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In connection with the entry of the Business Corporations Act (BCA) put into force on 1 January, 2014 there are, among other things, changes in the requirements on the preparation and content of reports on relations.
Due to the absence of specific transitional provisions governing this issue, uncertainty prevailed at the beginning of this year (2014) amongst the professional public. Was the report on relations describing the transaction in 2013, but composed in 2014, subject to the requirements of the Commercial Code or the BCA?
We, along with most professionals, believe, with the support of the general transitional provisions of the BCA (§ 775), that it can be applied to transactions made in 2013. This means proceeding according to the Commercial Code.
However, the question of how the preparation of the report on relations should proceed in those entities, whose accounting period is the year extending partly into 2013 and partly in 2014, remains? In these cases, we recommend dividing the report on relations into two separate parts with the first part, subject to the requirements of the Commercial Code, covering the transactions of 2013 and the second part relating to transactions in 2014, for which the rules of BCA are applied.
In connection with the approaching period of approval of the financial statements and the convening of the General Assembly, we also recommend reviewing whether your company qualifies for an audit as required by the law. For, an audit as required by the law with an auditor must be appointed by the General Assembly.
Author: Eva Šmahová