferral of tax obligations, etc.) should be pursued, as well as other measures designated to mitigate negative impacts of the crisis on the company, such as asking for deferral of loan repayments or protecting itself against termination of a lease of business premises by the lessor for a payment default.
It may further be advisable to consider taking certain measures to minimise meetings in person and to ensure sufficient availability of personnel and necessary flexibility in the company’s management and basic operation. These measures may include appointing one or more company proxys (in Czech: prokurista), providing for electronic signatures of the company’s signatories or the shareholders granting powers of attorney with respect to their attendance at general meetings.
It is also recommended to review (and amend, if necessary) applicable rules governing access of members of the statutory body and other persons to important documents and resources (including the company’s official data box primarily serving the communication with public authorities) should the authorised individuals be temporarily unavailable.
Companies should also ensure compliance with labour law when their employees are working from home. Last but not least, the health and safety measures of each company should be adapted to the new situation and provide for adequate protection of everyone in the workplace.
Disclaimer: The information contained in this summary does not constitute legal advice. PRK Partners and individuals involved in the preparation of this summary are not responsible for the consequences of actions taken based on the information contained herein, which may not be accurate or comprehensive to a particular situation. We are available to provide you with a tailor-made legal advice upon your request.