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Report on relations in the Czech Republic

March 9, 2023
This article is also available in
Czech

We would like to remind you the annual legal obligation to prepare a Report on Relations under the Business Corporations Act (the BCA). The obligation to prepare the Report on Relations is set by law for all companies (controlled entities) that are controlled by another entity or form part of a group of companies.

The Report on Relations (inter alia):

  • describes the structure of relations between the controlled entity and controlling entity;
  • lists contracts concluded among group companies;
  • assesses advantages and disadvantages that arise from the relationships among group companies and risks to the controlled entity entailed by them
  • evaluates damage, if any, incurred by the controlled entity and the method of its compensation.

The Report on Relations shall be prepared by the statutory body of the controlled entity no later than three months after the end of the accounting (financial) period, and shall be reviewed by the company supervisory body (if appointed). The statutory body shall file the Report on Relations with the Collection of Deeds kept by the applicable Registry Court within the period for filing the Financial Statements compiled for the financial period covered by the Report on Relations. If the Financial Statements of the business corporation are audited, the Report on Relations shall be part of the Annual Report.

If the obligation to prepare and file the Report on Relations is breached, the company may face a disciplinary fine of up to CZK 100,000.

If you are interested in our advisory services, we will gladly prepare the Report on Relations for you so that it complies with all requirements set out by law, and file it with the Collection of Deeds of the applicable Registry Court.

Please keep in mind that if your company financial year ended on 31 December 2022, the Report on Relations shall be prepared by 31 March 2023.

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