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Government combats theft of companies

11.09.2008

With the events, where ill-willed persons have forged documents to arbitrarily appoint their representatives to management or supervisory boards of companies, which essentially accounts for theft of a company, becoming more frequent lately, the Government decided to take steps to render more stringent regulation for the election of the members of directing bodies and prevent related fraud.

The Government approved the amendments proposed to the Commercial Code and the Penal Code along with a bill amending other related laws to enhance legal certainty in respect of election of the members of the directing bodies of legal entities. To that end the bill suggests more stringent regulation of election of the members of directing bodies.

Whilst the applicable law does not specify who must take minutes, or chair the meetings, of shareholders and sign the respective minutes, the new law does. The bill changes a situation where the members of the management board are elected without calling a meeting of shareholders by stipulating that besides other persons specified by law the minutes of the meeting must also be signed by a shareholder or a registered board member of company. When a management board member is elected at a meeting of shareholders, the minutes of the meetings must be taken or the meetings must be chaired by a shareholder or registered board member of the company. The new bill prescribes that in both cases the signatures to be inscribed on the minutes must be attested by a notary or replaced with a digital signature. However, the foregoing will not be applied if the minutes of shareholders' meetings have been notarised or where extension of the term of office of the management board is to be decided, or where the application for registration of a management board member is signed by a registered board member or shareholder of the company. According to the bill, analogous rules would also apply to the election of the members of the supervisory board.

Therefore, the bill, if passed, would allow the commercial registrar to deny registration in the event where the voting record or minutes of the shareholders' meeting have not been signed by a competent person as appropriate. Consequently, the bill would prevent situations where third parties could use forged documents to elect any unlawful members to the management board.

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