CZECH REPUBLIC Law and Practice Contributed by: Petr Janů, Vladislav Klimeš and Leoš Vavřík, BADOKH
11.3 Interference With Completion Shareholder activists do sometimes interfere with the completion of transactions. However, it is more com - mon for them to interfere in the early stages of the M&A process, and usually some sort of an agreement is reached in order to mitigate the risk of troubles in the later stages of the M&A process. All parties usually want to avoid entering into disputes before courts.
In more extreme cases, activist shareholders also seek to initiate legal disputes with majority share - holders (typically over the alleged misuse of majority shareholders’ rights) or board members (typically over alleged breaches of their fiduciary duty). The possible influence of minority shareholders on M&A transactions should always be assessed as a part of the due diligence exercise and be taken into consideration during transaction structuring and post- closing structuring (eg, when setting up stock option plans). Other potential activists, such as trade unions, play a significantly less substantial role in M&A transactions in the Czech Republic. 11.2 Aims of Activists Shareholder activism is most frequently aimed at increasing the value for minority shareholders to the detriment of the majority shareholders. Typical cases include boycotting the squeeze-out procedure, mak - ing it hard for the majority shareholder to divest or onboard a new investor. Activists seeking to encourage companies to enter into M&A transactions, spin-offs or major divestitures are almost non-existent in the Czech Republic.
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