On 27th March 2019 the Czech Supreme Court issued an innovative decision concerning the distribution of profit in a joint stock company, in which it was confirmed that according to the Business Corporations Act (Act. No. 90/2012 Coll.), effective as of 1.1.2014, the corporation´s financial statements prepared for the previous accounting period, may serve as a basis for decision on profit distribution until the end of the consequent accounting term.
By this ruling, the Supreme Court reversed the existing case law based on the interpretation of the Commercial Code (Act. No. 513/1991 Coll.), valid until 31.12.2013, implying the rule that after the elapse of the statutory period for the convocation of the mandatory annual General Meeting (i.e. 6 months from the end of the accounting term), the respective financial statements can not longer serve as a basis for profit distribution.
