The introduction of Act No. 90/2012 Coll., on Business Companies and Cooperatives (the Business Corporations Act) gave rise to a widespread view that a company could be represented by its director acting together with a registered proxy. 

In its decision no. 29 Cdo 387/2016 on October 31, 2017, the Supreme Court held that a limited liability company’s Memorandum of Association might require the company to be represented by several of its directors acting together (the so-called four-eyes principle) or else limit this power to certain directors. The Court ruled, however, that this joint action by authorised directors could not depend on the actions of others who were not themselves directors of the company.

The Supreme Court, thus, found that any provision in the Articles of Association that allows for the company’s representation by a director and registered proxy acting jointly is unlawful (Section 1(2) and Section 164 (2) of Act No. 89/2012 Coll., the Civil Code). Such provisions clearly violate the rules on the legal standing of individuals and entities and the requirements of public order. They are therefore invalid and must be disregarded by the courts even if this is not requested by any party (Section 588 of the Civil Code).

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