In August, the Government of the Slovak Republic approved a draft amendment to the Commercial Code which, after approval by the National Council of the Slovak Republic, should come into effect on January 1, 2018. Its aim is primarily to prevent unfair mergers of companies. It is also proposed to strengthen the accountability of statutory bodies of companies, as well as of participants (shareholders) in companies, in the cases where they perform acts damaging the company, and to specify rules for the creation and distribution of the so-called “other own resources” by introducing the notion of a capital fund formed from the contributions of the shareholders of a joint stock company or, alternatively, of the participants in a limited liability company.

The bill reacts to the application problems associated with chain acquisitions/mergers realized in order to avoid the proper fulfillment of obligations whether in winding up of companies or their bankruptcy, as well as reacts to various approaches to the creation of capital funds established in practice. The possibility of creating a capital fund is currently implicitly allowed for by law, but it is not clearly regulated.

Tightening the obligations of statutory bodies of companies mainly concerns the cases of “effective winding up” of a company by using the “services” of “white knights”, and also the cases where the last single statutory body steps down and the company remains without a statutory body. Concurrently, the Criminal Code will introduce the constituent elements of a new crime of “unfair winding up”, which will allow for prosecution for activities involving transfers of participation interests (shares) in companies to the so-called white knights.

The proposed amendment also includes new regulation of trade secret protection. The Commercial Code will also regulate the liability of a person who effectively exercises the competence of a statutory body or a member of a statutory body without having been appointed to such a function.

The amendment will also tighten the responsibility of the statutory body for failing to submit a bankruptcy petition in time, which may also be of a criminal law nature, and may also result in the obligation to indemnify the bankrupt’s creditors.