Certificate of no criminal record versus trade licence of legal person

In practice we recently meet with problem that some of Trade Licensing Registers conclude that the “clean criminal record” is condition for pursuing a trade [1] not just for a natural person but also for legal person. In this article we summarize why this conclusion is incorrect and we also briefly discuss other questions connect to innocence of legal person and its trade licence. 

Statement about blame of legal person

Although any kind of conviction for legal person has a negative effect on its business, it does not mean automatic loss of its trade licence. [2]

The conviction (for now, we do not deal with statement about penalty) has no direct effect on business of legal person (except for some possible indirect negative consequences as loss of repute etc.) because innocence as general condition for pursuing a trade according to the Trade Licensing Act, and this condition is explicitly applied only on natural person (see Section 6, Article 1, b) of the Trade Licensing Act)

Statement about blame and disqualification punishment of responsible deputy of legal person

Fulfilling of condition of clear criminal record is important for responsible deputy of legal person, who has to as natural person fulfill general and also specific conditions of trade licence and has to have clean criminal record.

If responsible deputy doesn't fulfil condition of clean criminal record (i.e. he was convicted for criminal act which was committed intentionally and that criminal act was committed in relation with business or with subject of trade for which he was designate, if there is no premiss that he was innocent) or other condition of trade licence for which responsible deputy can't be in this function of legal person.

If responsible deputy is punished by disqualification (even if he doesn't lose innocence by statement about blame in meaning of Trade Licence Act). For a period of this punishment, this person can't be responsible deputy for purpose of trade licence under which this trade is classified.  

In case that responsible deputy can't perform his function because of legal reasons, entrepreneur have to no later than 15 days designate the new responsible deputy. If entrepreneur doesn't fulfil this duty, he commits an offence [3], for which he can be fined up to 100 000 CZK.  

Disqualification punishment for legal person

Regard to that the statement about blame of legal person has no direct effect on trade licence of the legal person [4], only punishment that is convicted to legal person can interfere its trade licence.

If we disregard the effect on business of the legal person which indirect emerges from nature of the punishment (e.g. dissolution of the company or economic effect of some property punishments etc) the only punishment which can be an obstacle for trade licence [5], is the disqualification punishment. Legal person which is punished by disqualification can't do this trade during the period of this punishment. If it is free trade, this legal person can't do this trade and for the period of this disqualification punishment, but the person can do other free trades.

Conclusion

Despite the fact some of Trade Licensing Registers claim the opposite, the conviction of the legal person according to the Act on Criminal Liability of Legal Persons and Procedure against them has no effect on trade licence, just in case that the legal person was punished by disqualification punishment on the same trade as in its trade licence.

 Author: Jiří Mačát and Aneta Koubková

The article was pusblished on ©EPRAVO.CZ.

[1]  Section 6, Article 1, b) of the Trade Licensing Act

[2] The exception can be in some specific licences which are in special acts (e.g. concession), if this act would contain more strict conditions for obtain of the licence than Trade Licensing Act.

[3] Section 62, Article 1, d) of the Trade Licensing Act

[4] Except for situation in the upper note

[5] Section 8, Article 5 of the Trade Licensing Act