The executive directors, board of directors and statutory director, as applicable, are “statutory bodies” ("statutární orgány") of a company and their actions are deemed to be the actions of the company itself. This means that the directors have full authority to represent the company (solely or jointly – see below) and that this authority cannot be limited in any way in their actions toward third parties. There is no need for the directors to have special authorisation for certain acts to be valid (for example, the sale of real property), although certain material legal actions do require the approval of the general meeting, supervisory board or administrative committee, as applicable. A director’s act will always bind the company, unless the director acts outside the powers conferred by general law.
Only a general meeting of a limited liability company – not its directors – has the authority to decide (amongst other things) on: changes to the registered capital; changes of directors (limited liability company), members of the board of directors (JSC), supervisory board and administrative committee members; decisions as to a sale of the business or, in the case of a JSC, a decision to seek permission for shares to be publicly traded; and on such other matters set out in law, the memorandum of association or articles of the company.
In the case of limited liability companies, a memorandum of association specifies whether each director may bind the company solely or whether two or more signatories are necessary. This information is entered in and made publicly available in the commercial register.
In the case of a JSC, decisions of the board of directors are adopted by a majority of votes, unless otherwise specified in the company’s articles of association. The articles specify whether relevant members of the board of directors may bind the company individually or whether two or more signatories are necessary. Similarly to limited liability companies, this information is entered in and made publicly available in the commercial register.
Notwithstanding the above, and regardless of whether the internal signing requirements are publicly accessible, the company will be bound by an act of a director (limited liability company) or the board of directors (JSC) towards third parties; even if such an act is contrary to the memorandum and articles of association of the company (but is otherwise lawful).
Any limitation on the authority of the directors to represent the company (apart from the limitation described above, whereby a director acts contrary to the law) which is included in the memorandum or articles of association, or is given by a decision of the general meeting, will have no effect towards third parties. However, the company may sue the director who acted outside their authority for damages.