Changes in a joint-stock company – what do I need for the Commercial Register?

Decision of the Sole Shareholder

We recommend that all changes be recorded in the decision of the sole shareholder, from which all data to be entered or deleted in the commercial register will be derived, according to the form that needs to be submitted to the commercial register.

Changes concerning a joint-stock company can also be decided by the sole shareholder. According to Section 190(1) of the Commercial Code: “If the company has only one shareholder, the shareholder exercises the powers of the general meeting. This shareholder may at any time convene a general meeting, the powers of which they will exercise, and Section 184(3) does not apply. The decision of the sole shareholder made in the exercise of the powers of the general meeting must be in writing and signed; a notarial deed is required in cases specified in Section 187(2); the provisions of Section 189(3) apply accordingly.”

When is it necessary to adopt a decision on changes in a joint-stock company in the form of a notarial deed?

The Commercial Code specifies when it is necessary to prepare a notarial deed for changes in a joint-stock company. According to Section 187(2) of the Commercial Code: “To approve a decision of the general meeting on changes to the Articles of Association, an increase or decrease of the share capital, the authorization of the board to increase the share capital under Section 210, the issuance of priority bonds or convertible bonds, the dissolution of the company, or the change of the legal form, a two-thirds majority of the votes of the present shareholders is required, and a notarial deed must be prepared. A two-thirds majority of the votes of the present shareholders is also required to approve the decision of the general meeting to cease trading on the stock exchange with the company’s shares and the decision of the general meeting that the company ceases to be a public joint-stock company and becomes a private joint-stock company. The Articles of Association may specify a higher number of votes required to adopt a resolution of the general meeting.”

In order to answer your question, it is necessary to assess the individual changes to determine if they alter the company’s Articles of Association, or if they are other changes listed in Section 187(2) of the Commercial Code, in which case a change to the Articles is required.

An invitation to the general meeting is, for obvious reasons, not necessary, as Section 184(3), which governs the sending of invitations to the general meeting, does not apply.

Change of the Sole Shareholder of a Joint-Stock Company

We also draw attention to the need to submit a written statement from the statutory body of the joint-stock company to the commercial register, from which the recorded details about the sole (new) shareholder of the company will be derived.

Share Purchase Agreement

For the change of the sole shareholder, it is necessary to prepare a share purchase agreement. This agreement is governed by the provisions of the Commercial Code on sale contracts as well as § 30 of the Securities Act. For the validity of the share purchase agreement, it is required to specify the type of transferred securities, the number of transferred securities, their purchase price, and their ISIN (if assigned).

According to § 30 paragraphs 2 and 3 of the Securities Act: “Without specifying the purchase price, the share purchase agreement is valid only if the parties have expressed their intention to conclude the agreement without specifying the purchase price. In such cases, the buyer is obliged to pay the purchase price corresponding to the lowest price at which the transferable security was sold on the stock exchange on the day the agreement was concluded. If the transferable security was not traded on that day, the buyer is required to pay the lowest price at which the transferable security was last traded. If the purchase price cannot be determined this way, the buyer is obliged to pay the price that could be achieved with due professional care. The agreement on the purchase of a registered security must be in writing, and if required by a special law, the agreement on the purchase of a registered security shall also be in writing.”

Also, note the provisions of § 156 of the Commercial Code: “When shares are registered in the name of a shareholder, the company ensures the maintenance of a shareholder list according to this law and special regulations. The company must promptly submit the shareholder list to the central securities depository. The shareholder list should include the share’s numerical designation, type, nominal value, and business name or address of the shareholder. If a foreign person holds the share, their date of birth is required if a personal identification number is not assigned. The rights associated with a registered share can only be exercised by the person listed in the shareholder list. The shareholder list is not public. The shareholder has the right to request an extract from the shareholder list at their own expense. For the effectiveness of the transfer of a registered share, the change in the shareholder must be recorded in the shareholder list. The company must ensure that the change is promptly recorded in the shareholder list after the change in shareholder is verified. The company is liable for any damage caused to the shareholder or the acquirer of the share if it fails to carry out this obligation. The provisions of paragraphs 6 and 7 do not apply if, according to the law or the articles of association, the evidence of book-entry securities replaces the shareholder list.”

According to § 156 of the Commercial Code: “The transfer of registered shares is carried out by endorsement and delivery of the share. The endorsement must include the business name or address and identification number of the acquirer, the name, address, and personal identification number (if applicable) of the transferring shareholder, the signature of the shareholder transferring the share, and the date of transfer. If the shareholder is a foreign person, their date of birth is required if a personal identification number is not assigned.”

Other documents to be submitted to the commercial register depend on the changes being made.