If there is any amendment to the content of a BRC of a company, the company must apply to amend the BRC within 10 days from the date of amendment. Again, the Business Registration Authority has three working days to process the application. This procedure is the same as in Enterprise Law 2005 with a shorter timing.
Under the Enterprise Law 2014 and Enterprise Law 2005, a company will apply for BRC amendments after the amendment is made. However, the Enterprise Law 2014 remains unclear about:
- whether the Business Registration Authority has any discretion in accepting the application for BRC amendment. Without a clear indication to the contrary, one must assume that the Business Registration Authority has discretion in accepting or rejecting the application for BRC amendment; and
- the consequences when the Business Registration Authority does not accept the application for BRC amendments. In particular, whether the company must unwind the changes it has made and if so what would happen to actions or contracts which have been undertaken based on the changes. Facing with these uncertainties, a prudent company could only wait for the BRC amendment to be issued before implementing any action.
It would have been better that the Enterprise Law 2014 provides that the Business Registration Authority has no (or very limited) discretion in accepting an application for BRC amendment. In return, the company will be liable for any mistake or violation contained in the application for BRC amendment.
Approved notification of amendments
The Enterprise Law 2014 requires any changes in the application for an BRC to incorporate a company must be notified to the Business Registration Authority. The Business Registration Authority has three working days to update the business registration details if the notification is proper. This is a new procedure under the Enterprise Law 2014. Other than to amendment to contents of a BRC of a company, the Enterprise Law 2005 and its implementing regulations do not clearly require the company to notify and obtain approval for changes to the content of an application for BRC.
The requirement of notification and approval under the Enterprise Law 2014 is very expansive because the application for a BRC contains many documents and information including:
- details of branches and representative offices;
- business lines;
- list of members for a Limited Liability Company (LLC) or list of founding shareholders and foreign shareholders for a JSC. The list of members or list of founding shareholders and foreign shareholders contain many information including personal details and signatures of individual members in a LLC, founding shareholders and foreign shareholders in a JSC, capital contribution schedule, type of contributed assets, shareholding details of members in a LLC and founding shareholders and foreign shareholders in a JSC;
- classes of shares, par value of shares, and the number of shares authorised for sale for each class of share by a JSC;
- tax registration information;
- number of employees; and
- charter of the company. The charter of a company in turn may contain many information including authorities of various corporate bodies, and operation of the company.
The new notification/approval requirement under the Enterprise Law 2014 give rises to two major issues which could make this requirement a major backward step compared with under the Enterprise Law 2005:
- the requirement would require more paper works for a company. Especially, if the implementing decree of the Enterprise Law 2014 requires a company to submit supporting documents together the a notification as in the case of Decree 43/2010 implementing Enterprise Law 2005; and
- the Business Registration Authority now has discretion in approving many issues which were not subject to its approval authorities under Enterprise Law 2005. This would make the operation of a company under the Enterprise Law 2014 less stable and predictable.
After the notification of changes of other content of a BRC application is accepted by the Business Registration Authority, the company will also need to make a public announcement about such changes through the National Portal.
Other reporting obligations
In addition to changes to contents of a BRC application, a company must now notify the Business Registration Authority of details or any changes to such details of its Board directors, members of Inspection Committee or General Directors. In addition, a JSC must make the following information public in its website:
- CVs of the General Directors, Board directors, and member of Inspection Committee;
- Financial statements as approved by the General Meeting of Shareholders; and
- Annual operation reports by the Board directors and members of Inspection Committee.