CEE Legal Matters

Category: Czech Republic

  • Guest Editorial: Another Successful Year for M&A and PE/VC Transactions

    No doubt we all agree that a good lawyer should not only have extensive legal knowledge and experience, but should also constantly monitor the market. In reviewing the state of the Czech legal market over the past six months, I would like to point out several issues I personally find interesting or important.

    Deal Activity and Trends

    The first half of 2019 has been marked by a consistent flow of transactions and investments on the Czech M&A and private equity market. Personally, I have found a slight increase in the number of deals compared to the steady (high-volume) amount in 2017 and 2018. The Czech PE/VC market so far has focused mainly on divestments and fundraising with the market witnessing a couple of major divestments, such as (finally) the successful exit in KIWI.com, a leading and rapidly growing online travel booking platform, and the strategic investment by Apax Partners, a leading global private equity advisory firm engaged mainly in the tech & telco, services, healthcare and consumer segments, which recently acquired a majority stake in ADCO Group, the operator of the DIXI and TOI TOI brands providing portable toilet and sanitation equipment rental and services worldwide. Generally, activity in the technology and start-up sectors has further room to grow, and I suspect the trend will carry on into 2020.

    Corporate Case Law Developments

    Five years after the new Czech Civil Code and Business Corporations Act came into force, we can already see examples of conclusively establishing practice, e.g., rules on corporate dividends pay-offs. In addition, several new issues have emerged, such as case law impacting on traditional corporate governance rules in SHA, which now requires a rethinking of the traditional approach as seen in Dutch or English law. I would say that case law is progressing towards ever greater detail. 

    FDI Regulation on the Horizon

    The long-awaited Foreign Direct Investment Regulation should be in place in the Czech Republic no later than the second half of 2020. As in Germany, France, and Italy, foreign investors from countries outside the EU will be under supervision in the Czech Republic and the state must approve all investments in strategically important sectors. If, for example, an investor interested in a domestic company does not prove the identity of its ultimate beneficiary owner, the state may stop the entire transaction. This regulation is aimed at protecting strategic sectors, such as energy, the armaments industry, and technology firms that develop communication or IT systems for both civil and military purposes. It is estimated that in the Czech Republic the audit could cover up to 300 investments per year, but the special analytical team working under the Ministry of Industry and Trade of the Czech Republic will not examine all of them. There are expected to be several dozen cases per year. If the Ministry officials determine that a transaction is unsafe, they may not immediately propose rejection to the government, but must agree with the investor on terms that would minimize the potential risk and must subsequently monitor the execution of the agreed terms. In each case, it will be interesting to see how the FDI regulation will be put in place considering the current political environment in the Czech Republic, as well as prospective economic developments, where we can see signs of a slowdown in traditional industries. Regardless, I believe 2019 will be another successful year for M&A and PE/VC transactions.

    By Vladimir Cizek, Partner, Schoenherr 

    This Article was originally published in Issue 6.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • White & Case Advises PPF Arena 1 on EUR 500 Million Debt Issuance

    White & Case Advises PPF Arena 1 on EUR 500 Million Debt Issuance

    White & Case has advised PPF Arena 1 B.V. on the issuance of EUR 500 million 2.125% notes due 31 January 2025, which were admitted to trading on the Global Exchange Market of Euronext Dublin.

    The notes are guaranteed by certain subsidiaries of PPF Arena 1 B.V. and secured by a common security package over the group’s assets in multiple jurisdictions alongside the pari passu senior bank debt. BNP Paribas, HSBC France, Societe Generale and UniCredit Bank AG acted as global coordinators and joint lead managers, and Credit Agricole CIB, Credit Suisse Securities (Europe) Limited and PPF bank acted as co-managers.

    The White & Case team that advised on the transaction was led by Prague Local Partner Petr Hudec and included London Partner Stuart Matty, Prague Associates Petr Smerkl and Jan Vacula, and London Associate Neha Saran.

    This year alone, White & Case has advised PPF on the establishment of its EUR 3 billion Medium Term Note Programme and the debut issuance of EUR 550 million 3.125% notes due March 2026 (as reported by CEE Legal Matter on April 9, 2019), the sale of its stake in Telenor Hungary (as reported by CEE Legal Matters on November 7, 2019), and its USD 2.1 billion acquisition of Central European Media Enterprises (as reported by CEE Legal Matters on November 6, 2019).

  • Dominika Nosackova Becomes Regional Legal Counsel for CEE at CHEP

    Dominika Nosackova Becomes Regional Legal Counsel for CEE at CHEP

    Dominika Nosackova, the former Senior Legal Counsel at Coca-Cola HBC Czech Republic and Coca Cola HBC Slovak Republic, has join CHEP as Regional Legal Counsel for CEE.

    CHEP, which stands for Commonwealth Handling Equipment Pool, offers pallet and container pooling services, serving customers in a range of industrial and retail supply chains. The company, which is a subsidiary of Brambles, offers wooden and plastic pallets, small display pallets, crates, and IBC containers. 

    Nosackova, who is based in Prague, spent the past six and a half years at Coca-Cola. which she joined after a year and a half in-house with T-Mobile Czech Republic and a year as a junior associate with Havel, Holasek & Partners (now Havel & Partners).

    She explained the reasons for her move to CEE Legal Matters: CHEP invited me to take responsibility for the entire CEE region — which at the moment is 11 countries, and in January will expand to include Russia as well.” According to Nosackova, “it is for me very interesting and challenging, as I have opportunity to learn new things, and new legal systems. It is more difficult to manage, but I like it. I coordinate all legal issues in this region, from litigations to all contractual work. I review big procurement contracts, contracts with customers, supply contracts, etc.”.

  • Dentons Advises CPI Property Group on Debut Green Bond Issuance

    Dentons Advises CPI Property Group on Debut Green Bond Issuance

    Dentons has advised CPI Property Group on its issuance of Regulation S EUR 750 million 1.625% green bonds due 2027. Allen & Overy reportedly advised joint lead managers Barclays, Deutsche Bank, HSBC, Raiffeisen Bank, and Societe Generale.

    According to Dentons, “this transaction represents CPI’s debut green bond issuance, making CPI the first real estate group to issue green bonds in its region.” 

    The green bonds were issued under CPI’s EUR 5 billion Euro Medium Term Note Programme and are listed on the regulated market of Euronext Dublin. According to Dentons, “they received a positive response from the market, attracting investors from a range of regions, such as the UK, France, Austria, and Asia, and market demand peaked at over EUR 2 billion.”

    Dentons also reports that “as the leading owner and manager of income-generating real estate in its region, CPI has ambitious plans to improve the environmental performance of its properties. Under its green bond framework, CPI has committed to using proceeds from the green bonds to finance and/or refinance green initiatives, such as acquiring and refurbishing certified green buildings, improving energy efficiency, and promoting sustainable farming.”

    Dentons’ London-based team included Partner Nick Hayday, Associate Moeen Qayum, and Trainee Shinae Lee. Its Luxembourg-based team included Partner Stephane Hadet, Senior Associate Olivier Lesage, and Associate Christophe Renaudin. Denton’s Prague-based team included Partner Jiri Tomola.

  • Kinstellar Advises Investika on Galerie Butovice Acquisition

    Kinstellar Advises Investika on Galerie Butovice Acquisition

    Kinstellar has advised Czech real estate fund Investika on its acquisition and refinancing of the Galerie Butovice shopping center in Prague.

    According to Kinstellar, the retail complex contains more than 80 tenants and has nearly 100% occupancy. The property offers more than 50,000 square meters of lettable area and more than 1,400 parking places for visitors. Tenants include Kika, Albert, H&M and Electro World. The value of the transaction has not been disclosed.

    The Kinstellar team was led by Partner Klara Stepankova, and included Senior Associate Rudolf Schichor, Counsel Martina Brezinova and Junior Associates Denisa Šimanská and Igor Sebo.

    Kinstellar did not reply to our inquiry on the matter.

  • Lukas Sommer and Jiri Votrubec Make Partner at Rowan Legal

    Lukas Sommer and Jiri Votrubec Make Partner at Rowan Legal

    Former Managing Associates Lukas Sommer and Jiri Votrubec have been promoted to partner at Rowan Legal.

    “I am delighted to welcome Lukas and Jiri as partners at Rowan Legal,” said Partner Vilem Podesva. “With both of them we see their promotions as an appreciation of the excellent work they are doing both for clients and on our internal projects. We are also extremely pleased that both Lukas and Jiri have grown along with our firm – Lukas started out with us as a trainee, while Jiri even began as a student.”

    According to Rowan Legal, “Lukas Sommer has long specialized in public investments and projects in regulated sectors such as the energy and water supply industries. In addition to his work for clients, Lukas sets up internal processes in Rowan Legal and handles business development in his allotted areas.” 

    Sommer specializes in public procurement matters, advising both contracting authorities and tenderers in the preparation of their tenders. He graduated from the Charles University’s Faculty of Law, and has been with Rowan Legal for over 11 years.

    Votrubec specializes primarily in legal consultancy regarding public investments. According to Rowan Legal, “his team is currently working on more than 50 investment projects in public administration as well as in regulated sectors such as transport and the energy industry.” At Rowan Legal, Votrubec is in charge of managing the entire team focusing on the public sector and HR – particularly the recruitment, training and further development of new colleagues. He is a graduate of the Faculty of Law of Masaykova Univerzita in Brno and Univerzita Karlova in Prague. He’s been with Rowan Legal for more than nine years.

    In addition to these promotions, Rowan Legal also promoted Jaroslav Heyduk, Jan Mekota, And Jan Tomisek to the position of Managing Associate and Irena Kolarova to Senior Associate.  

  • Ron Given Returns to CEE with Deloitte Legal

    Ron Given Returns to CEE with Deloitte Legal

    Former Wolf Theiss Poland Co-Managing Partner Ron Given has joined Deloitte Legal as its CE Senior Legal Counsel, responsible for all of the firm’s offices in 19 Central and Eastern European countries.

    “I am absolutely delighted with this new role,” Given told CEE Legal Matters. “Deloitte Legal is already a phenomenal regional success with over 370 lawyers in the CE region addressing the most significant matters of very discerning local and international clients. This success has been enabled by exceptional lawyers and a collaborative culture that have both impressed and attracted me. I look forward to helping my new colleagues and clients manage and grow their success.”

    “Although the number of lawyers and countries covered makes us the largest law firm in CE, our goal and plan is to better leverage the potential of regional focus and cooperation and to improve our profile to the law firm of the first choice within the region” said Jan Spacil, Deloitte Legal CE Leader. “I am really happy that Ron will help us to achieve our plans and strongly believe that his great experience in building successful legal practices across our region will enable us to significantly move towards our goals.”

    Given, who will be based in Prague, comes to Deloitte Legal from Wolf Theiss, where he spent ten years practicing and managing offices in Zagreb, Prague, Kyiv, and Warsaw. After leaving CEE in the spring of 2019 (as reported by CEE Legal Matters on February 11, 2019), he served as Wolf Theiss’ U.S. Representative. Before moving to CEE in 2008, he was the general counsel of a NASDAQ-listed, Bermuda-based international insurance holding company and also had a long career as a corporate and banking partner with Mayer Brown.

  • Artifical Intelligence – Emerging Issues and Challenges

    Artificial Intelligence is, after distributed ledger technology, the new frontier for legal scholars, and many are working to define how important and significant its future development is and how it is going to shape our legislation, affect our judiciary, and transform our societies. Many are striving to outline new legal definitions of AI, propose novel legal subjectivity and liability for AI’s defects or damage, or reframe ethical principles that AI has to follow, once we finally create it and release it to the world.

    Although answers to these questions are surely important, the focus of this review is on something rather different. In our opinion before we start solving complex questions that truly define the legal status of AI, we should provide enough means and liberty for creators to realize their ideas first. Hence, we are confident that in the short term, the legal community should focus primarily on the following issues.

    1. Plurality of Subjects Liable for AI

    First and foremost we see a real challenge in limiting the plurality of subjects responsible for AI and its potentially harmful consequences. Where responsibility and liability for AI and its behavior is not clear, inventors and early commercial users might, among other things, be wary about using potentially ground-breaking AI simply due to risks associated with its introduction. Moreover, clarifying liability will allow for simpler and cheaper insurance as insurance companies will be able to easily identify liable subjects and offer competitive insurance. Skipping this rather important step will result in slower progression and higher costs in AI research and development.

    2. Wide Use of Data is Crucial

    The quality of data that AI uses is often presented as the most important issue to be addressed. Processing higher quality data (whatever the definition of this “higher quality” might be) will surely result in better outcomes. If we agree that this premise is true, we have a strong interest in providing AI with the best data available. This provision can often be limited or made impossible by strict data protection rules, especially if the relevant data is personal. We should encourage rather robust data protection legislation in the European Union and push for clearer (and wider) borders on the use of data by AI while, at the same time, protecting such data by wide use of anonymization and/or pseudonymization regimes. Preventing AI from learning from some types or areas of data will result in skewed outcomes with poor quality. 

    3. Sandboxes Everywhere

    Releasing AI to the world without properly testing it would be incredibly risky and, all-in-all, unpredictable. European legislators should therefore focus on providing inventors and early users open regulatory sandboxes to provide for public supervision of all forms of AI before they are allowed for public use. These sandboxes should be mandatory and AI should be exposed to rigorous and complex testing by competent individuals. Naturally, these public authorities are bound to store huge amounts of data as a co-product of AI testing and will be able to utilize this data to further improve their tests and define best practices.

    4. Point to Safe AI

    Connected to our previous point, state authorities should not be afraid to award certifications to AI that passes this rigorous testing. This certification could, in certain cases, also limit liability and provide the inventors with another reason to allow their AI to be tested and, consequently, certified. Certification also provides the public with a clear way to see what AI was tested, how it fared, and which authority is confident that the AI is safe enough for public use. From the use of certifications in other areas we already know that this practice is beneficial to all parties interested.

    5. Conclusion

    These aforementioned points might not be as exciting as defining what AI is for all perceivable purposes, but they are, in our view, truly more important. Instead of trying to construe these rather difficult definitions (that will keep us busy for the years to come), let us focus on creating an environment that promotes innovation of AI that is safe, publicly available, and exceptional.

    By Michal Matejka, Partner, and Milos Pupik, Associate, PRK Partners 

    This Article was originally published in Issue 6.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Allen & Overy Advises Banks on Czechoslovak Group Bond Exchange Offer and Issuance

    Allen & Overy Advises Banks on Czechoslovak Group Bond Exchange Offer and Issuance

    Allen & Overy has advised Ceska Sporitelna, UniCredit Bank Czech Republic and Slovakia, and Komercni Banka on the Czechoslovak Group’s exchange offer, issuance of new bonds, and partial cash settlement.

    All three banks were joint lead managers, Ceska Sporitelna and UniCredit Bank Czech Republic and Slovakia were joint exchange managers, and Ceska Sporitelna alone was coordinator, calculation agent, listing agent, and fiscal and paying agent.

    The Czechoslovak Group, a holding of Czech and Slovak industrial and trade companies, invited holders of its outstanding domestic bonds (due 2021) to exchange their existing bonds for newly issued CZK 2 billion domestic bonds due 2024. Holders of CZK 771 million existing bonds accepted the exchange offer, while the remaining amount of the newly issued bonds were sold to investors.

    According to Allen & Overy “this is a first-of-its-kind transaction on the Czech market involving an exchange offer in respect of wholesale domestic bonds for retail domestic bonds, both admitted to trading on the regulated market of the Prague Stock Exchange.” 

    The Allen & Overy team included Counsel Petr Vybiral, and Associates Jana Chwaszcz and Tomas Kafka.  

  • Former SAZKA General Counsel Radek Vana Joins Eversheds Sutherland in the Czech Republic

    Former SAZKA General Counsel Radek Vana Joins Eversheds Sutherland in the Czech Republic

    Eversheds Sutherland has announced that Radek Vana, former General Counsel at the SAZKA Group, has joined the firm’s M&A team in Prague as Principal Associate.

    According to Eversheds Sutherland, Vana will “focus on further developing the transaction practice and will head the Russian Desk.”

    “We are glad that Radek has decided to join our ranks,” said Managing Partner Stanislav Dvorak. “Besides his transaction practice, we are also getting a leading expert in competition and lottery law who will take our services in this field to an even higher level than before.” 

    “When I decided to return to practicing law in the Czech Republic,” said Vana, “I was looking for a strong local firm that belongs to a large global network where I could fully apply my international transaction experience from London and other markets. The offer from Eversheds Sutherland was a clear choice.”

    Prior to joining Eversheds Sutherland, Vana was the General Counsel of SAZKA Group, an international lottery group, for three years. Before that, he spent seven years at Allen & Overy in Prague, London, and Amsterdam, and almost six years as the international legal counsel at KAZ Minerals PLC in London and Almaty, Kazakhstan. He graduated from the Faculty of Law of Charles University in Prague. 

    Also joining Eversheds Sutherland is former bpv Braun Partners’ Managing Associate Michal Hrabovsky, who joins as a Principal Associate.