CZECH REPUBLIC Law and Practice Contributed by: Petr Janů, Vladislav Klimeš and Leoš Vavřík, BADOKH
there have not been any significant changes to the Czech takeover regulations over the past 12 months, nor is there anything to indicate that any such changes might be forthcoming in the months ahead. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies Stakebuilding strategies concerning public com - panies are rather rare and almost non-existent for private companies. That said, such strate - gies typically involve the gradual acquisition of publicly traded target company shares through open market purchases (acquisition from minor - ity shareholders at the stock market) or private negotiations (acquisition from significant share - holders). However, it is important to note that bidders are not allowed to abuse any inside information obtained during due diligence. Stakebuilding before a mandatory offer (see 6.2 Mandatory Offer Threshold ) triggers a premium consideration requirement. The consideration in a mandatory offer must correspond, at a mini - mum, to the highest price paid by the bidder for target company shares during the 12 months preceding the offer. It is important to note that there are no triggers for private companies or for stakebuilding in a public company that remains below the mandatory offer threshold. 4.2 Material Shareholding Disclosure Threshold Under the relatively strict Czech implementation of the Transparency Directive (2004/109/EC), a person shall notify the company and the Czech National Bank if its direct or indirect share of vot - ing rights of public companies reaches, exceeds or falls below the thresholds of 1% (or 3%, depending on the amount of registered capital),
5%, 10%, 15%, 20%, 25%, 30%, 40%, 50% and 75%. The Czech National Bank publishes the notifications on its website, and the general public may access such data. The company, as the issuer, is also required to comply with the notification requirement if it acquires its own shares above the said thresh - olds. However, the company can fulfil this requirement by publishing the notification on its website. For private companies, there are no such thresh - olds, but information about shareholders and their respective share amounts is publicly avail - able in the Commercial Register in the case of limited liability companies. 4.3 Hurdles to Stakebuilding Companies operating in the Czech Repub - lic have the ability to establish different rules regarding stakebuilding thresholds or other related aspects through their articles of incor - poration or by-laws (such as notification to the supervisory board). Hurdles to stakebuilding generally include (i) necessary approvals from authorities (including a merger control authority) in connection with stakebuilding; (ii) voting limitations concerning different share classes available to the bidder; (iii) the mandatory offer threshold; and (iv) report - ing obligations in the mandatory offer about the acquisition of shares (including the share price) in the target company during the 12 months pre - ceding the bid. 4.4 Dealings in Derivatives Derivatives transactions are permissible in the Czech Republic. Financial derivatives are traded either over the counter (OTC) or on traditional exchanges.
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