contents · ties in reacin a resoution o a isute or complaint. the act defines mediation as...

AMENDMENT TO THE BUILDING CODE | 2 |

NEW MEDIATION ACT | 5 |

EMPLOYMENT OF THIRD COUNTRY NATIONALS AND REQUIREMENTS FOR OBTAINING A RESIDENCE PERMIT FOR EMPLOYMENT PURPOSES | 7 |

NEW PUBLICATION DUTIES OF CONTRACTORS AND CONTRACTING AUTHORITIES IN PUBLIC PROCUREMENT | 9 |

INCREASING TRANSPARENCY OF SHAREHOLDER STRUCTURES | 11 |

AMENDMENT TO THE TRADE LICENSING ACT TO MAkE LIFE EASIER FOR ENTREPRENEURS | 12 |

SALES OUTSIDE OF ORDINARY BUSINESS PREMISES | 14 |

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CONTENTS

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P U B L I C S E C T O R

I P / I T , M E D I A A N D T E L E C O M M U N I C A T I O N

AMENDMENT TO THE BUILDING CODE

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ever, the Ministry attempted to change the law for the second time as with the first time in 2009, the proposal ended up in the commenting procedure after the fall of Topolanek’s government. The current proposal for the Amendment has already been approved by the Chamber of Depu-ties, the Senate however returned the proposal to the Chamber of Deputies with several further amendments in July and the Chamber of Deputies shall vote on the Amendment again in the next few days.

The Ministry aims primarily at remedy-ing the current ambiguities and errors in the legislation which manifested in its ap-plication; however, it has also come up with substantial conceptual changes. The Amendment declares the liberalisation of certain practices and concepts in the zon-ing procedure but also in the procedure for approving the construction of a structure.

During its upcoming session in September the Chamber of Deputies is scheduled to further discuss a bill of the substantially amended Building Code which should come into effect as of 1 January 2013. The amended law changes basically all of the concepts of zoning and construc-tion law. Considering the large extent of the amendment, we will explain its impact within two separate articles. In this first article, we are going to inform you on the changes in the procedure of placing and approving structures.

In January 2012, a governmental bill largely amending the Building Code was submitted to the Chamber of Deputies (the “Amendment”) by the Ministry for Regional Development (the “Ministry”). This is the first substantial proposal for a change of the Building Code since 2007, when the new Building Code came into force. How-

Unfortunately, as indicated below, the ac-tual effect of some of these changes will be rather the opposite.

Placement of structures

As regards the procedure concerning the placement of structures, it is proposed to abandon the current obligatory public oral deliberation of all projects requiring a zoning decision and the publishing of all projects on the official notice board of the Building Office and on the concerned site. This approach will continue to be applied only in the cases of projects that are subject to the assessment of environ-mental impact and in the cases of sites for which no zoning plan has been issued. The Building Office may even completely abandon the oral deliberation, “if the con-dition of the site is well known to it and if the application provides a sufficient basis




ed law actually seems to take an oppo-site approach as regards the notification of structures, as it will make the place-ment of notified structures conditional on the zoning decision or at least on the zoning permit (so far, it has been possible to implement selected projects only on the basis of a notification without any previ-ous zoning decision or permits). However, some other cosmetic changes such as the extension of the register by some other types of structures for the construction of which only notification is sufficient (e.g. structures with an area of up to 50 square metres instead of the original 25 square metres) cannot compensate for this sub-stantial tightening of the legal regulation.

The concept of a fictive agreement with the construction of a structure shall be cancelled (currently, if the Office does not provide any statement within 40 days, it should be deemed to agree with the notified structure). This 40-day time limit should be replaced by a 30-day time limit for the issuance of a decision against which no appeal is possible. The validity of the agreement was extended to two years whereby it may be reviewed by a superior body; however, after the lapse of fifteen months, no decision may be issued in these review proceedings. These time-limits, as determined, benefit investors and increase their legal certainty, as so far it has not been possible to cancel the re-quired agreement with the construction of a notified structure in the review proceed-ings without any time limits.

The bill reacts to the deficiencies of the current legislation by the automatic “transfer” of an unsuccessful notifica-tion into the building permit procedure upon a resolution of the Building Office, against which no appeal is admissible. This practically means a return to the legislation embodied in the 1976 Build-ing Code. Hence, while under the current legislation the investor must file a building permit application, under the new legisla-tion the original notification should replace this application.

for the assessment of the project.” The Of-fice shall notify only the concerned bodies and parties to the proceedings of the com-mencement of the procedure. This meas-ure shall speed up the zoning procedure while protecting the investor’s privacy from the undesirable attention of the public. On the other hand, it may decrease the legal certainty of the applicant, as owing to the delivery through the official notice board nobody can currently challenge the final and conclusive zoning decision at a later time for the reason of being omitted as a party to the zoning procedure.

A new time-limit for the Building Of-fice to issue a decision on the project should be determined (i.e. a time-limit for the issuance of the zoning decision). This period shall be 60 days and in particularly complicated cases (by giving an example, the bill refers to the procedure involving public deliberation), the Office should is-sue the decision within 90 days from the commencement of the zoning procedure.

The scope of an objection in the zon-ing procedure should be substantially limited: property owners (or beneficiaries under easements) may assert their objec-tions only to the extent to which their right is affected; civic associations may assert their objections only to the extent to which the public interest that they represent is af-fected. Objections of parties that trespass these limitations despite the advice of the Office will be then disregarded (currently, a reasoned decision must also be issued on such inadmissible objections).

Another partial change that should affect owners of flats and non-residential premis-es will be the exclusion of objections of as-sociations of flat owners, as these should completely lose their position as a party to the procedure.

Permitting structures

Should it seem in light of the previously commented changes that the Amendment attempts to reduce regulation, the amend-

Public contracts

The current provisions of the Building Code governing public contracts by which the zoning decision and the building per-mit may be substituted should change substantially. Under the new provisions, it should be possible to conclude only one agreement on the placement of a struc-ture and, at the same time, on it realisa-tion, i.e., replace both the zoning decision and the building permit with a single public agreement. Other provisions should lead to the clarification of certain questions and to the rectification of the current deficien-cies of this alternative for administrative procedures concerning the issuance of a permit.

The bill primarily introduces an autono-mous regulation of these public contracts which has priority over the general regu-lation under the Code of Administrative Procedure. The new law should specify the individual essential elements of pub-lic contracts concluded under the Building Code. For placing structures, a draft of the agreement should be submitted to the Office along with documentation identical to that for an application for the zoning decision, including the site plan, binding opinions or decisions of the concerned au-thorities and a proof of the authorisation to construct the structure on the land plot. Subsequently, the Office should assess the draft of the contract within a period of 30 days and provide reasoning if it refuses to conclude the agreement. The public shall be informed on the submission of the draft contract to the Office via the official notice board within 15 days from the effec-tive date of the contract.

From the point of view of legal certainty, it seems to be very important that the Of-fice will be obliged to mark the effective date on public contracts. Marking the ef-fectiveness on contracts should be condi-tional on the submission of consents of all the parties to the procedure. This should bring to an end the current uncertainty of investors, as the effectiveness of the con-


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tested in the practice; however, the Amendment aims at tightening the super-vision of the Building Offices over this pro-cess As a novelty, certificates issued by the authorised inspector will not only be notified to the Building Office but they will be also subject to its review. The Office will be able to file reservations against the notified certificate in the same way as the concerned bodies or persons that have acted as parties to the building permit procedure; these actions may be taken within 30 days from publishing the notification concerning the construction of a structure on the official notice board and have a dilatory effect on the certificate, i.e., the construction cannot commence before a final and conclusive decision on the ob-jections or reservations is adopted. The inspector should be able to comment on the objections and reservations, and deci-sions on the objections and reservations shall be made in a procedure similar to an appellate procedure by an administrative body that is superior to the Building Office. This quasi-appellate authority would then

tract is conditional on the consent of all the concerned parties and bodies that do not form a definite set in the practice. The state shall be responsible for any damage incurred due to the effectiveness being marked incorrectly on the contract by the Office.

Public contracts should expire after two years. Under the new legislation it should be possible to extend the effective period by a new contract or by a decision of the Building Office. It would be possible to review a concluded public contract within one year from its effective date even ex officio; however, analogically, the decision would have to be made within 15 months from the effective date (again, this strengthens the legal certainty, as no time limitation has been determined for review-ing public contracts).

Certificate of an authorised inspector

Permitting the construction of structures by private specialists has been already

review the certificate and decide that the notification of the issued certificate either has no effects (de facto cancelling the notification of the certificate), or that the objections and/or reservations shall be rejected. For the sake of increasing le-gal certainty, the Building Office should, at the investor’s request, mark the effec-tive date of the authorisation to construct a structure on the certificate.

Aleš Roztočil, Senior associate

Lumír Swiech, Junior associate


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NEW MEDIATION ACT

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more and more popular both in the Czech Republic and western countries. It is often used as the main way of reaching set-tlement in a variety of domains such as commercial or family matters. In simple terms, mediation is a process in which an independent and neutral third party – the mediator – assists the opposing par-ties in reaching a resolution of a dispute or complaint. The Act defines mediation as ‘the process in resolving conflicts with the involvement of one or more mediators supporting the communication between the parties engaged in the conflict [...] so as to assist them in reaching an amicable

The new Mediation Act came into force on 1 September 2012. Until now, mediation regulation has been absent in Czech law. However, this does not mean that media-tion did not occur or was illegal; instead, there was merely no regulation governing mediation, which has raised a number of issues as to the duties of mediators, me-diation effects, confidentiality of the me-diation process and other related matters. This gap is to be filled by the approved bill from the date of its effect.

Mediation is a modern, alternative meth-od of resolving disputes that is becoming

resolution of their conflict by entering into a mediation agreement.’

The main benefits of mediation include, in particular, the fact that, unlike judicial proceedings or arbitration, the result of the conflict rests in the hands of the parties and the final agreement is an expression of their joint will and liability. Therefore, situations that are very often encountered in courtrooms or arbitration rooms in which one of the parties (and often both) leaves unsatisfied do not arise. Mediation is usu-ally much faster and less formal than litiga-tion or arbitration. The independent media-




In addition to the guarantee of the qual-ity of the mediation process by a mediator, one of the advantages of mediation pro-vided by registered mediators will also be the fact that the commencement of such mediation will result in suspension of the time of prescription, which is something that that unregulated mediation does not and cannot have. The same applies to the simplified rules for delivery between the mediation entities, including the statu-tory constructive notice, which may not be used or agreed upon effectively by the en-tities in unregulated mediation.

Other standardised matters include a detailed and strict regulation of the con-fidentiality obligation and other duties of a mediator during the course of mediation. Last, but not least, mediation provided by registered mediators is expected to re-move a burden from the courts that are conferred, by granting the power to order participants in the process to meet with a registered mediator for a range of up to 3 hours. The Act also governs some other issues relating to the position of a media-tor from another EU Member State and the effects of mediation conducted in other EU member states, thus implementing the relevant EU Mediation Directive (Directive 2008/52 EC of the European Parliament and of the Council of 21 May 2008 on cer-tain aspects of mediation in civil and com-mercial matters).

We are convinced that the adopted law could help raise awareness in the business public, and elsewhere, of the possibility of using mediation as an efficient method of resolution that is fast, cheap and flexible. The new legal framework is expected pro-vide sufficient guarantees that mediation will be transparent and conducted by ad-equately competent mediators and that it will feature clearly defined results.

tor, as a kind of intermediary, facilitates the calming of troubled waters and establish-ing a dialogue where the parties are often unable to have a rational discussion, be it regarding a commercial or family dispute. Foreign experience shows that agreement between the parties can be reached in up to 75% cases.

In an ideal mediation, parties enter into an agreement to mediate with the mediator under which one or several dealings are held between the parties to the media-tion and the mediator. The dealings result in a settlement in the form of mediation agreement. This is how the beginning and the (ideal) ending of mediation is defined by the new Act.

The Act does not regulate the performance and effects of any mediation; instead, it only provides an institutional framework for mediation conducted by registered me-diators. These are persons recorded in the list of mediators with the Ministry of Justice who have passed the mediator examina-tion and complied with the standard re-quirements of no criminal record and uni-versity education. To conduct mediation in family matters, in addition to the general mediation examination, the person must also pass a special examination in fam-ily mediation. The mediation examina-tions are administered by the Ministry of Justice and by the Czech Bar Association for attorneys-at-law who wish to become mediators. The requirements to pass the examination, the purpose of which is to assess expert knowledge in the area of mediation and related fields, including re-lated laws, is to ensure adequate quality of services provided by registered mediators. This will also be facilitated by surveillance by the Ministry of Justice or the Czech Bar Association and strict penalties imposed for a breach of obligations by a mediator.

Dušan Sedláček, Partner

Petr Bříza, Senior Associate

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LEgAL NEWS Commercial Law

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with a Czech legal entity or individual. This article, however, does not address the conditions of employing foreign national directors or officers, the seasonal employ-ment and posting of foreign nationals by foreign employers.

An employment permit (the “Permit”) is usually requested by a foreign national be-fore his/her arrival in the Czech Republic by a written application to the competent Regional Employment Bureau Office or via his/her employer that is to employ the foreign national.

The application for the Permit is filed via a special form issued by the Ministry of Labour and Social Affairs (“MLSA”). The request is available for download from the MLSA website and must include the following (i) a copy of the travel docu-ment page containing the foreign nation-al’s personal details; (ii) a certificate of professional qualification to perform the given employment (such as a translated and authenticated copy of an apprentice-ship certificate, school-leaving certificate, or university/college diploma). Since the publishing of the MLSA press release on 9 February 20121, a new unconditional re-quirement has applied for the nostrification of the documents under point (ii) above; the nostrification may be provided within a period necessary for obtaining the nos-trification based on a permit granted by the director of the Regional Employment Bureau Office;2 (iii) the employer’s con-

The employment of foreigners in the Czech Republic is governed by Act No. 435/2004 Sb., on Employment (the “Em-ployment Act”). For the purposes of the Employment Act, a foreign national is not a citizen of the European Union or a mem-ber of his/her family, or a family member of a citizen of the Czech Republic that is not a citizen of the Czech Republic or another EU Member State.

A foreign national may only be employed in the territory of the Czech Republic on the assumption that (i) he/she has a valid em-ployment permit and (i) a valid residence permit or (iii) is a holder of the Green Card or the EU Blue Card and only if (iv) the em-ployer’s intention to fill a specific vacancy by a foreign national (including the speci-fication of their number, if there are more foreign nationals, type of work to be per-formed and the expected period of work) is notified in advance, and discussed with, the competent regional Employment Bu-reau office (the “Regional Employment Bureau Office”). In fact, employment is deemed to also include the performance of tasks arising from a legal entity’s activity that are carried out by a partner, director or officer of a corporation or another cor-porate body or a member of a cooperative or a director or a member of another body of the cooperative. The employment per-mit is also required for seasonal employ-ment and in cases when a foreign national is posted to work in the Czech Republic by his/her foreign employer under a contract

firmation to employ the foreign national (the template can be downloaded from the MLSA website); (iv) other documents as required by the nature of the employment. The granting or refusal of a Permit is fully at the discretion of the relevant Regional Employment Bureau Office.

The Permit will be issued to the foreign national in view of the labour market situ-ation and only if the vacancy involved has been notified and discussed in advance and may not be filled otherwise due to the required level of qualification or the lack of free labour forces. Since the publish-ing of the above-mentioned MLSA press release, with effect from 1 July 2012, the process of granting Permits has become more difficult as much focus has been placed on the MLSA requirement not to grant or carefully consider the granting or extension of Permits to foreign nationals in respect of a job where a lower level of qualification is required by the employer than completed secondary education with a school-leaving examination. The Per-mit is granted for a period not exceeding 2 years and may be extended repeatedly, again for a period not exceeding 2 years.3

The fee for the Permit is CZK 500 and the fee for Permit extension is CZK 250.

The requirements for granting a visa ex-ceeding 90 days for employment purposes are regulated in Act No. 326/1999 Sb., on the Residence of Foreign Nationals in the

EMPLOYMENT OF THIRD COUNTRY NATIONALS AND REQUIREMENTS FOR OBTAINING A RESIDENCE PERMIT FOR EMPLOYMENT PURPOSES

1 Press Release of 9 February 2012, MLSA’s Information on the Instructions for Employment Bureaus in Respect of Granting Employment Permits to Non-EU Foreign Nationals 2 MLSA’s Press Release of 15 March 2012, on Issuing Work Permits to Foreign Nationals3 The requirements stated in this paragraph need not be complied with for Permits in cases listed in Section 97 of the Employment Act. No Permit is required in cases specified

in Section 98 of the Employment Act




must be submitted. In the case of a visa for employment purposes, this should be a certificate of travel medical insurance coverage only for the period from the foreign national’s entry in the Czech Re-public until the date of commencement of employment.

All foreign language documents except the travel document must be provided with an official translation into Czech and may not be older than 180 days except the travel document and documents from the register office.

After entering the territory of the Czech Republic, the foreign national is required to notify the place of residence to the For-eign Police department having local juris-diction depending on the foreign national’s place of residence within 3 business days (this does not apply to foreign nationals under 15 years of age and foreign nation-als who comply with the obligation with the landlord in accordance with Section 103 of the Foreign Nationals Act).

Where the purpose of the stay requires a stay exceeding 6 months, the foreign national must file an application for long-term residence, (it which may be granted for a maximum period corresponding to the term of validity of Permit).

The terms for granting the Green Card and the Blue Card are also regulated by the Foreign Nationals Act. The Green Card and the EU Blue Card entitle the holder to reside in the territory and perform the em-ployment for the period stated in the card.

The Green Card may be applied for by for-eign nationals that are citizens of countries (12 in total) listed in the Ministry of the In-terior Decree No. 461/2008 Sb. (such as

Czech Republic (the “Foreign Nationals Act”).

An application for a long-term visa for employment purposes can be filed in per-son in the Czech Republic’s embassy in the country of which the foreign national is a citizen or the country that issued the foreign national’s travel document or the country of the foreign national’s long-term or permanent residence (with exceptions as listed in Ministry of the Interior Decree No. 429/2010 Sb.). In the Czech Repub-lic, the application can be filed in excep-tional cases only, in the relevant office of the Ministry of the Interior. The statutory period for dealing with the application is 90 days of the date of filing or 120 days in especially complex cases. With effect from 1 January 2011, a visa is granted for a maximum period of 6 months.

The application must include the docu-ments specified in Section 98 of the For-eign Nationals Act (a travel document; a document substantiating accommoda-tion in the Czech Republic; a document confirming the purpose of the stay, i.e., the Permit or the reference number stated in the application for the Permit and the identification of the Regional Employment Bureau Office considering the application; a document identical to the statement of no criminal record; and on the basis of reasonable suspicion, a foreign national may be required to submit medical re-ports confirming that the person does not suffer from any of the grave illnesses specified in the Ministry of Health Decree No. 274/2004 Sb.).

Before the visa is stamped into the travel document, a certificate of travel medical insurance coverage for the territory of the Czech Republic of at least EUR 60,000

Japan, the U.S.A., Canada and Ukraine). The Green Card is, similar to the Permit, issued for a specific job with a specific employer, published in the register of va-cancies available for Green Card holders as follows: (i) for skilled personnel with a university education and key personnel, (ii) for workers occupying jobs for which an apprenticeship certificate is required as the minimum, or (iii) for other workers. The documents that must be provided with the application are listed in Section 42 of the Foreign Nationals Act. Before granting the Green Card, the embassy may con-duct an interview with the applicant. The qualification requirements, the period of validity and option of extension differ de-pending on the type of the Green Card. The EU Blue Card may only be applied for by a foreign national who has completed a university or higher vocational education, the duration of which was at least 3 years, irrespective of the country of origin. The EU Blue Card is granted for vacancies listed in the register of vacancies intended for Blue Cards and whose registration as such has been approved by the employer. The documents that must be provided with the application are listed in Section 42j of the Foreign Nationals Act. We are of the opinion that, analogous to the applications for Permits, the documents substantiating a high level of skills must be nostrified.

Natalija Traurigová, Counsel

Lyudmila Izmailova, Associate


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NEW PUBLICATION DUTIES OF CONTRACTORS AND CONTRACTING AUTHORITIES IN PUBLIC PROCUREMENT

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pany, the list must also include an ap-pendix containing a list of holders of shares representing more than 10% of the share capital. The time limit for pro-ducing the list of shareholders is 90 days prior to the date of submitting the list of subcontractors.

The list of subcontractors (with the list of shareholders attached, as the case may be) must be presented to the contracting authority within the time limits specified below.

• If the term of the contract does not ex-ceed 1 calendar year – the list is to be submitted within 60 days of the perfor-mance of the contract. In this case, the subcontractor’s share is calculated from the value of the entire contract.

• If the term of the contract exceeds 1 cal-endar year – the contractor is required to submit the list by 28 February of the next calendar year. In this case, the subcontractor’s share is calculated from the part of the value of the contract that was paid by the contracting authority in a single calendar year (the amount paid by the contracting authority in a specific year will serve as a basis for the calcu-lation of the share that was paid by the contractor to its subcontractors).

The obligation to submit a list of subcon-tractors does not apply to small public contracts, i.e., contracts the value of which does not exceed CZK 1 million net of VAT with respect to the supply of products and the provision of services or CZK 3 million net of VAT with respect to construction works.

In connection with the latest amendment to the Public Procurement Act, we would highlight the new obligations of the pub-lic contracting authorities and contrac-tors concerning the publication of con-tracts, the prices actually paid, and the subcontractors used (§ 147a of Act No. 137/2006 Sb. on public procurement, as amended).

The interpretation guidance of the Czech Ministry for Local Development (available at: http://www.portal-vz.cz/CMSPages/GetFile.aspx?guid=e0252a62-d123-46bc-a8c0-85052fa12db5) ties these duties to the time of execution of the contract or the time of performance of the contract (with respect to the duty to publicise the price that was actually paid for the subject mat-ter of the contract and the list of subcon-tractors), regardless of the time when the tender procedure in question was com-menced. Thus, these duties may also ap-ply to tenders that were commenced prior to the effective date of the latest amend-ment, i.e., before 1 April 2012.

Contractors – submission of the list of subcontractors after the performance of the contract

If a contract is performed after 1 April 2012, the contractor will be obligated to deliver a list of subcontractors to the public contracting authority, so that the latter may post the list on its profile.

The list should include all the subcontrac-tors to whom the contractor paid more than 10% for the performance (or 5% in the case of a significant public contract). If the subcontractor is a joint-stock com-

The performance of a contract is gener-ally understood to mean the discharge of the contractor’s obligation to provide the requested performance and, on the other hand, the discharge of the contracting authority’s obligation to pay the price for such performance. It follows from informal consultations with the Czech Office for the Protection of Competition (the “Office”) that the publication of information that is tied to the moment of the performance of the contract should not be deliberately postponed until, for example, after pay-ment of the retention money. We have been informed that the Office should issue a detailed interpretation guidance to clarify the phrase “performance of a contract” within the meaning of the Act on Public Procurement.

Public contracting authorities

1) Publication of contracts – after the execution of the contract

If the contract is executed after 1 April 2012 (i.e., after the effective date of the latest amendment), regardless of when the tender for the public contract was announced, the contracting author-ity must post the complete wording of each contract whose worth is equal to or greater than CZK 500,000 net of VAT, including its modifications and subsequent amendments, on its profile within 15 days of the date of its execution.

2) Publication of the price paid – after the performance of the contract

• If the contract is performed after 1 April 2012, regardless of when the




data to the contracting authority one month before the contracting authority has to post them on its profile (details below).

For practical purposes, we offer a link to the methodological document of the Czech Ministry for Regional De-velopment concerning the publication of tender announcements http://www.portal-vz.cz/getdoc/e0aee1e6-ab04-44d4-a37f-975323a1cd2a/Metodicke-pokyny-k-uverejnovani-(1). We would highlight mainly Art. 3.1.2, which specifies the re-quirements concerning information to be published on the contracting authority’s profile. With respect to executed frame-work agreements and DPS (dynamic purchasing system) contracts, the cited article stipulates on page 13 of the meth-odological document that: “In the case of framework agreements and DPS, the amount of the price actually paid and the list of subcontractors will be published on an aggregated basis for the dynamic purchasing system or the framework agreement. The Ministry for Regional Development is preparing, in cooperation with the Office for the Protection of Com-petition, a statement regarding the publi-cation of public contracts awarded on the basis of a framework agreement or DPS; the statement will be reflected and subse-quently incorporated in this methodologi-cal document.”

On page 15, the cited article further points out a duty set out in § 8 (1) (g) of Decree No. 133/2012 Sb. on the publication of

contract was executed, the contract-ing authority must post on its profile the price actually paid for the per-formance of each public contract whose worth is equal to or greater than CZK 1 million net of VAT with respect to the supply of products and the provision of services or CZK 3 million net of VAT with respect to construction works, by the deadlines specified below:

• If the term of the contract does not exceed 1 calendar year – the actual amount of the full price for the perfor-mance is to be published within 90 days of the date of performance of the contract;

• If the term of the contract exceeds 1 calendar year – the price paid for the previous year will always be pub-lished by 31 March of the next calen-dar year.

3) Publication of subcontractors – after the performance of the contract

Another obligation tied to the moment of the performance of a contract is the obligation to post on the contracting authority’s profile a list of subcontrac-tors to whom more than 10% of the price of the contract (or 5% with respect to significant public contracts) was paid for their performance. If the subcontrac-tor is a joint-stock company, it is also necessary to publish a list of holders of shares representing more than 10% of the share capital. This obligation re-quires the cooperation of the successful bidder who has a duty to provide these

tender announcements and on the formal requirements concerning the contracting authority’s profile: “The contracting author-ity will ensure that all the documents and information that were posted on the con-tracting authority’s profile will be accessi-ble to the general public, at no cost, for at least 5 years from the date of their posting (with the exception of notices in simpli-fied below-threshold proceedings and the text part of the contract documents).” The posted contracts, the prices paid and the lists of subcontractors will thus have to re-main posted on the contracting authority’s profile for 5 years from the date of their publication.

Failure to publish or provide the requested information is subject to penalisation: the Office may impose a fine of up to CZK 20 million on contracting authorities, and a fine of up to CZK 2 million on contrac-tors. It would be unreasonable to expect any leniency on the part of the Office in the case of failure to comply with one’s ob-ligations.

Barbora Karo, Senior Associate

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shares will be changed ex lege to the form of registered shares. Shareholders will then be obliged to submit the shares of a company for the purpose of designating a change of their form, or exchanging for new shares, and provide necessary data for registration in a list of shareholders, which will be newly available not only to other shareholders of the company, but also to the persons specified in the Act on Business Activities on Capital Market un-der its terms and conditions for the provi-sion of data by persons keeping records of investment tools.2

The essential elements of a list of share-holders will be newly supplemented with details about a shareholder’s bank ac-count to which all payments will be trans-ferred by wire to the credit of the share-holder by the company. The bank account will have to be opened with an entity au-thorized to provide banking services in a country that is a member of the Organi-sation for Economic Cooperation and De-velopment (OECD), in a European Union Member State, or in another country that is a contracting party to the Agreement on European Economic Area. However, de-tails about shareholders’ bank accounts, given their privacy, will not be provided to other shareholders of the company, but only to the relevant public authorities. At

An effort to make the shareholder struc-tures of joint stock companies transparent has encouraged the former Justice Minis-ter, Jiří Pospíšil, to draft an Act on Increas-ing Transparency of Joint Stock Compa-nies and on Amendment to Certain Acts,1 which entails much expected limitations on bearer shares. The aim of the Act, whose draft was approved by the government on 30 May 2012 and will be discussed by the Chamber of Deputies on its upcoming ses-sion in September, is to make it possible to identify a shareholder at any moment, and thus eliminate the risks of a non-transpar-ent and corrupt environment and money laundering through anonymous joint stock companies.

The draft Act allows for the cancellation of the circulation of physical bearer shares. Physical bearer shares, which will not be immobilized, will change ex lege to physical registered shares. It will be pos-sible to avoid such a change only by (i) the book-entering of shares, i.e., by chang-ing their form through registration with the Central Securities Depository, or (ii) a so-called immobilization, i.e., depositing with a securities broker providing securi-ties custody services.

If one such change is not made by 1 Janu-ary 2014, the form of anonymous bearer

the same time, shareholders of book-en-tered and immobilized shares will have to open an asset account in which the shares held by them will be registered.

If the draft Act is adopted in the submit-ted wording, bearer shares will only exist in a book-entered or immobilized form from 1 January 2014, whereas both these forms include the possibility of identi-fying a shareholder, either through the Central Securities Depository or a bank providing securities custody services. In-formation about shareholders will then be able to be used by criminal investigators as well as other supervisory and admin-istrative authorities, subsidy providers and the like. It will then be possible to transfer bearer shares only through registration in the records of investment tools.

Tomáš Valouch, Associate

Zuzana Tonarová, Associate

INCREASING TRANSPARENCY OF SHAREHOLDER STRUCTURES

1 The draft Act on Increasing Transparency of Legal Persons and on Amendment to Certain Acts, ref. no. 294/12, http://eklep.vlada.cz/eklep/page.jsf?pid=RACK8QPH6AUG.2 Cf. Section 115 (1) of Act No. 256/2004 Sb., on Business Activities on Capital Market, as amended.





12

rather minor modifications of the individ-ual provisions of the Act, often reflecting amendments to other laws. However, the proposed amendment can be said to be clearly based on the current experience of applying the existing Trade Licensing Act and to be focused on the topical issues pertaining to business and on the limita-tion of the undesired effects associated

The amendment to the Trade Licensing Act, which was published in the Collec-tions of Laws under No. 169/2012 on 30 May 2012, is to make life easier mainly for entrepreneurs – individuals.

In the past, the Trade Licensing Act was subject to frequent amendments that (except for a few exceptions) constituted

therewith. This applies in particular to the intention to minimise the administrative burden of both new and established en-trepreneurs by simplifying, or even cancel-ling, some of the administrative duties and specific acts that would, in effect, reduce the financial burden of entrepreneurs by up to 25%. Moreover, the legislators’ quest for the comprehensibility and technical ac-

AMENDMENT TO THE TRADE LICENSING ACT TO MAkE LIFE EASIER FOR ENTREPRENEURS




Another upcoming relief for entrepreneurs comes in the fact that, if they report their place of residence as their place of busi-ness, they can request the Trade Licensing Office to automatically change the place of business upon a change of residence2

Therefore, if an entrepreneur carries on business at home and then changes the residence, the Trade Licensing Office will change the place of business automati-cally and without requiring any additional information. These situations are common in frequent relocations.

All authorities can be notified at the same time

The existing law already permits entrepre-neurs with a trade licence to make a fil-ing with other public administration bodies and institutions (such as tax authorities, social security administration, employ-ment bureaus and health insurance com-panies) via their competent Trade Licens-ing Office. Via this office as the Central Registration Place, these authorities can also be notified of any changes. However, the amendment abolishes the restrictions under which a change could only be noti-fied to another authority if the change was concurrently notified to the Trade Licens-ing Office.3

Trade continuation upon an entrepre-neur’s death4

The Amendment also addresses changes in the event of the death of a business person. The intention is, in particular, to

curacy of some of the (so far contentious) provisions should not be left unmentioned.

Identification number of an establish-ment not required (1)

Specific changes will affect various areas, including the cancellation of an entrepre-neur’s obligation to mark his/her establish-ment with an identification number. The entrepreneur will be required merely to ensure that the establishment is fit for car-rying on the given trade and will no longer be required to provide an identification number outside of the establishment.

On one hand, the establishment will have a specific identification number kept with the Trade Licence Register so as to com-ply with the formal requirements of the Czech Statistical Office; but on the other hand, each business person will decide whether to use the identification number assigned to his/her establishment. This regulation particularly reflects the (cur-rently unfavourable) position of entities carrying on business under a trade licence compared to entities carrying on business under other laws (such as architects, no-taries and attorneys-at-laws), who are not bound by current laws to have, publish and notify the identification number of their es-tablishment. The cancellation of this duty could spare the entrepreneurs up to CZK 47 million.

No obligation to report a change of the place of business upon a change of residence

ensure the smooth continuation of the business of the deceased entrepreneur. The Amendment includes a list of enti-ties authorised to continue carrying on the trade after the completion of the probate proceedings (such entities comprise: the administrator of the property of the de-ceased, heirs at law, beneficiaries of the will, surviving spouse or partner – even if not an heir, provided that he/she is a co-owner of the property used for carrying on the trade, and, as the case may be, the in-solvency trustee). In addition, the Amend-ment introduces an obligation on the court to provide, at the request of the Trade Li-censing Office, information as to the date when a resolution of the court terminat-ing the probate proceedings in respect of a deceased entrepreneur came into force.

The Amendment came into force at the end of June.

Michaela Riedlová, Senior Associate

Kateřina Havlíková, Junior Associate


13

1 S. 17 (4), (5), (6) and (7) of the Trade Licensing Act2 49 of the Trade Licensing Act, par. (4) through (6) added3 S. 45a of the Trade Licensing Act4 S. 13 of the Trade Licensing Act


14

But nothing is lost yet – if the purchaser changes his mind after returning back home (which happens very often), within two weeks of the purchase he can still re-scind the purchase contract with a written notice, without stating a reason or being subject to any sanctions.

There was one exception, however, set forth for a long time in Section 57 of the Civil Code, under which the consumer’s right to rescind the contract within two weeks did not apply: when he had ex-plicitly arranged for a dealer’s visit at his place with the aim of placing an order. Do you understand now why dealers are so ready to offer “free delivery”? Precisely! To make the consumers sign a document stating that they wish to have the pur-chased goods delivered to or installed in their homes. In these situations the sellers hardly have any goodwill. Unlike consum-ers, dealers often use this exception, thus depriving the consumers of their right to rescind the contract within two weeks.

However, this situation will soon change, as the amendment to the Civil Code that

Most consumers are already aware that if they shop on-line they can, within two weeks of the purchase rescind the pur-chase contract and return the goods with-out stating a reason and without being subject to any sanctions. This is regulated by law mainly because when consumers purchase goods from a distance, without the opportunity of seeing such goods, they should be allowed, subject to certain con-ditions, to return these goods if they do not meet their expectations.

However, unfortunately hardly any con-sumers are aware that for a long time a similar policy has also applied to pur-chases made outside the seller’s com-mercial premises. Such purchases in-clude all kinds of door-to-door sales, as well as goods presented at sales shows where consumers are offered items such as a “delicious lunch“, “a gift electric razor for men” or “a set of washing powders for women” where the main purpose is to pre-sent overpriced goods of a questionable quality. In such situations, many consum-ers give in to the dealer’s elaborate strat-egy and end up purchasing the goods.

was published in the Collection of Laws under no. 170/2012 on 30 May 2012 contains no such exception for purchas-es made outside of ordinary business premises. Consumers are now only pre-vented from rescinding a contract within two weeks if it is a contract on repair or maintenance performed at the request of and at a place indicated by the consumer. Thus, consumers do not have to worry anymore that they will not be able to return the goods they have purchased at a sales show, as the sellers may no longer deprive them of such a right. The time for return may only be extended. The amendment came into effect on the 15th day after pub-lication, i.e. on 14 June 2012.

Ivan Rámeš, Associate

SALES OUTSIDE OF ORDINARY BUSINESS PREMISES




The purpose of the document and of the information it contains is to create a general idea of specific issues, not to present a comprehensive legal analysis. Notwithstanding the attention and care exerted in the preparation of this document, the law firm Havel, Holásek & Partners recommends consulting the issues prior to taking any decisions on the basis of the information contained herein.

© 2012 Havel, Holásek & Partners s.r.o.All rights reserved.

Havel, Holásek & Partners, attorneys-at-law, based in Prague, with offices in Brno, Ostrava, and Bratislava and with 21 partners, more than 150 lawyers, and a total staff of more than 400 employees, including 130 employees of the cooperating collection agency Cash Collectors, is the largest Czech-Slovak law firm. The firm currently provides services to approximately 700 clients, more than 30 of which have been ranked as Czech Top 130 companies; approximately 80 rank among the Fortune 500. Based on the total number of awards and nominations in the official Law Firm of the Year competition, Havel, Holásek & Partners was the most successful Czech law firm in the last three years. This year, the firm was awarded the prestigious Who’s Who Legal Award and was ranked the best law firm in the Czech Republic of the year 2011, and was also ranked the No. 1 local law firm in the overall ratings published by Practical Law Company. Furthermore, Havel, Holásek & Partners was awarded an ILO Client Choice Award 2010 by International Law Office (ILO), which named it the best-rated law firm by clients in the Czech Republic. Our lawyers are regularly cited as leading or recommended specialists by renowned international rating publications, such as PLC Cross-border, European Legal 500, Cham-bers Global Guide, European Legal Experts, Global Law Experts, and IFLR 1000, all of which have cited Havel, Holásek & Partners as one of the best law firms for transactions carried out in the Czech Republic in the areas of mergers and acquisitions, corporate and commercial law, banking and finance, capital markets, insolvency and restructuring, real estate and construction law, labour law and dispute resolution.

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