Czech Republic: Employee Share Incentive Schemes – Capital Market Regulatory Assessment


The Czech law provides – under Act No. 256/2004 Coll., the Capital Market Undertakings Act (the "Act") – the obligation to publish a securities prospectus, if those securities are offered to random investors in the Czech Republic. But does this obligation also apply to employee share incentive schemes and are there any exceptions to this obligation?

Generally, share incentive schemes are considered supplementary instruments that companies use to remunerate current, former or future employees or executives. Their main purpose is to ensure the participation of employees or executives in the economic growth of the company through the offer of securities traded on a stock exchange. The theory being that such participation in the company's economic growth should be a motivation to improve their work performance.

Share incentive schemes are usually globally implemented by a parent company for all its subsidiaries across a number of jurisdictions. Based on the tax regime, scope of recipients, the kind of remuneration, or other aspects, several basic forms of share incentive schemes can be distinguished. In the Czech Republic, the most common share incentive schemes are share incentive plans (SIPs), save-as-you-earn schemes (SAYEs) and long-term incentive plans (LTIPs). In terms of the underlying investment instrument, the most frequently offered are ordinary shares, restrictive share units (RSUs), stock appreciation rights (SAR), phantom share options or other equivalents, such as dividend equivalents rights or performance shares.

Offer to the public and obligation to publish a securities prospectus

An offer to the public would occur where an offeror communicates information containing details on offered securities and conditions for their acquisition to a wider group of people. Such information must be sufficient so as to enable any investor to make an informed decision to purchase or subscribe such investment securities. Further, a securities prospectus must be prepared and published to serve as a source of information about the issuer, its current and future economic situation, and about the offered securities themselves. Based on this standard, securities issued under share incentive schemes are generally considered as being offered to the public, unless any of the exceptions stated below apply.

Implicit exceptions from the obligation to publish a securities prospectus

The share incentive scheme must be preceded by the publication of a securities prospectus only if the potential recipients of an offer have the possibility to make the investment decision (i.e. to decide whether they want to accept the offer and participate in the scheme), and the underlying security of the scheme is transferable. Nevertheless, the latter condition on transferability will be said to exist even in case of a non-transferable security option where the vesting period is short (generally less than one year) from the granting of the option. In such a case, a look though approach would be applied, resulting in the option possibly being considered an offer of the underlying security itself, and accordingly, being subject to the publication requirement.

Statutory exceptions from the obligation to publish a securities prospectus

In addition to the implicit exceptions, the Act provides for explicit exemptions from the obligation to publish a securities prospectus that may be applicable for employee share incentive plans. These exceptions would typically include the following:

1. Minimum consideration

If the amount of the overall consideration does not exceed EUR 1 million, calculated for all securities issued within all EU member states, the obligation to publish the securities prospectus does not apply.

The same applies to a gratuitous offer of securities. Note: if there is hidden consideration provided by an employee against the issued securities (e.g. by assuming a non-compete obligation), the securities could be considered as issued for consideration, and not gratuitously.

2. Limited group of recipients

If the group of recipients of an offer of securities does not exceed 150 people in one EU member state, the securities prospectus does not have to be published.

3. Offer to employees

The last potential exception to the obligation to publish applies to an offer or assignment of securities by an employer or other group to its current or former employees, or management, provided that the employer or group is seated in any EU member state, or in for a non-EU legal entity, its securities are accepted for trading on a European regulated stock market, or on a non-European regulated stock market equivalent to a European regulated stock market as decided by the European Commission under an "equivalence decision".1 Moreover, for this exception to apply, it is mandatory to submit a document to the Czech National Bank containing information about the number and type of securities and the purpose and details of the offer.


In light of the above, it is advisable first to analyse whether the investment instruments issued under share incentive schemes may be classified as investment securities pursuant to the Act and, at the same time, whether all characteristics of an offer to the public are present. If yes, the three exceptions outlined above should primarily be assessed. If none of the exceptions available under the Act apply, the securities in question are considered as issued through an offer to the public, and this issuance must be preceded by the publication of a securities prospectus.


[1] no non-European stock market has been recognized as equivalent yet.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions