Dear clients and business partners,

In accordance with the current, long-established practice, many companies have stipulated so-called free trade licence “production, trade and services not listed in Annexes 1 to 3 of the Trade Licensing Act” as the subject of their business in their articles of association or statutes and have it registered likewise in the commercial register. In a surprise decision passed in May 2021, one senate of the Supreme Court of the Czech Republic, has, in a very specific case, expressed its opinion that the object of business defined in such way is vague and should therefore not to be taken into account (i.e. as if it was not stated).

Since this decision was issued, the internet has filled with countless articles, which claim that the articles of association or statutes should be amended immediately in order to bring them into line with the above-mentioned Supreme Court’s decision. However, since this court decision would lead to a total turnaround of the current practise which has established itself over the last years, we strongly recommend waiting to see what position the notaries chamber will take, or if the grand senate of the Supreme Court will issue a unifying statement on this topic.

We will continue to monitor this matter and will inform you promptly as soon as we know more details.