Changes to the Companies Act – mandatory provisions affect LTDs

As it is known, the company register is a public and open database. This means that the data and facts indicated in the register must be considered as existing and actual and must be accessible to anybody.

The primary objective of the legislator is to ensure the above, for the purpose of which the legislator decided to introduce new guarantee provisions from January 1, 2024. In this context, the data in the company register relating to the pledge will be extended, making it compulsory to list the following:

1. in the case of a mortgage on a business share, the amount of the claim secured by the pledge or the amount up to which the claimant may submit its claim,
2. a prohibition on alienation and encumbrance or on separate alienation of the interest in the share, affecting the holder's right to dispose of the share, or
3. the sub-mortgage information.

The interest of a shareholder of a limited liability company is represented by the share. As a result, a share may have a significant asset value and, as such an asset of marketable value may be encumbered and, accordingly, may constitute security for (pledge) lending.

However, in order to ensure the public authenticity of the company register and the security of the pledge, it is necessary to define guarantees, therefore, the legislator decided to add the above data to the company register, thus making it possible for anyone to know the restrictions on the company’s share.

The legislator sets a transitional period for the compliance with the registration obligation, so that the companies concerned benefit from the favorable conditions regarding the registration: if any of the above cases apply, they must register it to the company register, but this is sufficient to be done at the next amendment to the company’s data, but no later than December 31, 2024. The registration of the data can be made by either the claimant or the debtor and, although the procedure is free of charge, legal representation is mandatory.

We are of course happy to provide advice and legal services for your company or business. Our office is available to assist you with the registration of existing liens, alienations, and encumbrances, as well as the registration of new guarantees. Please, contact us using the form below.

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