Over the past year, many regulations have been passed that will have an impact on most business and work contexts. Below is a summary of the rules passed in 2023.

Measures for companies

The new laws simplify certain provisions concerning limited liability companies and lay down obligations for directors. The novelties:

• Model deed of incorporation of s.r.o. available to the public: a model article of incorporation is available on the website of the Ministry of Justice. This tool facilitates the creation of the basic documents and guarantees cost savings. However, it is not suitable for companies that have a more complex and flexible corporate structure.

• More straightforward rules regarding business licenses: can be obtained after the company is established, specifically within one year of its incorporation. If the company has not received a business license within one year, the court may decide to proceed with liquidation.

• Obstacles to being a director: a new (non-public) register of disqualified persons has been introduced, i.e. persons convicted of certain offenses such as fraud, tax crimes, money laundering, and fraudulent bankruptcy. Since such a conviction entails an impediment to appointment as a company director, the court and notaries will be able to independently consult this register to check the suitability of the director. If an existing director is on the disqualified register, his or her office will automatically cease as of 1 October 2023.

• Amendment of the ‘unspecified’ free market licenses: it was customary in the articles of association and the commercial register to indicate as corporate purpose ‘The production, trade, and services not specified in Appendices 1 to 3 of the Business Licensing Act’. In 2023, the Supreme Court intervened and decided that this definition of the company object was undefined and therefore the articles of association contained a fundamental defect; if this defect was not resolved, the court could order the dissolution of the company. To avoid this risk, it is necessary to amend the inspection by specifying the company object.

• Digital form of documents with DocuSign or similar tools: The Czech Republic does not have a comprehensive regulation on digital signatures, at the same time court practice is very vigorous and uneven in assessing which signature is suitable or not. Therefore, for important documents, it is strongly advisable to use ink or a certified electronic signature.

Stricter conditions for sales to customers

In January 2023, many changes were introduced in this respect:

• The legal deadline for delivery of a good: the maximum deadline for delivery of a good is 30 days from the date of purchase. The only exception to this deadline must necessarily be contractually agreed between the parties (the information on the seller’s website regarding the delivery deadline is not sufficient).

• New rules for online orders: when the consumer places a binding order by click, it must be specified on the website that such a click entails an obligation to pay. In addition, discounted products must have the lowest prices over the last 30 days. In addition, new penalties of up to 4 percent on the turnover of sellers are foreseen for malpractice or misbehavior.

New regulations for companies in the food and agricultural supply chain

The new law, effective from January 2023, applies to all companies in this supply chain and requires them to revise their contracts:

• New requirements for supplier contracts: the contract must be concluded in writing before the start of the shipment of goods or the provision of services. This contract must be specific and must guarantee information such as price, quantity, date, object of purchase, specification of related services, method of payment, promotional actions specifying their duration, and the quantity of goods being promoted.

• An extended list of business practices considered unfair: stiffer fines, up to CZK 10,000,000 or up to 10% of turnover, for violations and practices considered unfair (failure to comply with contractual terms).

Obligation to introduce systems for the anonymous reporting of irregularities (whistleblowing)

In August 2023, the new law came into force requiring companies with at least 50 employees, most public authorities, and other entities such as investment funds or insurance companies, to have a system for receiving and handling reports of possible wrongdoing, guaranteeing the anonymity of the whistleblowers and the persons involved. In particular, companies are required to appoint a manager, i.e. a natural person, who will handle complaints from employees or other persons who become aware of the misconduct.

Amendments to the Labour Code

The amendments to the Labour Code, in force since 1 October 2023, are aimed at regulating remote work and the exchange of digitized documents in the workplace.

• DPP and DPČ (on-call and part-time contracts): the employer is obliged to schedule working time and to notify employees at least three days in advance (unless otherwise agreed), and DPČ/DPP workers will also be entitled to surcharges for night work, overtime, weekend work, etc. DPČ/DPP workers may request a change to a traditional employment relationship after having worked at least 180 days in the last year; the employer must respond in writing and give reasons for its decision. Finally, DPP/DPČ workers from 1 January 2024 will be entitled to holidays.

• Continuous daily rest: employees will be entitled to a rest period of at least 11 hours within 24 hours. This rule can only be waived in exceptional situations or specific types of employment.

• Changes in document delivery methods, and greater support for electronic communication methods: the amendment allows for the electronic conclusion of employment contracts with employees, as well as the delivery of documents. The employee’s consent to this method of communication is required, but the employee may revoke this consent at any time. In the case of signing contracts and other documents digitally, a certified electronic signature is required on the part of the employer, but not on the part of the employee.

• New obligations of the employer: the employer is obliged to justify in writing why the request for home office or reduced working hours was not accepted.

• Content of the employment contract: there is an obligation to detail the employment contract with specific information on the probationary period, fundamental rights, and obligations arising from the employment relationship, also applies to employment of less than 1 month. Finally, special rules have been drawn up for the information of employees posted to the territory of another state.

• Home office: the employer is required to conclude a written agreement with the employee on the home-office working arrangements. A whole section on the reimbursement of expenses incurred while working remotely has also been added.

• Parental leave: the request for parental leave must be in writing, the amendment provides that the employee must apply at least 30 days before the start of parental leave unless there are serious reasons.

Registration of the beneficial owner

• Changes in the registration of the Ultimate Beneficial Owners (UBO): In the event that the existing entry in the UBO Register is not up-to-date, any decisions taken by the shareholders’ meeting or the sole shareholder are null and void, in particular decisions on the distribution of profits.

Source: https: //www.camic.cz/it/news/, https://kpmg.com/cz/cs/home.html

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