Czech Republic: Act On Takeover Bids

Last Updated: 2 October 2008
Article by Ladislav Štorek and Lucie Vožehová

On the 1st of April 2008 Act No. 104/2008 Coll., on Takeover Bids and on Amendments to Certain Other Acts, came into effect. The law comprehensively regulates takeover bids for ownership interests in joint-stock companies with registered offices in the Czech Republic whose securities have been admitted to trading on the regulated market in the Czech Republic, as well as other issues relating to takeover bids with a foreign element. The Act impacts also on procedures associated with the so-called squeeze-out of minority shareholders.

The main reason why the new Act was passed is the transposition of the Directive on Takeover Bids (Directive 2004/25/EC of the European Parliament and the Council) that required new regulation of the price offered in mandatory bids, the obligation to sell-out and the so-called breakthrough rule. In addition, the Act eliminates some defects and ambiguities in the pre-existing version of the Commercial Code and makes the regulation where strict regulatory demands were not sufficiently justified, more liberal. The Commercial Code will continue to provide only a general framework for regulation of public bids for acquisition of shares made to shareholders, which are not aimed at acquiring control over a company. This concerns acquisition of a minority interest, acquisition of other shares by the majority shareholder, or, as the case may be, mandatory bids, for example in a case of delisting. In respect of voluntary bids, the regulation will apply only if the number of contacted shareholders exceeds 100 and the volume of demanded securities exceeds 1% of the issue.

On the other hand, the Act on Takeover Bids regulates only those takeover bids submitted as a public bid aimed at acquiring control over the target company. Voluntary bids will not be affected much – the bidder's obligation to state in the bid its plans regarding the target company and resources for funding of the bid and to obtain the opinion of the Board of Directors, Supervisory Board and employees of the target company, still remains in effect. In the case that the bidder acquires a majority share in the target company, it is possible for it to break through any limitation of voting rights (the so-called breakthrough rule) on the condition that the statutes of the target company permit it. Other major changes implemented relate to the process of evaluation of bids by the Czech National Bank ("CNB").

As regards mandatory bids, the current bid obligation applicable in a case where 2/3 or 4/3 of the registered capital or of the voting rights of the target company were exceeded, has been repealed. A limitation has been introduced on the obligations related to the control exercised in concert with other entities. Acting in concert (in order to distinguish this from the regulation set forth in the Commercial Code, the expression "establishment of a group of collaborating persons/entities" has newly been introduced) constitutes the duty to submit a bid only if all persons/entities acting in concert, i.e. each of them, acquired a controlling interest when adding up all their ownership interests. If any of them had already controlled the target company, the obligation does not apply. Similarly, the obligation does not apply if the collaboration was terminated and one of the members of the group retained the interest in voting rights of the target company that such member had already had.

The bid obligation applies if a company is controlled but only if the controlling share exceeds 30% of the voting rights, and such bid must be approved by the CNB. The price offered in case of mandatory bids is now not set forth primarily by an expert but is rather based on the price for which the controlling interest was acquired, or, alternatively the highest price that the bidder or the person/entity collaborating with the bidder paid for securities in the target company within the past 12 months before the bid obligation arose (premium).

The Act sets forth certain exceptions when the premium based price will not apply. In such cases, the price will be set forth by the CNB that will no longer have the right to reject a bid due to insufficient justification of the price. Important will be how the approach taken by the CNB as regards granting exceptions shall be further specified; this is expected to be determined in the next couple of months.

If the premium cannot be determined (in case of an indirect acquisition of control), the price must correspond at least to the weighted average of prices achieved in transactions with the same securities on the regulated market during a period of six months before the obligation to submit the bid has arisen. In such cases, exceptions can be applied more frequently since the weighted average from the market can be affected by low liquidity of the market or price manipulation on the market.

In addition to changes in takeover bids, the Act has implemented considerable changes in provisions regulating the concept of 'squeeze-out'. Minority shareholders can now be squeezed-out any time after the "super controlling" share is acquired, and not only during a period of three months after the acquisition of such interest as required by the pre-existing law. CNB has to approve the conditions for squeezing-out, now only in case of listed companies.

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