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Concluding an M&A deal in the Czech Republic requires obtaining approval from the relevant regulator (i.e. the Competition Protection Agency). Participants may submit a notice after the required documents are signed or an agreement has been reached on a transactions’ structure & deadlines.

Those seeking to conclude an M&A deal in the Czech Republic should keep in mind that failure to submit the required documents to the regulator is deemed a breach of regulatory requirements & punished accordingly.

Requirements

A notice must be filed if:

  • a company is acquired by a sole purchaser;
  • joint control is obtained;
  • a subsidiary or its part is bought; 
  • a M&A results in the creation of a JV in the Checz Republic.

Please note that conducting an M&A transaction in the Czech Republic requires paying a fee of one hundred thousand kronas (four thousand dollars).

Stages 

After receiving a notice of a transaction, the regulator has thirty days to:

  • report a transaction for non-compliance with M&A regulations (Stage I);
  • approve a transaction (Stage I); 
  • launch an investigation if a transaction threatens to impede competition (Stage II).

If no decision is made by the prescribed deadline, a transaction is deemed permitted. Stage II must be launched no later than 60 days from the date of notification.

If remedies are requested during the conclusion of an M&A deal in the Czech Republic, the deadlines for Stages I & II may be extended by 2 more weeks. If a simplified procedure is followed, a final decision must be made within twenty days. If the regulator asks the participants to make changes to the notice, the said deadline may be suspended.

Purchasing a Czech company without authorization is punishable by a fine of up to ten million kronas (forty four thousand dollars) or ten percent of the turnover of companies that committed the violation. Please note that a fine for violation of the suspension of proceedings may be levied. 

Foreign Companies

Similar rules & penalties are applicable to transactions involving foreign companies. Because the regulator must assess the negative consequences of M&A transactions only in the Czech Republic, participants may be held responsible for possible violations if an M&A deal is concluded in the Czech Republic without the regulator’s consent.

Notice

A notice must be completed in Czech. The regulator must be provided with the originals of the required documents or their notarized copies. If the documents are in a foreign language, they must be translated into Czech by an authorized translator. Annual reports & financial statements mustn’t be translated if their originals are in German or English.

A simplified notice can be sent if:

  • none of the participants operate in the same market or their combined market share doesn’t exceed fifteen percent;
  • exclusive control is gained over a JV.

Failure to provide correct information is punishable by a fine of up to three thousand kronas (thirteen thousand dollars) or one percent of the gross turnover achieved in the last reporting period.

Reorganizing a business in the Czech Republic requires submitting a notice to the relevant regulator. If no objections are raised, participants can conduct an M&A transaction in the Czech Republic.

Considering purchasing a Czech company? Need advice on M&A regulation in the Czech Republic? Why not contact IQ Decision UK?