During the effective period of the previous legislation, the Supreme Court concluded that the 6-month period for convening the annual general meeting counted from the end of the last accounting period also represents the last day for using the regular financial statements for profit distribution in joint-stock companies. However, this meant that, after this period, the conclusions of the regular financial statements for the previous accounting period were no longer viewed as sufficiently relevant for the general meeting’s decision on profit distribution, so extraordinary financial statements had to be drawn up to take a decision on the profit.
However, these rules will not apply pursuant to the Business Corporations Act, as confirmed by the Supreme Court’s decision in case Ref. No. 27 Cdo 3885/2017. Although the Business Corporations Act continues to lay down that the general meeting decides on profit distribution based on regular or extraordinary financial statements, while stipulating the time limit for discussing the regular financial statements, it also contains the provision on the so-called insolvency test, which prevents profit distribution if such distribution causes insolvency of the company, potentially with an impact on its creditors. This regulation essentially fulfils the objectives of the previous legislation and the relevant case law, so it is not necessary to continue to insist on the application of the rules presented in the preceding paragraph.
Therefore, the above implies that since 1 January 2014 it is no longer necessary to prepare extraordinary financial statements before each decision of the joint-stock company’s general meeting on profit distribution, but the statutory body should evaluate whether it can still use the regular financial statements or whether it needs more up-to-date information, i.e. arising out of the extraordinary financial statements.
