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16 July 2021

Digitization of notary activities

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Amendment to Act No. 358/1992 Coll., On Notaries and Their Activities (Notarial Code)

Source: Weinhold Legal, Legal Update, June 2021

On June 4, 2021, the Chamber of Deputies approved in the 3rd reading a fundamental amendment to Act No. 358/1992 Coll., On Notaries and Their Activities (Notarial Code), as amended ("Amendments") following the legislation contained in the previously adopted Act No. 12/2020 Coll., on the right to digital services and on the amendment of certain acts. The reason for discussing the amendment is, in addition to pragmatic reasons consists mainly in relieving business entities from an administrative burden, also the implementation of the requirements of the so-called EU digitization directive, which aims to create uniform rules for online company formation, registration of branches in public registers and saving documents and data.

The proposed Amendment has divided effectiveness, but the effectiveness of the core legislation described below is set for 1 September 2021.

A fundamental practical change brought by the Amendment is the already mentioned online establishment of companies. According to the Amendment, applicants for the establishment of companies could now carry out the entire process leading to the formation of a company, including its establishment, by videoconference instead of the necessary personal visit to the Notary office, using means of remote identification and authentication in a secure environment of the Notary Chamber of the Czech Republic. According to the draft, the identity of the applicants should be proved mainly by an electronic ID card using an NFC reader in a smartphone.

As part of this process, a notary would verify the admissibility and veracity of the data provided, such as a business name, scope of business, integrity of members of the statutory body or a legal title to use the seat in the basic registers and information systems of public administration, and then he would sign the authenticated documents with an electronic signature. Other changes to the data entered in the Commercial Register could take place in a similar way.

However, the amendment also brings other changes, such as the possibility of writing notarial records in electronic form, verifying the authenticity of electronic signatures and the resulting removal of the need for electronic conversions, the notary's explicit right to make entries in the register of beneficial owners and trusts, or the right to issue a verification clause to official documents for their use abroad (apostilles).

According to the explanatory memorandum to the Amendment, the apostille clause measure should be charged at CZK 300 (excluding VAT).

In connection with these changes, the Amendment establishes a public Register of verified signatures in electronic form, in which the public will be able to find out whether the verification clause is genuine. Along with this record, notaries would then keep a public Collection of Documents, which would contain data on notarial records. The purpose of this regulation is, in addition to simplifying the administrative burden on the business environment, also to increase the protection of entities, especially against theft of companies through the transfer of shares on the basis of forged verification clauses.

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