Investment regulation - Czech Republic

Decrease crossing 10%, 20%, 30% or 50% threshold of voting rights 

Notify the CNB without delay. Where the limits are exceeded due to the transfer of title, the person with the share in question shall notify the CNB of this fact without delay. 

Investment Fund companies, self-managed investment funds, and main administrators 

Acquisition crossing 10%, 20%, 30% or 50% threshold of voting rights or share capital, or acquiring a share giving opportunity to materially influence management or control (typically 40%) 

As per the Act on Investment Companies and Investment Funds (No. 240/2013 Coll., as amended), secure prior consent from the CNB. Non-compliance would result in the loss of voting rights and may lead to the CNB imposing financial penalties on the investor. Appointed main administrators are also covered as CNB’s supervision. CNB approval must also be sought when acquiring a share that gives opportunity to materially influence management of any of the Collective Investment Entities or which allows for control of any of the Collective Investment Entities (typically 40%, unless there is a higher share held by another person). 

Decreased share of voting rights or share capital crossing 10%, 20%, 30% or 50% threshold 

Notify the CNB without delay. Non-compliance would result in the loss of voting rights. 

Insurance and re-insurance companies shares 

Acquisition of 10%, 20%, 30% or 50% of voting rights or share capital, or acquiring a share giving opportunity to materially influence management or control (typically 40%) 

As per the Insurance Act (No. 277/2009 Coll., as amended), apply for prior approval from the CNB. Non-compliance would result in the loss of voting rights. Applies to insurance and re-insurance companies. CNB approval must also be sought when acquiring a share that gives opportunity to materially influence management of any of the Insurance Entities or allows for control (typically 40%, unless a higher share is held by another person). 

Decreased share of voting rights or share capital crossing 10%, 20%, 30% or 50 thresholds 

When selling shares of any of the insurance and re-insurance entities and crossing mentioned thresholds, the investor must inform the CNB without delay and at least 30 days before contemplated sale. Non-compliance would result in the loss of voting rights. 

Listed shares - mandatory takeover bid 

Acquisition of 30% and 90% of voting rights in the form of listed shares or convertible securities to obtain such shares (if applicable) 

As per the Act on Takeover Bids (Act No. 104/2008 Coll.): A mandatory takeover bid to purchase the outstanding listed shares within 30 days after the day when the shareholder(s) acquires or exceeds any of the said holdings must be made. 

The countervalue (remuneration) for the securities must: 

- be paid in cash or in other securities or a combination of both; 

- be at least equal to the highest price, that is, the premium price for which the shareholder(s) bought the securities in the period of 12 months before the bid; 

- be at least equal to the weighted average of prices for which the securities were traded in the regulated market in the period of six months before the bid if the premium price cannot be set; 

- be approved by the CNB. 

Capital market entities shares (broker-dealers that are not banks, organisers of a regulated market, central securities depository) 

Investment - acquisition crossing 10%, 20%, 30% or 50% threshold of voting rights or share capital, or acquiring a share giving opportunity to materially influence management or control (typically 40%) 

Per the Capital Markets Act (No. 256/2004 Coll., as amended): Secure approval from the CNB prior to the acquisition. Non-compliance would result in the loss of voting rights, rights to call an EGM and the right to challenge the validity of actions taken at a general meeting. Scope applies to (a) broker/dealers that are not banks, (b) organiser of a regulated market (PSE), or (c) central securities depository (CDCP). CNB approval must also be sought when acquiring a share that gives opportunity to materially influence management or allows for control of any of the Capital Market Entities (typically 40%, unless a higher share is held by another person). 

Capital market entities shares 

Decrease crossing 10%, 20%, 30% or 50% threshold of voting rights or share capital 

Notify the CNB without delay. Where the limits are exceeded due to the transfer of title, the person with the share in question shall notify the CNB of this fact without delay. 

Pension companies shares 

Investment - acquisition crossing 10%, 20%, 30% or 50% threshold of voting rights or share capital, or acquiring a share that gives opportunity to materially influence management or control of the pension company (typically 40%, unless a higher share is held by another person) 

Per the Act on Supplementary Pension Savings (No. 427/2011 Coll., as amended), an investor whose holdings cross the thresholds of 10%, 20%, 30% or 50% or more of the voting rights or share capital of a pension company is obliged to obtain the CNB’s prior consent. CNB approval must also be sought when acquiring a share that gives opportunity to materially influence management of the pension company or allows for control of the pension company (typically 40%, unless there is a higher share held by another person). Non-compliance results in the loss of voting rights until consent is obtained. 

Decrease crossing 10%, 20%, 30% or 50% threshold of voting rights or share capital 

When selling shares of a pension company and crossing above-mentioned thresholds, the investor has to inform the CNB without delay. 

Cross-border weapons dealers shares 

Aggregate holding by non-residents of EU member states exceeding 49% of voting rights or share capital 

Statutory foreign ownership ceiling: Pursuant to Section 7 of Act No. 38/1994 Coll. (Act on Foreign Trade in Military Material), shares of legal entities engaged in foreign trade in military material / cross-border weapons dealers may only be acquired and held by non-residents of EU member states up to an aggregate threshold of 49%. Holdings by non-EU residents exceeding 49% are prohibited. 

Shares in Czech legal entities and trusts (Beneficial ownership registration) 

Register of beneficial owner in the public Czech Registry of Beneficial Owners 

Per Act No. 37/2021 Coll. on the Registry of Beneficial Owners, as amended: Legal entities with registered office in the Czech Republic and qualifying trusts must register their beneficial owners. Non-compliance results in statutory sanctions: (a) until duly registered, the beneficial owner and any entity directly or indirectly owned by them may not exercise voting rights at the general meeting of the Czech entity; and (b) the Czech entity/trust is legally prohibited from paying dividends, profit shares, or capital yields from the shares to such beneficial owner. 

Shares of companies listed on an EU regulated market (Czech registered or prospectus approved in CZ) 

Acquisition or decrease reaching, exceeding, or falling below 1%, 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, or 75% of total voting rights 

Per the Capital Markets Act (No. 256/2004 Coll., as amended): Shareholders must disclose reaching or crossing thresholds to the issuer and the CNB without undue delay, and no later than 4 business days after the voting rights were acquired or decreased. (The 1% threshold applies only if registered capital is at least CZK 0.5 billion; the 3% threshold applies if basic capital exceeds CZK 100 million). Non-compliance results in loss of voting rights while in default, and potential administrative fines from the CNB up to CZK 300 million or 5% of annual turnover for legal entities (up to CZK 60 million for natural persons).