In our previous article, we described what rules registered office providers must follow to conduct their business lawfully. The list of obligations is long, the level of responsibility is high, so it is no wonder that companies operating at a high level and investing lot of energy only want to provide the service to companies who fulfill their commitments in return. However, it happens that a business does not pay for the provided headquarter, becomes inaccessible or winding-up or compulsory strike-off proceedings are initiated against it. What can the provider do in such cases to avoid the “stuck-in” of the registered office?
Regulation No. 7/2017 on provision of registered office services (hereinafter: “Regulation”) stipulates that the agent carrying out the activity and the principal corporation must enter into a contract for the provision of the office. The Regulation prohibits contractual termination within one year of the conclusion, but it does not preclude extraordinary termination. As a result of a potential termination, the registered office is also expired, of which the registered office provider notifies the client (at its known accessibility). In this case, the company must provide a headquarter and must inform the court of registration in the form of notice of change.
What can the service provider do if the principal does not act, and the company register contains data on the previous office? The agent firm will continue to receive items addressed to the business but will not be able to accept them without authorization. In this case, the letters are returned to the sender, the authority personally stopovers at the registered office. Following a particular visit, the registered office provider updates the authority of the expiry of the registered office, based on which the authority – or even the service provider itself – may initiate legal supervision proceedings… a long and cumbersome process, and in some cases (for example in forced liquidation proceedings) is not allowed.
In our view, it is possible for the office provider and the principal to develop a mechanism on how to proceed in these cases, and avoid court procedure, upon the conclusion of the service agreement.
There may be several reasons for terminating the service contract. It is worth considering the circumstances of terminating an agreement upfront so that the so-called company cemeteries are pushed out of the market and companies with experience in the industry may secure their reputation.
