controlling member

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In modern economic life, in order to increase efficiency and share resources and market risks, companies are increasingly forming close cooperation systems, known as groups of companies (or conglomerates). However, this process often proves to be contrary to the basic principles of classical corporate law, which is based on the independence and separate liability of legal entities. Act V of 2013 on the Civil Code (“Civil Code”) offers a structured solution to this dilemma with the institution of recognized groups of companies, providing a legal framework and a strict warranty system for the responsible economic and legal operation of corporate groups.

Given that the regulation of group of companies will change this spring, our article presents the regulatory system for group of companies in order to provide greater clarity on the background to the changes.

The recognized corporate groups

In order for close cooperation between companies to qualify as recognized corporate groups, three conceptual elements must be present:

there must be a controlling member that is required to prepare consolidated annual accounts;

there must be at least three different legal entities controlled by the controlling member;

a uniform business policy must be established, which is laid down in the control contract itself.

The group of companies is established by drawing up a draft control contract and obtaining the approval of a three-quarters majority of the members (subject to the successful fulfilment of the relevant disclosure obligations). The controlling member must apply for registration in the commercial register within 60 days of the final approval.

The control contract

The control contract is the central regulatory instrument for the operation of the group of companies, as it contains the uniform business policy that forms the basis for cooperation. In addition to the most important identifying details of the members, the contract must also specify the form of their cooperation and its essential elements.

It is important that the contract only restricts the independence of the controlled members to the extent necessary to achieve the uniform business objective. Under the rules of the Civil Code, the management of the controlling member may instruct the management of the members within the framework of the control agreement. In this case, the rules on the exclusivity of decisions of the supreme body do not apply either.

In order to ensure transparent operation, the management of the members of the group of companies (including the controlling member) is obliged to report to the supreme bodies at least once a year on the activities related to the performance of the agreement. The management of the controlling member also has an additional obligation to inform creditors with significant claims. If the latter fails to do so, the creditor may apply to the court of registration.

Minority protection

The operation of a group of companies requires specific minority protection rules, as members with a small shareholding must adapt not only to the majority owner within their own company, but also to the majority owner of the controlling member. For this reason, the law provides for special minority protection guarantees both at the time of the formation of the group of companies and during its operation:

upon the formation of the group of companies: members of legal entities joining as controlled members who do not wish to participate in the group of companies may request, within 30 days of the second publication of the announcement of the formation, that the controlling member purchase their shares at market value;

during the operation of the group: if the controlling member substantially or repeatedly breaches the control agreement, members holding at least 5% of the votes of the controlled member, as well as the management of the controlled member, may initiate the convening of the supreme body of the controlling member. This creates an opportunity to bring the breach of contract before the highest decision-making forum of the controlling member. If the management of the controlling member does not comply with the request, the court may also convene the meeting or authorize the applicants to do so.

Creditor protection and underlying liability

One of the fundamental objectives of the establishment and operation of a group of companies is to protect the interests of creditors.

The main security provided by the system is the underlying liability of the controlling member. If any of the controlled members is liquidated, the controlling member is obliged to cover the unsatisfied debts. The controlling member may be exempted from liability if it can successfully prove that the insolvency was not a consequence of the implementation of a uniform business policy.

Supervision by the Court of Registry

The Court of Registry, which is responsible for registration, supervises the legality of the group of companies. In the event of a material or repeated breach of the control agreement, any legally interested party (e.g. a member or creditor) may request that the Court of Registry conduct a legality supervision procedure against the group of companies.

De facto groups of companies

A de facto group of companies exists when uniform management or close economic cooperation has been in place for three years without the parties complying with the formal requirements (control contract, registration). According to long-standing rules, at the request of any legally interested party, the court may oblige the group of companies to conclude a control agreement or to apply the relevant provisions in the absence of such an agreement, thereby creating both underlying liability and the possibility for minority members of controlled subsidiaries to exit.

Regarding actual groups of companies, the amendment, which will enter into force on March 1, 2026, clarified the concept of a legally interested party: in the future, anyone to whom the controlling member would be liable (i.e., typically the creditor of the controlled member) will be considered to have a legal interest. The amendment prioritizes creditor protection by directly linking the existence of an actual group of companies to the obligation to pay, thus making the underlying liability of the controlling member enforceable for aggrieved creditors despite the lack of a formal framework.

Summary

The regulation of groups of companies is based on the balance of ‘power and responsibility’. The institution of acknowledged group of companies offers legal certainty by ensuring the right to uniform management and instruction, while at the same time protecting economic actors with strict guarantees. It is in the fundamental interest of company managers to ensure that the group operates in compliance with legal guarantees and within a transparent contractual framework, thereby avoiding unexpected underlying liabilities and legal disputes.

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