Slovak Financial Law News 2005

Act on Administrators

Act No. 8/2005 Coll. on Administrators and amending and supplementing certain other acts

This Act regulates the office of an Administrator who carries out the ``administrator's activity'', i.e. an action in bankruptcy proceedings, restructuring proceedings or in the process of debt discharge under the new Bankruptcy and Restructuring Act. The Act further regulates the rights and obligations of administrators, their further training, the competence of the Ministry of Justice of the Slovak Republic (the ``Ministry'') with regard to the exercise of the administrator's activity, obligatory contractual insurance of administrators and charges for the breach of obligations in connection with the exercise of the activities of an administrator. The Act has been adopted along with the new Bankruptcy and Restructuring Act and further develops the provisions thereof concerning administrators.

An administrator may be a Slovak or foreign legal entity or an individual, if the conditions stipulated under the Act are fulfilled. The office of an administrator may be performed only by legal entities having the legal form of a public commercial partnership or a limited partnership and fulfils further conditions stipulated by law. One of the terms stipulated by law is that partners of a public commercial partnership or limited partners in a limited partnership may be only administrators - individuals.

An individual may be registered in the list of administrators, if it is a citizen of the Slovak Republic, of another member state of the European Union or of a member state of the European Economic Area (the ``member state'') competent to legal acts with permanent residence in the territory of the Slovak Republic or another member state, without a criminal record, trustworthy and possessing professional competences. The manner of proving the above conditions and the terms of no criminal record and trustworthiness are stipulated by law.

The Act stipulates the obligations of an administrator in the course of the exercise of the administrator's activity and thus provides an independent action of the administrator without delay. The administrator is obliged to exercise the administrator's activity honestly, responsibly and diligently and with due professional care. The administrator is obliged to ask another professional for help in case he/she is not competent to exercise a certain action in terms of experience or professional skills. The administrator is obliged to perform the administrator's activity with undue delay, refrain from accepting a gift or other benefit from a person involved in the matter. He/she is also obliged to refuse a gift or another benefit, providing it may be assumed that the gift or benefit has been presented with the aim of affecting the impartiality of the administrator's decision making or opinion.

The Act further sets forth a wide range of cases in which the administrator shall be dismissed from the exercise of the administrator's activity and stipulates the duty of the administrator to report every fact which may affect the impartial exercise of its function to court.

The administrator is obliged to maintain an administrator file for each case in which the administrator's activity is exercised, while the persons exercising supervision over his/her activity, the court, parties to the proceedings and further entities stipulated by law shall be authorized to examine the file. At the same time, the administrator is obliged to elaborate a specification of each action within the administrator activity in terms of time schedule and its subject matter, indicating the duration of each action, description and justification of actions, the name and surname of the person that has performed the action.

The administrator's office will need to be officially established. However, a maximum of one administrator's office may be established within the same district of one Regional Court.

Except for cases stipulated by law, the administrator is obliged to keep any facts of which he/she has gained knowledge in connection with the exercise of the function confidential and this obligation will survive the termination of the administrator activity and deletion from the list of administrators.

Apart from the fulfillment of further conditions for the exercise of the function of the administrator, the administrator will have to pass the administrator's examination. The administrator examination and further administrator training will be maintained by the Ministry or by a person authorized by the Ministry. The purpose of the examination is to examine the knowledge of economy and law required for a due exercise of the administrator's activity.

State administration in the field of the administrator's activity will be exercised by the Ministry. The Ministry maintains a list of administrators, decides on entry into the list of administrators, on the suspension of the exercise of the administrator's activity, on the deletion from the list of administrators, exercises supervision over and levies penalties for the breach of obligations of the administrators. The administrator may be charged by the Ministry with a penalty of up to SKK 100,000 for the breach of obligations under this or other Act.

The administrator is liable for damage caused in connection with the exercise of the administrator's activity under the Civil Code, if not stipulated otherwise by this or other Act. The administrator is also liable for damage caused by its employee or by a person delegated by the administrator to the performance of actions constituting the administrator's activity. The administrator shall waive the liability, if he/she may prove that the damage could not have been prevented even if all efforts that could have been expected from the administrator have been made. The state is not liable for the damage caused by the administrator.

The administrator is obliged to conclude a liability insurance contract concerning damage for the infliction of which he/she shall be liable under this Act.

Under the preliminary provisions of this Act attorneys registered in the list of administrators maintained under the current regulations are considered administrators registered in the list of administrators under this Act. However, they are obliged to pass the administrator's examination under this Act by 31 December 2005, otherwise they will be deleted from the list. Within a period stipulated by law administrators are obliged to fill in the address to be recorded as the administrator's office, provide evidence of the conclusion of the insurance contract, submit a copy of the extract from the Criminal Register and further data under the Act.

The Act came in to effect on 1 July 2005.

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