CZECH REPUBLIC: Changes to Major Shareholding Notifications Introduced

Wednesday June 1 2016

Following the amendments to Act No. 256/2004 Coll. on Capital Markets undertakings (CMU Act), pursuant to Decree 158/2016, the Czech Republic Government has transposed the EU Transparency Directive Amendment Directive (TDAD 2013/50/EU) into national law. The CMU Act governs major shareholding notifications in the Czech Republic.

The provisions of the revised CMU Act are effective from 01 June 2016.

Changes introduced to the CMU Act
Existing requirements under the CMU Act require a disclosure to be made to the Czech National Bank of major shareholdings which reach, exceed or fall below the applicable thresholds of 3%. 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%.

A new threshold has now been introduced which requires the disclosure of voting rights which reach, exceed or fall below the threshold of 1% of the total voting rights in a company, if the issuer´s total registered capital is higher than CZK 500m or equivalent in foreign currency. The issuer’s total registered capital requirement for notifications under the existing thresholds remains at CZK 100m.

Stricter sanctions for failing to meet these notification requirements are detailed in Article 122 of the CMU Act, as follows:

• For Legal entities, fines of up to CZK 300 million, or 5% of the total annual net revenues, or up to double the unfair advantage gained by committing the offence, whichever is higher (the minimum requirement set by TDAD is EUR 10m or 5% of total turnover);
• For individuals, fines up to CZK 60 million, or double of the unfair advantage gained by committing the offence, whichever is higher (the minimum requirement set by TDAD is EUR 2m or twice the amount of profits gained or losses avoided);.

The above notifications are required to be submitted “without undue delay”, but no later than 4 business days following the occurrence.

Disclosures are required to be made via a link on the Czech National Bank website “collection of information and registration of entities”.

Please click on the link above for the applicable legislation (Section 122)