1. The right of explanation is linked to the shareholder's participation in the general meeting
The Supreme Court has again held that the shareholder's right to an explanation is linked to their participation in the general meeting.
The primary purpose of this right is to ensure that the shareholder is informed and to enable them to make an informed assessment of the matter before the general meeting at which they exercise their rights. If they do not attend, this right loses its true meaning. Thus, if a shareholder does not attend the general meeting, they cannot receive any explanation, since the purpose of the right to an explanation is not fulfilled.
(According to the decision of the Supreme Court of the Czech Republic, Case No. 27 Cdo 3812/2019 of 25 May 2021)
3. Liability of the parent company for infringements of competition by a subsidiary
The CJEU has concluded that in the event of a breach of the prohibition of agreements which exclude or distort competition under EU law, the victim of such anti-competitive conduct of a parent company may also bring a claim against a subsidiary, provided the parent and subsidiary form an economic unit.
Thus, where there is at least one entity within a group that has infringed the prohibition referred to above, as confirmed by a decision of the Commission or of a national court, and where the parent company carries on an activity related to that of the subsidiary, liability may be attributed to any entity within the group and not, as has been the case to date, only to the parent company for the activities of its subsidiary.
5. Executive service agreement may "survive" the termination of the office
The Supreme Court reaffirmed that an executive service agreement may be made subject to the Labour Code even by mere reference to it, unless the parties exclude individual provisions of the Labour Code, in this case the provision on the dismissal of a senior employee.
In practice, this means that the office of a member of an elected body would then cease at the time of their dismissal, but their relationship with the legal entity would not necessarily end. Indeed, the company would be obliged to offer the member a change of employment upon termination of their office. Only if the legal entity does not have such a job for the dismissed member, or if the member refuses it, can the parties terminate their contractual relationship by giving notice. Unless the parties agree otherwise, in the event of termination, the member will be entitled to remuneration in the same form and at the same rate as they were entitled to for the performance of their duties during the two-month notice period.
(According to the decision of the Supreme Court of the Czech Republic, Case No. 27 Cdo 2837/2020 of 22 September 2021)
7. Exclusion of the pre-emptive subscription rights of other shareholders for the purpose of squeezing them out
Although the Supreme Court held that a majority shareholder's effort to achieve the necessary shareholding to squeeze out other shareholders is legitimate, it also confirmed that a majority shareholder cannot do so in ways that contravene the law.
Thus, a majority shareholder cannot exclude the pre-emptive rights of the other shareholders to subscribe for shares on the grounds of an important interest of the company and to subscribe for new shares themselves, thereby increasing their shareholding in the company. Although pursuant to Section 488 of the Business Corporations Act the general meeting may limit the shareholders' pre-emptive rights if it is in the important interests of the company, such a limitation must be the same for all shareholders.
(According to the decision of the Supreme Court of the Czech Republic Case No. 27 Cdo 1453/2019 of 3 February 2021)
9. Registration in the Commercial Register is decisive for limiting the transferability of shares
The Supreme Court confirmed that the restriction on the transferability of registered shares is effective only upon their entry in the Commercial Register.
The Business Corporations Act provides that if the general meeting decides to limit the transferability of registered shares, such an amendment to the articles of association will not take effect until the date of entry of the amendment in the Commercial Register.
The purpose of this provision is to provide increased protection for purchasers of shares. Thus, as long as the restriction on the transferability of shares is not entered in the Commercial Register, anyone may legitimately assume that the shares are transferable without restriction, and it is not decisive that the restriction on transferability is contained in the company's articles of association, regardless of whether it has been in the company's articles of association since its incorporation or whether the restriction was only subsequently inserted in the articles of association by an amendment.
(According to the decision of the Supreme Court of the Czech Republic Case No. 27 Cdo 2927/2019 of 9 December 2020)