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What is the correct reference date for the expert opinion on the adequate amount of compensation in cases of a transfer of assets to the shareholder?

Or how to comply with two mutually inconsistent provisions of the Czech Transformations Act, regarding the day as at which a court-appointed expert determines what constitutes adequate compensation for asset transfers to the shareholder.

Asset transfers to the shareholder are one of several forms of corporate transformations recognized by the Czech Act on transformations of companies and co-operatives (the "Transformations Act"). This particular transformation means that the company (or co-operative) ceases to exist and its assets pass to one of the shareholders. The other shareholders are entitled to adequate compensation. That the compensation was actually adequate must be shown by submitting an expert opinion on the asset transfer, prepared by a court-appointed expert (Sec. 341 (2) of the Transformations Act in conjunction with Sec. 28 (c) of the Transformations Act).

This expert opinion must be circulated among shareholders prior to the general meeting which is being asked to decide on the transfer of assets to one of the shareholders (Sec. 342 of the Transformations Act). Given that the provisions on the asset transfer to a shareholder do not stipulate any specific date as at which the amount of compensation should be determined, the general provision of Sec. 13a of the Transformations Act kicks in according to which the amount of compensation is to be determined as at the day on which the shareholder ceases to be a member of the company (or the member of the co-operative ceases to be a member of the co-operative). However, that membership expires on the day on which the transfer of assets to the shareholder is entered into the Commercial Register, and thus by definition only after the general meeting convened which decided on the selfsame transfer.

Clearly, the above-described statutory requirements contradict each other. In order to accommodate them both, we believe it is advisable to draw up one expert opinion as at the day which precedes the so-called "reference day" (rozhodný den) of the asset transfer and another expert opinion as at the day on which the asset transfer is entered into the Commercial Register, such that the actual payout of the adequate compensation can be carried out within one month from the date of entry of the asset transfer into the Commercial Register, as per Sec. 341a (1) of the Transformations Act. Pursuant to Sec. 339 (d) of the Transformations Act, the draft terms of the asset transfer must describe how one arrived at the amount of compensation, including the time period for payment (and in this respect, we recommend stating the specific amount given in the first expert opinion, adjusted though as it may be based on the second expert opinion). In our practice we also have encountered a different solution: one expert opinion which was drawn up "looking into the future", to the anticipated date of entry of the asset transfer to the shareholder.

Source:
Czech Act No. 125/2008 Coll., on transformations of companies and cooperatives, as amended

 

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