in short
As of July 19, 2024, companies operating in the Czech Republic face significant changes in their legal obligations when undergoing mergers, spin-offs and other transformations. new legislation1 Comply with EU directives on cross-border conversions, mergers and demergers. The aim is to simplify the transformation process and reduce administrative costs and bureaucratic burden.
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- new transformational form
- Relocation to a third country
- Creditor Protection Modifications
- Simplify expert appointment
- Other changes
A newly implemented “demerger” separates part of the assets and liabilities of the demerger company into one or more companies that are or will become (as a result of the demerger) its direct subsidiaries.
A demerger allows for a spin-off into (a) one or more newly formed companies that will be wholly owned by the spin-off company, or (b) one or more existing companies in exchange for the acquisition of shares in those companies by the spin-off company. separate companies.
The new form can serve as an effective tool for planning restructuring projects in the Czech Republic. It provides an alternative to in-kind contributions within and outside registered capital and in some cases can even eliminate the valuation necessary for such contributions.
It is now clearly confirmed that companies from third countries (i.e. non-EU and non-EEA countries) can relocate to the Czech Republic and vice versa.
The new legislation contains only general requirements for such relocations. The specific rules mainly refer to the laws applicable to relocation within EU and EEA countries, which may lead to certain issues that must be resolved during the transition process.
Significant changes in disclosure requirements. Among other things, under certain conditions it is not necessary to publish a creditor notification regarding the transformation in the Commercial Gazette (this obligation can be replaced by a simplified procedure).
The right of creditors to demand adequate safeguards applies only to receivables arising from relationships established prior to the disclosure of the draft transformation project, whether such receivables are actual, contingent or anticipated.
The period within which creditors can request adequate cover has been significantly reduced (from six months to three months).
In order for the courts to grant adequate protection, it is now sufficient for the creditor to credibly demonstrate that the settlement of the relevant receivable is at risk, without having to prove this.
Furthermore, the new legislation explicitly confirms that creditor requests will not prevent registration or completion of transformation.
Under the new legislation, it is no longer necessary to request a court-appointed expert if an expert is required for assessment or review. Instead, the company concerned can simplify the evaluation or review process by selecting an expert from an official list maintained by the Czech Ministry of Justice.
In some cases, it is permissible to substitute a simplified procedure for expert assessment.
Recent amendments have introduced a comprehensive range of other major and minor changes. These include other significant changes to disclosure requirements and greater involvement of notaries in the transformation process. In light of these significant changes, we strongly recommend against relying on the pre-revision process. If you are considering transitioning, we recommend consulting with a legal professional to effectively navigate these new regulations.
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If you have any questions, please contact us.
1.162/2024 Coll., Law of 29 May 2024, amending Act No. 125/2008 Coll. (as amended) on the transformation of commercial companies and cooperatives and other related acts
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