One step closer to interconnecting commercial registers within EU

The harmonisation of EU law regarding the use of digital tools and processes in corporate law has taken on a concrete form: an amendment to the Act on Public Registers, implementing a part of the changes prescribed by the EU directive into Czech law, entered into effect on 1 January 2021. The amendment will mainly simplify the exchange of information regarding cross-border transformations of joint-stock companies and limited liability companies or branches of foreign companies.

The amendment to the Act on Public Registers responds to Directive (EU) 2019/1151 of the European Parliament and of the Council as regards the use of digital tools and processes in company law, aiming to strengthen cooperation among member states’ registers through the register interconnection system to ultimately enhance the effectiveness of administration and establishment of corporations within the EU. Methods of exchanging information among registers and the clarification of information that is being exchanged and other tools applicable in practice are determined in Commission Implementing Regulation (EU) 2020/2244 in effect from 18 January 2021.

The amendment should help connect more closely the Czech commercial register with commercial registers of other member states through a central electronic platform. In spring 2018, the Czech commercial register became part of BRIS – the Business Registers Interconnection System, interconnecting the commercial registers of EU countries, Iceland, Lichtenstein, and Norway. It is currently possible to search BRIS for entities in the above countries and obtain basic information about specific companies free-of-charge (e.g. name, identification number, registered office, type/legal form, state of registration); other information is available depending on the regime of the state in which a company is registered.

BRIS will help significantly reduce the administrative burden of companies. For example, if any limited liability or joint-stock company is dissolved, this should be followed by an immediate dissolution of its business establishments or registered branches in other member states without any proceedings having to be held. Similarly, as a result of the availability of information through BRIS, selected information about business establishments and registered branches of foreign limited liability and joint-stock companies should also be registered without any proceedings. For cross-border mergers of joint-stock or limited liability companies, the court keeping the register will record a cross-border merger for the company being dissolved solely based on the data made available in BRIS on the cross-border merger registered in a foreign public register.

In the government’s legislative plan, another amendment to the Act on Public Registers implementing the remaining provisions of the above directive into Czech law was to be discussed by the government in November 2020. Since the deadline for implementing the directive will expire on 1 August 2021, further changes are expected to occur in the upcoming months.

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