How to dismiss an Executive in a Ltd
The dismissal of an executive in a Limited Liability Company does not have to be a difficult process. The simplest situation is when a company has one associate or the associates are consonant. The dismissal and appointment of executives falls within the competency of a general meeting. The general meeting must be held at least once a year to clear the accounts. It may also be summoned in order to dismiss an executive.
The fundamental documents for the whole process are founder´s documents of a concrete company. They may be found in the set of documents of the Companies Register at justice.cz. It is necessary to find out when the general meeting is quorate and what is the minimum number required for the dismissal of an executive who may not agree with the dismissal. If not determined otherwise by the Memorandum of Association, the general meeting is quorate when the associates having at least half of all votes are present.
It is not necessary to hold the general meeting at the “notary” for the dismissal of an executive. In that case a notarial record is not necessary, unless e.g. the number of executives or the way of their representation of a particular company is changed.
The general meeting is always summoned by the executive. That means if the second associate wants to summon the general meeting to dismiss the executive, he/she should address the executive (if the company has more associates). The general meeting may be summoned by the associate under certain circumstances but only in the situation when the company does not have an executive and the executive does not perform his/her duties in the long term. It is necessary to pay attention to the fact that the possible resolution of the general meeting should not be complained about the non-validity of the resolution.
The dismissal of an executive is effective by the decision of the general meeting. If the general meeting does not explicitly postpone the effect of its decision, the decision comes into effect on the day when the decision is taken. The fact, that the dismissed executive – till the moment he learned of or may have learned of the dismissal – may not be criticized that he/she acted as a statutory body of the company (because he/she did not know he/she is not in that function anymore), does not change the fact that the function of the executive ceases on the day when the general meeting decides on the dismissal, or on the later day determined in the decision of the general meeting.
The dismissal is therefore not effective on the day when the executive gets knowledge of the dismissal but on the day when it is decided on the dismissal!
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The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2019. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (consultation@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.