5 - Czech Republic

Summary

Introduction

Special provisions applicable to takeover bids did not exist in Czech law until 1996. Prior to this year, takeovers were subject to general provisions applicable to public offers to enter into an agreement. The 1996 amendment to the Commercial Code (the section applicable to the rights of shareholders in public limited liability companies) introduced provisions on the so-called ‘public offer to enter into a share purchase agreement’ (Sections 183a–183c Commercial Code) that, in addition to other requirements, imposed a duty to make a mandatory public offer in circumstances where a shareholder acquired either a one-half, two-thirds or three-quarters share in the voting rights of a listed company.

Takeover provisions were amended several times after 1996 – the most significant amendment being the one in 2000 (taking force and effect on 1 January 2001) that changed provisions substantially and introduced, inter alia, the term ‘takeover bid’ into the Commercial Code. The major changes brought by the 2000 amendment included, without limitation: (i) the requirement for prior consent from the Securities Commission (a special supervisory authority) to disclose a takeover bid involving a listed company; (ii) the requirement that the duty to make a takeover bid be established upon acquisition of control over a company; and (iii) a new requirement on the price for takeover bids. The form and nature of the provisions on takeover bids introduced by the amendment survived until the end of 2007. Subsequent amendments have introduced only technical alterations that are less substantial.