The Supreme Court of the CR has taken a surprising position on defining the business activity of business corporations

In its ruling on Case 27 Cdo 3549/2020, the Supreme Court of the CR, reached the surprising conclusion that an arrangement of articles of incorporation or statutes according to which the business activity of a business corporation is only unqualified (notifiable) trade, i.e. “production, trade and services not stated in Supplements 1 and 3 of the Trade Licensing Act” does not fulfil the requirements of precision, for it does not clarify the specific business activity of a given corporation. According to the Supreme Court, such an arrangement is apparent due to the imprecision of its content and is not taken into account.

This ruling entails a change of the old practice of registration courts, which are now to request, at the entry of the business activity into the commercial register, the specific business activity (e.g. wholesale or retail) or, more precisely, are to request that business corporations furnish the terms of the articles of incorporation or statutes which will contain the specific business activity. Yet this change requires a general meeting, with a certificate in the form of a notarial deed.

In cases of business corporations already entered into the commercial register, the issue should be rectified.

According to the Supreme Court of the CR, the partners or members of business corporations, in relation to the list of fields of activity in Supplement 4 of the Trade Licensing Act, usually designate and state in the articles of incorporation or statutes specific fields of activity pursuant to Supplement 4 of the Trade Licensing Act. These will then be entered into the commercial register as the business activity or corporation activity.