Feb 3

Approval by the general meeting required for transfer of a part of an enterprise


In its decision file no. 27 Cdo 2645/2018 of 29 May 2019, the Supreme Court addressed the issue whether the term “part of an enterprise” as used in Section 190 (2) (i) of Act No. 90/2012 Coll., on business corporations (the “BCA”) means only an independent branch of an enterprise or any materially significant part of an enterprise.
The Supreme Court preferred the first of the two options in its decision.
This issue needed to be addressed to answer, among other things, the question whether the transfer of a part of an enterprise is subject to approval by the general meeting or whether such a transfer may be effected only based on a decision of a business representative, in particular an executive.
In its decision, the Supreme Court determined that in the case that a part of an enterprise is being transferred, such a transfer is subject to approval by the general meeting provided that (i) it is a transfer of an independent branch; and (ii) such a transfer represents a significant change of the current structure of the enterprise or the company’s subject of business or activities. These two conditions must be fulfilled simultaneously. If the two conditions were fulfilled and a part of an enterprise was transferred without the general meeting approval, such an act would be deemed relatively void; however, the general meeting approval may be also granted subsequently.
Whether you intend to transfer a part of an enterprise or you are dealing with another corporate matter, we stand ready to provide our legal services, in these and other matters.