Approval of financial statements in the Czech Republic | News Flash

We would like to draw your attention to the corporate obligations related to the end of the financial period. These include the following:

• discussion and approval of financial statements,
• decision on the use of profit and loss.
• publishing these documents in the Collection of Deeds.

The annual financial statements must be considered and approved by the General Meeting of the company no later than 6 months from the end of the financial period. Hence, if the financial period ended on 31 December 2022, the financial statements must be approved by 30 June 2023.

Furthermore, along with the financial statements, a proposal on the use of profit and loss shall also be presented to the General Meeting for approval. The statutory body decides on the actual payment of the dividends and other own resources. This decision is subject to the so-called balance and insolvency tests to assess whether the profit can be paid out. These documents, incl. the financial statements, or the annual report if prepared by the company, should be filed in the Collection of Deeds no later than 12 months from the balance sheet date.

We would like to point out that the most recent amendment to the Act on Public Registers sets out that if a company does not file in the Collection of Deeds the annual or extraordinary financial statements for at least two consecutive financial periods and at the same time the company cannot be contacted by the Registry Court, a disciplinary fine or even the dissolution of the company without liquidation may be imposed.

Finally, in connection with the approval of the financial statements by the General Meeting and the decision on the use of the P&L, we recommend that the company has a beneficial owner registered in the Register of beneficial owners or that the entry in the Register corresponds to the actual facts. Otherwise, according to the Act on the Registration of Beneficial Owners, the shareholders might not be able to exercise their voting rights at the General Meeting and a share of the profit might not be paid out.

We are ready to assist you with the required documents and meet the legal obligations.