The Slovak legislator has further attempted to resolve the issue of the maturity of invoices with a recent amendment of the Commercial Code1, which was adopted on 12 October 2017.
In the past, there were rules regulating maturity of debts of public entities, however the new amendment extends the definition of public law entities to include public sector partners registered with the Register of Public Sector Partners.
As of 1 January 2018, the Commercial Code sets out the deadline for fulfilling the monetary obligations of public law entities, especially those based on invoices.
This applies not only to public authorities, but also public services companies, which are not involved in manufacturing or are standard businesses, and at the same time:
(i) are partly or fully financed; or
(ii) are controlled or the appointing/voting of more than 50% of members of the managing or controlling body,
by the state authority, municipalities or autonomous territorial units.
Similarly, public law entities which are not entrepreneurs, but fulfil public needs even if they did not meet the above mentioned criteria, are also considered to be public entities.
Monetary debts of these subjects/public law entities based on supply of goods or provision of services must be paid within 30 days after delivery of the document (mostly an invoice), or 30 days after the day of the creditor's proper performance of its obligations. The decisive factor is which of these will happen earlier. The Commercial Code excludes any agreement on the date of delivery of the document/invoice which prevents the postponement of the start of the prescribed period.
The above-mentioned 30-day period may be extended by agreement, but such change and deferral from the statutory time limit must be expressly agreed in the contract, and at the same time this arrangement may not grossly diminish the rights and obligations (unfair contract condition). The maximum extension period is 60 days. The justified reason for this extension should primarily consist of and reflect the nature of the subject matter of the commitment. It is often possible to meet such an extension in cases where the performance will be more extensive and the associated remuneration will represent a higher amount.
A novelty, effective from 1 January 2018, is linked to the creation of the Register of Public Sector Partners2. In particular, the definition of the term public law entity is expanded for the purpose of specifically adjusting the settlement of cash liabilities. Therefore, as a public law entity, every person registered in the Register of Public Sector Partners (the public sector partner) is required to fulfil the obligations arising from the supply of goods or services, and taking into account all the circumstances it is obvious that they are provided to a public sector entity3.
In such situations, public sector partners will be required to pay their subcontractors' invoices within the specified deadlines - 30 days or max. 60 days after receipt of the invoice or performance. The purpose of this adjustment is to provide no worse conditions for the repayment of financial liabilities of subcontractors than individual direct public sector suppliers.
This also strengthens and confirms the definition of subcontractor under the Act on the Register of Public Sector Partners in conjunction with the procurement guidelines of the Public Procurement Office as it requires more facts and knowledge about subcontracting being provided to a public law entity.
Will the novelty affect your company's day-to-day operations?
And what specific changes should you make to comply with the new Commercial Code?
If you are interested in a consultation, or would like to receive more detailed information, please do not hesitate to contact the authors. We are happy to discuss any questions or issues you may have.
1 The Act No. 264/2017 Coll. amending the Act No. 513/1991 Coll. Commercial Code as amended and which amends certain laws.
2 The Act No. 315/2016 Coll. on the register of the partners of the public sector and amending several laws as amended.
3 The obligation to register in the Register of Public Sector Partners is not mandatory in many cases, and may even be voluntary.