Přeměna společnosti a přechod práva na ochranu pověsti ve světle aktuální judikatury

Good reputation as a key asset: Why is its protection essential in the B2B world?

Moreover, judicial practice reinforces this trend. In a recent finding (Pl. ÚS 26/24), the Constitutional Court confirmed that legal entities are entitled to appropriate satisfaction for non-material harm caused by an infringement of their reputation. This brings the protection of corporate reputation closer to the protection of the personal rights of natural persons.

One of the powerful tools of defense against false statements in the media is the right of reply under Section 10 of the Press Act (Act No. 46/2000 Coll.). This instrument allows the affected company to quickly and effectively correct distorting or false factual statements directly in the given medium.

Our Prague-based legal team at ARROWS specializes in media law and reputation protection. We regularly prepare requests for the publication of replies for our clients and represent them in subsequent disputes. Do you need legal assistance? Contact us at consultation@arws.cz.

Company transformation on the horizon: What happens to rights that are not on the books?

Mergers, divisions, and other transformations are complex operations that require precise legal management. While the transfer of assets, debts, and contracts is clearly regulated, what happens to rights of a non-proprietary nature? Specifically, if the reputation of the dissolving company was damaged, can its legal successor continue the defense? Until recently, legal uncertainty prevailed on this issue.

This uncertainty is illustrated by a recent case that went all the way to the Supreme Court. Company A was attacked in the media and sought the publication of a reply. During the court proceedings, however, it ceased to exist through a merger by formation of a new company, resulting in the successor Company B. The publisher (the defendant) argued that the right of reply is personal, non-transferable, and that with the dissolution of Company A, this right also ceased to exist.

Company transformation processes are our daily practice. For clients among more than 150 joint-stock companies and 250 LLCs, we ensure that the transfer of all rights and obligations, including the less obvious ones, is legally flawless under Czech legislation. For an immediate solution to your situation, write to us at consultation@arws.cz.

• In a merger by acquisition, one company is dissolved and its assets are transferred to another, already existing company. In a merger by formation of a new company, all participating companies are dissolved and a completely new one is created. Do you need advice on choosing the right form of transformation? Write to us at consultation@arws.cz.

Do I have to inform my business partners about the planned merger?

• The law stipulates the obligation to inform creditors. In addition, active communication with key partners is essential for maintaining business trust. We will be happy to prepare a communication strategy and the necessary documentation for you. Get in touch with us at consultation@arws.cz.

The Supreme Court has ruled: Universal succession also protects your reputation

The Supreme Court clarified this issue in its ruling, file no. 25 Cdo 1919/2024. It unequivocally confirmed that the right of reply under the Press Act does not cease to exist during a merger, but is transferred to the successor company.

The court based its decision on the principle of universal succession. This technical term does not only mean the transfer of assets and debts. It means that the successor company enters into the entire legal position of the dissolving company, including all rights and obligations, not just proprietary ones.

The court's key argument stood on two pillars:

1. A company is not a human being: The court made a fundamental distinction. While the death of a human being is a biological event, the dissolution of a company during a transformation is a conscious legal and business act. Therefore, the rules on the termination of personal rights applicable to natural persons cannot be automatically applied. The legal identity of a corporation is continuous, even if it changes its legal form.

2. Practical and logical need: The court also argued from a business perspective. It would be illogical for a successor, who takes over all business activities and bears the consequences of its predecessor's reputation, not to have the opportunity to defend this reputation. This would mean the termination of the right in contradiction to its meaning and purpose.

This interpretation fully corresponds to our long-term practice. Our Czech legal team has always advocated for a broader concept of universal succession to ensure maximum legal certainty and protection of our clients' values in M&A transactions. Do you want to know the impact of this decision on your company? Write to consultation@arws.cz for a legal opinion.

Practical implications for your company: From due diligence to active defense

This decision sets the rules of the game for mergers and acquisitions. The successor company must now expect to "inherit" reputational disputes and the associated rights and obligations. This has two main impacts.

Firstly, it is necessary to expand the legal due diligence. It must now focus not only on classic commercial and court disputes, but also on ongoing or imminent disputes over reputation protection, analysis of the media image of the dissolving company, and potential "skeletons in the closet" that could damage the name of the new, merged company.

Secondly, the successor company can and must actively continue the defense. For example, it can enter into already ongoing court proceedings, submit a new request for the publication of a reply (if the deadlines have not expired), or use other legal tools to protect the reputation it has taken over.

At ARROWS, in-depth legal due diligence is the foundation of every transaction. Our team of specialists will ensure that you uncover all reputational risks before signing and will prepare a strategy to address them. Do you want to conduct a comprehensive due diligence? Get in touch with us at consultation@arws.cz.

Strategic reputation protection in an international context

In globalized business, reputational problems do not stop at borders. False information published in the foreign press can have a devastating impact on your business in the Czech Republic and elsewhere. Similarly, mergers and acquisitions often cross national borders.

Thanks to our ARROWS International network, built over ten years, we resolve disputes with an international element on a daily basis. Whether it is a merger with a foreign partner or reputation protection on the global market, our experts and partners are ready to provide you with fast and effective legal assistance.

However, the best defense is prevention. Reputation protection does not start in court, but with a proactive approach that minimizes risks and prepares the company for potential crisis situations.

Therefore, we provide our clients not only with dispute resolution, but also with preventive services, such as professional training for employees and management in the field of media law and crisis communication, including a certificate of completion, or the preparation of internal guidelines that minimize the risk of reputational crises. Do not hesitate to contact our office – consultation@arws.cz.

ARROWS: Your partner for safe growth and protection of corporate values

As confirmed by the Supreme Court, a good reputation is a lasting value that accompanies your company even through complex transformation processes. It is an asset that deserves the best legal protection. Passivity in this area can lead not only to financial losses but also to permanent damage to the trust you have built over the years.

Our experience from long-term cooperation with a portfolio of more than 150 joint-stock companies, 250 LLCs, and 51 municipalities and regions gives us a unique insight into the problems you face. We pride ourselves on speed, high quality, and a proactive approach.

We are not just lawyers. We are your business partners. We are happy to listen to your business ideas and connect you with other clients if we see interesting business or investment opportunities.

Whether you are dealing with an acute reputational issue, planning a company transformation, or want to protect your company preventively, we are here for you.

Our Prague-based legal team is ready to help you – write to consultation@arws.cz and arrange an initial consultation.