Proposal of an amendment to ZGD-1K (part one)
The amendment to ZGD-1K impacts two areas in our legislation. The first would address the need for harmonization of our legislation with Directive (EU) 2017/288, which was adopted by the European parliament and Council on the 17th of May 2017, while the second addresses the elimination of shortcomings and inconsistencies in the current legislation. This article will focus only on the changes to national legislation. The consequences of adopting Directive (EU) 2017/288 will be examined in one of our next issues.
The 4th paragraph of Article 11 of the current version of ZGD-1, which stipulates that companies must use Slovenian when communicating with employees, is set to be amended. After the amendment is passed, management will be free to communicate with foreign employees in a language they understand and will be required to do so in situations when the health and safety of others are at risk.
It also tries to resolve the issue of so-called virtual offices, where foreign citizens in Slovenia set up a company using an address and services provided by a third-party who then takes deliver of and forwards the mail, which prevents contact with responsible persons. To combat this practice Articles 29 and 30 of ZGD-1 are to be amended to include a requirement that companies being registered give a business address in addition to the address of the seat of the company (which is required under current legislation). This in itself would not change much, however, the penalty provision under Article 658 will lend weight to ZGD-1. Consequently, companies whose business address is not in order as per Article 30 of ZGD-1 will be liable to fines.
The amendment to Article 235 is also theoretically important as it sets down who is deemed the holder of rights and obligations in relation to a company, which originate from registered or bearer shares, therefore who is the shareholder. Under the new regulation, the shareholder will be the person registered in the central register, which is managed by the Central Securities Clearing Corporation, and by the person written down in the shareholders’ register.
ZGD-1 also re-establishes the conditions regarding the signing (i) of a contract for consulting between the company and a member of management or the supervisory board and the signing of (ii) a commercial contract between the company and a member of management, the supervisory board, or the manager. Under the proposed amendment, management or the supervisory board will have to give permission every time a contract for consulting is signed, regardless of the value and content of the contract. If a business contract is signed, supervisory board permission will not be required if it relates to the company’s core business and is done under normal market conditions. The phrase »normal market conditions« must be interpreted restrictively – the market price must be determinable, estimated value is not sufficient. When assessing whether a business falls under the scope of the company’s regular business, the scope of the business, its frequency, and the ordinariness of its conditions must be assessed.
Finally, we should mention the proposed amendment to Article 297 of ZGD-1, which would change the cut-off day for attending the assembly from four to seven days before the assembly is to be held. The same article also stipulates that a company must confirm the receipt of a vote sent by a shareholder sent via electronic means. ZGD-1K does not change the current rule which states that an assembly can be held by electronic means only where expressly provided for in the company’s statute. Otherwise, it cannot be held, which could prove problematic given the current climate. This is one of the issues that the legislator has decided to resolve through the package of measures included in the sixth coronavirus response package.
Author: Matevž Klobučar, Attorney-at-law
