Czech Republic

• 15/10/2020
• Jurisdictions

Currently, the Czech Republic does not have a formal FDI screening mechanism in place.

Legislative developments

In April 2020, the Czech government approved a bill on the screening of foreign investments (the Czech Proposal). If approved, the competent authority for screening such investments would be the Czech Ministry of Industry and Trade (the Czech Ministry).

The Czech Proposal contains a fully-fledged ex ante screening mechanism for investments carried out by non-EU entities. It aims to introduce a notification requirement for investments in specific sectors (military equipment, critical infrastructures, cyber-security, dual-use goods) or any other sector if the investment could compromise the security of the Czech Republic or its internal public order. The requirement would be triggered if the investor acquires an effective level of control over the target such as (i) at least 10% of the voting rights of the company; (ii) appropriate influence over the person through whom the economic activity is carried out (the corporate bodies of the company) or (iii) disposes of the property rights through which the economic activity is carried out.

The Czech Ministry will assess whether the investment poses a risk to the security interests or internal or public order of the Czech Republic. Screening under the Czech Proposal could take up to 120 days from the submission of the application. A transaction subject to the authorisation requirement will be null and void if it is carried out without authorisation. Failure to comply with the relevant provisions can expose investors to fines up to 2% of the investor’s annual turnover in the preceding accounting period.

The Czech Proposal is currently subject to scrutiny by the lower house of the Czech parliament.

 

The above information is a summary that does not constitute legal advice. For exhaustive information, advice, and assistance please get in touch with our lawyers.