New Business Registry Act in Slovakia in the Light of its Effects on Business

In February, 2004 the new Act on Business Registry came into effect. The new regulation was sought by the legal practice as well as the entrepreneurs who had to face lengthy procedures before registration courts when applying for registration of newly established companies and making changes in business registries. Virtually, no deadlines for registration of the entries in general (several months was no exception), ambiguous interpretation of requirements for registration of changes as well as for types of documents to be submitted and unclear regulation of constitutive and declaratory effects of entries in business registries were the main reasons for passing the new Act with the aim to remove all unnecessary and timely procedural steps and to speed-up the entire registration proceedings.

New Act

The new Act is based on a new system of business registry which enables transparent and speedy decisions to be taken by the registration courts, and thus safeguards foreseeable actions on both parts of the proceedings.

The registration can be considered as separate proceedings under the new Act and, in principle, it falls within the agenda of Higher Court Officers. Judges enter the proceedings in case of a possible dispute when appealed by the petitioner. Under the Act, applications for registrations are reviewed only from the formalistic prospective, e.g. completeness of the application, conformity of the data set out in the application with the enclosed annexes, and other formal requirements.

Another new element in the Act is the formalization of applications for registration in a template form and a list of enclosures to be submitted to the registration court and placed into the collection of documents. We think that this is one of the crucial assets of the Act. The applicants are no longer exposed to risks of delays of the registration procedure due to incomplete applications submitted to registration courts. Another big “plus” of the new Act is the regulation of documents which must accompany the registration application (although regulated by the Decree of the Ministry of Justice). Due to the opacity and incompleteness of the previous regulation even the business registry judges were not clear on the documents to be asked from the applicants when entering the data into business registries. In several case judges required information and documents in excess of the limits set out by the law which was also mentioned in the reasoning report accompanying the Act before its approval in the Slovak Parliament.

The Act sets out a firm deadline of five working days for entering the changes into the business registry which, in case of a perfect application, speeds up the registration procedure considerably (in comparison to usual length of several months in the past).

From the practical point of view, the new Act improved conditions for the functioning functioning of the business sector in Slovakia. According to the Ministry of Justice, in the third week of application of the new Act, 56% of the applications succeeded. As much as 80% of the applications were rejected due to applications filled out incorrectly. After the appealing process, 94% of the appeals ended up with registration. Obviously, the new Act enables faster and more flexible incorporation of companies as well as registration of their changes, and thus the entire business registry system becomes more competitive to the rest of the EU countries.