Into the new year with an amended Civil Code
Two days before the third anniversary of the Civil Code’s effective date, its first overall amendment was published in the Collection of Laws as Act No. 460/2016 Coll. It has brought about some significant changes, the most crucial of which we summarise for you below.
The amendment to the Civil Code addresses some of the pressing issues that the private law recodification has initiated and that have been questioned by the professional public. For instance, the new law explicitly stipulates that if a married person acquires a share in a business corporation, the other spouse does not automatically also become a member of the corporation. It also addresses the issue of powers of attorney for juridical acts where a form of a notarial record is required: for such powers of attorney, an official verification of the signature of the principal (person granting the power of attorney) will suffice; the amendment determines as sufficient also powers of attorney with a verified signature drafted before its effective date. Furthermore, the much-criticised duty of collective statutory bodies to authorise one of their members to act towards employees has been cancelled. In contrast, the co-owners’ pre-emptive right, which had been suppressed by the recodification, celebrates a comeback: it will generally apply to transfers for consideration as well as to gratuitous ones, unless the transferee is a close person.
Rather extensive changes have been made to the regulation of trusts. A trust (unless established mortis causa) shall be incorporated upon its registration in the register of trusts, same as, for instance, commercial companies. The amendment thus also affects the Public Registers Act: it introduces the record-keeping of trusts in a similar manner as the amendment to the Act on Certain Measures against Legalisation of Proceeds from Crime did for the record-keeping of beneficial owners.
Of the other changes, we should mention the cancellation of the prohibition of the unilateral off-setting of receivables against wages or salaries amounting to more than half of the regular payments. Under the new law, such receivables may be unilaterally offset without any such limitation. For leases, the maximum limit on security deposits to be provided to landlords has been reduced from six-times to three-times the amount of monthly rent. The duty of previously existing associations and unit owners’ associations to change their names according to the requirements of the new Civil Code has been abandoned, which should ease the administrative burden for these entities.
Apart from the pre-emptive right provisions and the record-keeping regulation for trusts, which enter into effect on 1 January 2018, most of the mentioned changes will apply from 28 January of this year.