From 1 May 2015, in addition to registration courts, notaries can also make entries in the Commercial Register. The advantages of this option are particularly evident on initial registration of companies, where registration by a notary it is not only administratively simpler, but also much less expensive. In this article, we will examine entries in public registers by notaries and point out the possible pitfalls.
In conjunction with the overall amendment of private law, the possibility of entries in public registers by notaries was expected with the adoption of Act No. 304/2013 Coll., on Public Registers of Legal Entities and Natural Persons (hereinafter “APR”), from 1 January 2014.
However, because the required system was not prepared and implementing regulations had not been issued, it only became possible for notaries to make entries in public registers from 1 May 2015, when the amendment of the Act on Court Fees determined fees for entries by notaries (for amount see below).
1. Entries in public registers by notaries
The primary difference between an entry made by the court and an entry by a notary is that while the court must conduct registration proceedings at which it examines the conditions of registration, a notary need not conduct such proceedings and can make an entry directly. An entry by a notary is therefore faster than in case of the registration court.
Another advantage is that there is no need to submit an application for registration in traditional electronic form. Notaries are simply provided with the necessary documents, as required by the registration court.
A condition for entry in the public register is that this entry is made by the same notary who drew up the underlying notarial deed. It is therefore not possible to draw up a notarial deed at a notary, and then apply for entry in the public register by another notary.
If the requirements for entry are not met (an underlying document in the form of a notarial deed, notary’s declaration and the necessary documents), the notary must refuse to make an entry in the public register. The applicant, however, retains the option of submitting an application for registration to the registration court.
If the requirements for the entry of information in the public register are met, the notary shall make an entry by remote access without undue delay after filing an application for registration. This application does not have set statutory requirements and is not a traditional application for registration on an electronic form. In most cases, an application sent by mail or submitted directly at the notary after drawing up the underlying document will suffice.
The notary will issue the registered party with a certified extract from the public register showing recorded facts to confirm registration. The notary will also send this extract to other parties that may be registered in the public register in connection with the registered party (e.g. registered board members) within 3 working days from the date of entry.
2. Fees for entries in public registers
As mentioned above, fees for entries in public registers by a notary are lower than court fees for the initiation of proceedings in matters of public registers at registration courts.
For example, the fee for the incorporation of a joint stock company is CZK 8,000 at a notary, which would come to CZK 12,000 at court. The fee for the incorporation of a limited liability company is CZK 2,700 at a notary and CZK 6,000 at court. A notary will charge CZK 1,000 for a change or addition to an entry, which would cost CZK 2,000 at court.
3. Problem in legislation?
However, a certain problem in legislation that legislators probably overlooked must also be pointed out.
The problem stems from the APR, which imposes an obligation to submit an application for registration in the register following the foundation of company without delay, i.e. an application on an electronic form with an electronic or notarised signature.
According to Section 9 of the Business Corporations Act, if an application for registration in the Commercial Register is not filed within 6 months of a company’s foundation, the same effects arise as on withdrawal from a contract.
As mentioned above, an application for registration is not submitted to notaries, but according to Section 113 of the APR, an application is submitted, though this is not further specified or its requirements listed in the Act.
For this reason, a problem could arise on a purely formal interpretation as to whether a company registered by a notary after the expiry of the aforesaid period has valid and effective Articles of Association, or whether the same effects as on withdrawal from a contract have arisen.
We believe that given the evident intention of legislators to allow entries to be made by not only the registration court, but also by notaries, no registration court would accede to the dissolution of a company for the above reason. However, the above shortcoming in legislation should be kept in mind until it is remedied by legislators.
4. Conclusion
In light of the above, it can be said that direct entries in public registers by notaries are simpler and cheaper than entries by the court and will undoubtedly be frequently used in practice.
However, this innovation is not entirely free of certain imperfections in legislation, which we have pointed out above.
For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail: jkucera@kuceralegal.cz ; tel.: +420604242241.