On 2 December 2022, the National Council of the Slovak Republic approved an amendment to the Act on Social Economy and Social Enterprises. The most significant changes include the addition of new provisions on family businesses, which gives family business a separate legal framework.
Under this amendment, only an entity that was primarily established for the purpose of carrying on a business with substantial family ties may be a family business. Thus, the provisions for family businesses do not create a new, separate legal form, but rather define the characteristics of a family business for entities of already existing legal forms. Selected legal forms include: commercial company, cooperative, and individual – entrepreneur.
The existence of family ties is essential for a family business in terms of its internal functioning, as well as in terms of achieving business objectives. The essential characteristics of the existence of family ties are:
- majority exercise of voting rights in favour of members of the same family,
- participation in the management of the company through the statutory person as a member of the family,
- majority economic benefit of members of one family.
The amendment to the Act also regulates the council of the family business as the governing body of the business, the conditions under which a business may be included in the register of family businesses, as well as the granting of the status and obligations of a registered family business.
In the future, family businesses could gain access to selected forms of direct and indirect aid. However, specific forms of support for family businesses have not yet been established by law.
The amendment to the Act on Social Economy and Social Enterprises is effective from 1 January 2023, while the provisions relating to family businesses come into effect on 1 July 2023.