CZECH REPUBLIC Law and Practice Contributed by: Petr Janů, Vladislav Klimeš and Leoš Vavřík, BADOKH
The offer document shall contain, as a mini - mum, information on the sources and method of financing or other security for the consideration. In particular, the bidder shall indicate in the offer document whether it intends to finance the take - over exclusively from its own resources or from intra-group resources or whether it intends to finance the takeover entirely/partially from exter - nal resources. Furthermore, the Czech National Bank may require the bidder to demonstrate that it has sufficient resources to finance the takeover bid and to document the origin of these resources. 7.4 Transaction Documents The offer document shall be disclosed in full (see 7.1 Making a Bid Public and 7.2 Type of Disclo- sure Required ). In the context of private M&A deals, no public disclosure of transaction documents is required. Company directors (including members of a supervisory body) have to follow general fiduci - ary duties such as due care and loyalty. These general fiduciary duties prioritise the interests of the company over the interests of the directors, shareholders or stakeholders. In other words, the directors shall act in the best interests of the company as a whole, taking into account the long-term interests of the company, its share - holders and other stakeholders. If a breach of directors’ duties has been committed, the court may rule that the directors must provide com - pensation for the loss of the company, and in 8. Duties of Directors 8.1 Principal Directors’ Duties
some instances the directors may be personally liable toward the creditors. General fiduciary duties remain unaffected in private deals. In the process of a business com - bination of a public company, however, Czech law provides for certain additional duties. In the process of a business combination of a public company, the directors have to follow the same general fiduciary duties and prioritise the interest of the company as a whole. How - ever, there is one notable modification to this rule. Czech law states that the directors may not frustrate the shareholders’ opportunity to freely decide whether to accept or refuse the takeover bid – such an obligation being considered a duty of neutrality. In practice, the duty of neutrality means that once the directors become aware of the likeli - hood of receiving a takeover bid, the directors’ general fiduciary duties are modified to the extent that the directors may not (i) adopt meas - ures that would adversely influence the share - holders’ opportunity to freely decide whether to accept or refuse the takeover bid (such as withholding information from the shareholders) or (ii) undertake any actions that could stave off the takeover bid unless the company’s general meeting has sanctioned such actions, or the law requires such actions, or such actions fall within the ordinary course of the company’s business. Nevertheless, the directors may actively pursue a competitive takeover bid or even submit their own competitive takeover bid without breach - ing any principal directors’ duties, as Czech law expressly allows such actions.
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