The right of a subsidiary association to withdraw from the main association

With the entry into force of Act No. 89/2012 Coll., the Civil Code (hereinafter referred to as the "Civil Code"), transitional provisions (specifically Section 3045(2) of the Civil Code) resulted in the "transformation" of previously organizational units^[1] into subsidiary associations regulated by the Civil Code.

As can be seen from a recent decision of the Supreme Court of the Czech Republic^[2], this change in concept still raises possible legal questions, which are often answered by the courts in their decision-making practice, even after 9 years since the Civil Code came into force.

In the January decision^[3] the question of the possibility, or rather the impossibility, of unilateral withdrawal of a branch association from the main association was addressed. Here, the Supreme Court assessed whether it is possible for a branch association, which was established on the basis of the transitional provisions of the Civil Code, to unilaterally withdraw from the main association and transform itself into an independent association, or to join another main association as a branch association.

In the referenced decision, the Supreme Court then concluded that, in view of the derived legal personality of a branch association from the legal nature of the main association, it is generally not possible for such a branch association to withdraw from the main association on the basis of its unilateral action (e.g. by a unilateral decision of the supreme body of the branch association).

Such a unilateral withdrawal would only be possible if the main association itself provided for such a possibility in its statutes, and at the same time the specific rules and conditions for the unilateral withdrawal of a subsidiary association (e.g. which body of the subsidiary association has the power to decide on this, the method of settlement between the main association and the subsidiary association, etc.) would be regulated in these statutes. In the event that the statutes of the main association do not provide for the possibility of unilateral withdrawal of a subsidiary association from the main association, as well as specific rules and conditions for such unilateral withdrawal, any decision of the subsidiary association to withdraw from the main association shall be regarded as if it had not been taken at all. Thus, the court may decide that the decision of the body corporate (the resolution adopted by the subsidiary society) is not a decision of the subsidiary society and shall be regarded as if it were not, even without a petition.

It should be emphasised here that it is not sufficient that the statutes of the main association contain a general provision for the possibility of unilateral withdrawal for subsidiary associations, but that the rules and conditions for unilateral withdrawal must always be laid down, otherwise the situation for the subsidiary association and the consequences for its eventual decision are the same as if the statutes of the main association had not provided for the possibility of unilateral withdrawal at all.

At the same time, it is always necessary to examine the wording of the statutes of the main association in force at the time when any unilateral decision of the branch association to withdraw from the main association was taken. Therefore, even if the possibility of unilateral withdrawal of a subsidiary association, together with the rules and conditions for such withdrawal, were added to the wording of the statutes of the main association after the subsidiary association's decision to withdraw from the main association had been taken, such a decision of the subsidiary association would still be regarded as not having been taken. The subsidiary would thus continue to be part of the main society until a new, legally sound and effective decision to withdraw is taken.

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[1] Within the meaning of Act No. 83/1990 Coll., on the association of citizens, as amended

[2] Resolution of the Supreme Court of the Czech Republic of 10 January 2023, Case No. 27 Cdo 3526/2022

[3] Resolution of the Supreme Court of the Czech Republic of 10 January 2023, Case No. 27 Cdo 3526/2022