Appointment of a Guardian of a Legal Person

The Supreme Court of the Czech Republic recently dealt with appointment of a guardian of a legal person according to Section 165 Subsection 2 of the Civil Code (decision of December 8, 2015, Reference Number 29 Cdo 4384/2015).

Section 165 Subsection 2 of the Civil Code determines that the court shall (even of its own motion) appoint a guardian of a legal person if the interests of its governing body are contrary to the interests of the legal person, and in the absence of another member of a body of the legal person capable of representing it.

According to the opinion of the Supreme Court it is necessary by the application of the above mentioned provision to take into consideration the fact that the appointment of the guardian by the court interferes into internal relationships of the legal person and it should be applied as the last solution.

In case there is another member of a body that is allowed to act on behalf of the legal person, it is not possible to appoint a guardian according to Section 165 Subsection 2 of the Civil Code. It is not possible to appoint the guardian not even in case the legal person has already appointed another guardian (regardless the purpose for which the guardian was appointed).

The provision will not be used even in case the member of a governing body will fulfil its information obligation according to Section 54 Subsection 1 and 2 of the Business Corporations Act and the supervisory body or the supreme body will not suspend the execution of its function. In such case it is allowed to represent the corporation even if there is a conflict of interests.