JŠK Legal Flash
What changes does the Act on the Register of Ultimate Beneficial Owners introduce?
The obligation to register the ultimate beneficial owners of companies and other legal entities has already existed for some time. However, the recently adopted act significantly broadens the scope of those who will be considered ultimate beneficial owners. Moreover, the relevant entries in the register will now be made publicly available. Keep in mind that the most important changes consist of sanctions for a failure to register the ultimate beneficial owner, namely the prohibition of payment of dividends, the suspension of voting rights and the impossibility to assert rights from certain agreements before the courts.
Supreme Court: Actions taken in error in concluding transfer agreements
The Supreme Court dusted off and supplemented its case law on the topic of actions taken in error in concluding transfer agreements and reminded the relationship between legal due diligence, the transferor's statements, and disclosure. According to the court, under the old Civil Code, an action taken in error is invalid if the error is substantial and at the same time excusable. A substantial error is when the (un)truthfulness of the fact is decisive for the legal action, i.e. had the actor known of the error they would not have concluded the contract at all. The acquirer's error is excusable if they proceeded with the usual degree of caution, which can also be regarded as concluding a contract while trusting (subject to limited due diligence) in the truthfulness of the transferor's statements, unless it was already clear at the time the contract was concluded that these statements were untrue. Simply put, if the buyer does not have the opportunity to conduct thorough due diligence of the company, they are protected by trust in the seller's statements and this trust is regarded as the usual degree of caution. If the seller's statements were false, the buyer's actions are an excusable error.
Class actions: European Parliament definitively approves Directive on Representative Actions
The Directive requires Member States to provide mechanisms for representative actions in consumer disputes. The plaintiffs in these cases may be consumer organisations, but also public bodies designated by individual Member States. If they meet special criteria, these bodies will also be able to bring actions in other Member States. The Directive will enter into force on Christmas Eve and Member States should transpose it within two years. After several significant amendments to the Czech bill on collective proceedings, a version is now awaiting the first reading in the Chamber of Deputies, according to which collective proceedings in the Czech Republic should also be admissible only in consumer disputes. In addition to non-profit consumer organisations, the plaintiffs could also be the consumers themselves. To reduce the risk of their abuse, the current bill only permits class actions for consumer claims and the representative of the group of plaintiffs must not be a commercial entity.
(Directive 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC)