Government seeks to tighthen sanctions for the failure to publish financial statements
25. January 2019
The Chamber of Deputies received an amendment to the Public Registers and Accounting Act, which tightens the sanctions for the failure to file financial statements in the Collection of Deeds. If a company fails to file financial statements in the Collection of Deeds in accordance with the application regulations or on the court request, it may be fined up to CZK 100,000. If this obligation is breached by a company repeatedly, the court may rule on its winding up with liquidation. If the government bill is adopted, the court will be able to instigate proceedings for winding up the company without liquidation. Third parties will be granted a 1-year term to prove at the court that the company has assets. If this is not proved within the aforesaid term, the court will rule on winding up of the company without liquidation. The court may choose this course of action only in the case where the company fails to file in the Collection of Deeds financial statements for two consecutive accounting periods and, at the same time, it will not be possible in any way to deliver to the company an invitation to meet this obligation. Through this course of action, the government seeks to eliminate the so-called inactive businesses which could serve as the so-called strawmen for financial frauds. The amendment to the public registers act should come into effect on January 1, 2020.