Category: Czech Republic

Allen & Overy has advised manager Wood & Company Financial Services on the establishment of a ten-year secured bond program for City Home Finance III with a value of up to CZK 1 billion and on the first bond issuance with a total expected nominal value of up to CZK 400 million.

The first bond issuance has the option of being increased to CZK 600 million, as needed.

According to Allen & Overy, “the bond program is secured by pledges and guarantees with a unique mechanism embedded in the joint terms and conditions, which ensures that only a joint meeting of bondholders of all issues issued under the bond program can decide on the common interests of the bondholders of multiple issues issued under the program, including matters related to security.”

Furthermore, the firm reports that all bonds issued under the program are secured by a pledge of 100% of the shares in the issuer, pledges of the shares in the guarantor, and a guarantee issued by City Home Invest III. The issuer belongs to the SATPO Group, which specializes in premium residential development projects mainly in Prague.

The Allen & Overy team in Prague included Partner Petr Vybiral, Senior Associate Tomas Kafka, and Associate David Bujgl.

The EU Directives on Work-life balance and on Transparent and predictable working conditions are expected to take effect in the Czech national legislation in the second half of 2023 with some exceptions starting on 1 January 2024. They will bring about significant changes and obligations for the employers. What will they mean for businesses?

This report is designed to help companies to understand the requirements and how they have been implemented.

Implementation of EU Directive on Work-Life Balance (EU Directive 2019/1158)

Has the directive been implemented in the jurisdiction?                

No.

What is the status of the implementation or draft implementation?

An amendment to the Czech Republic’s Labour Code made by the Ministry of Labour and Social Affairs was published in September 2022 and consequently submitted to Parliament in April 2023. The wording on the key changes described below was finalized based on remarks and comments made by the public. However, it may yet be subject to change as a result of amendment proposals made during discussion of the proposal in Parliament.

It is expected that the amendment will be implemented in the months ahead and come into effect in the second half of 2023 (although certain exceptions will become effective on 1 January 2024).

What are the key changes for employers and employees?

1.      Working conditions for female and male employees who care for children or anybody who is dependent on the assistance of another individual

• Parents with children aged under 9 or caregivers can make a request to work remotely.
• If the request is rejected, the employer must justify the decision in writing.

2.      Parental leave

• Parental leave must be requested in writing. Requests for parental leave must be submitted at least 30 days before the beginning of the leave period. A shorter notice period can be applied under special circumstances.
• The request must specify the duration of the parental leave.
• Such a request can be submitted repeatedly.

3.      Agreements on works performed outside an employment relationship

• In the event of termination of employment law relationship established based on the agreement, the employee will be able to ask the employer to justify the decision.
• The employer will have to inform the employee in writing about the reason for the employment law relationship being terminated.

What are the main actions for HR departments in preparing for the changes?

• Review internal guidance and documentation on working from home, and decide on the appropriate solution for parents and carers.
• Review or draft the form for requesting parental leave.
• Prepare a template for responding to a request for the justification of termination of employment law relationship established based on the agreement on performance of work/agreement on working activity.
• Deliver training to acquaint HR staff with the new rules.

Implementation of EU Directive on Transparent and Predictable Working Conditions (EU Directive 2019/1152)

Has the directive been implemented in the jurisdiction?

No.

What is the status of the implementation or draft implementation?

An amendment to the Czech Republic’s Labour Code made by the Ministry of Labour and Social Affairs was published in September 2022 and consequently submitted to Parliament in April 2023. The wording on the key changes as described below was finalized based on the remarks and comments of the public. However, it may yet be subject to change as a result of amendment proposals made during discussion of the proposal in Parliament.

It is expected that the amendment will be implemented in the months ahead and come into effect during the second half of 2023 (although certain exceptions may become effective on 1 January 2024).

What are the key changes for employers and employees? 

1.      Information on the terms of an employment relationship

• There will be a shorter period (reduced from one month to seven days) for informing the employee of the terms of the employment relationship.
• There will be new rules for informing employees electronically.
• A wider range of information will have to  be provided to the employee, including information about the probationary period, social security authority, procedures for terminating employment and opportunities for professional development.
• Information about weekly working hours and how they and rest periods are distributed must also be provided to employees working under an agreement on works performed outside an employment relationship.
• There will be a new obligation to inform employees posted abroad about the terms and conditions of a secondment to another country.

2.      Agreements on works performed outside an employment relationship

• The employer must schedule an employee’s working hours as part of the weekly schedule of working hours.
• The schedule of working hours must either be submitted to the employee three days in advance of work starting, or at a time agreed by both parties.
• The employee is entitled to paid leave. The amount of paid leave is calculated based on a 20-hour working week.
• The employee will be able to ask the employer to justify the termination of employment, and the employer will have to inform the employee in writing about the reason.
• An employee who has worked for an employer based on such agreement at least 180 days during the previous 12 months can ask to be employed in a standard employment relationship (i.e. under a contract of employment).

What are the main actions for HR departments in preparing for the changes?

• Review and amend the template of information for employees. If relevant, prepare a template of information for employees posted abroad.
• Review and amend any agreements on work performed outside an employment relationship and HR processes related to the respective employment law relationships established based on these agreements.
• Prepare a template with an answer to the request to be employed in a standard employment relationship (i.e. under a contract of employment).
• Deliver training to acquaint HR staff with the new rules.

By Jan Prochazka, Partner I Attorney at Law, and Petra Schneiderova, Managing Associate I Attorney at Law, Deloitte Legal Czech Republic

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively, the “Deloitte organization”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and their related entities, are legally separate and independent entities.

Clifford Chance has advised Ceskoslovenska Obchodni Banka on the partial refinancing of the purchase price for Emma Alpha Holding’s acquisition of a controlling ownership interest in FAVI Online.

Ceskoslovenska Obchodni Banka is a Czech bank and a part of KBC Group.

According to Clifford Chance, “FAVI is a dominant home design and furniture search engine, boasting an expansive presence across numerous European nations. Originating in the Czech Republic, FAVI was founded in 2016 and soon grew into an outstanding enterprise serving Central and Eastern Europe.”

Emma Alpha is a company operating under the umbrella of Emma Capital, a private equity investment group focusing on acquiring customer-oriented companies.

The Clifford Chance team included Partner Milos Felgr, Counsel Dominik Vojta, and Associate Tomas Kubala.

PRK Partners has advised lead co-managers Ceska Sporitelna, Komercni Banka, J&T Banka, and UniCredit Bank Czech Republic and Slovakia on Czechoslovak Group’s CZK 4.5 billion bond issuance, which contains an option of an increase up to CZK 5 billion.

According to PRK Partners, the “transaction involved the exchange of existing bonds held by investors for new bonds.”

CSG is a holding company engaged in defense and civil industrial manufacturing, with a diverse product portfolio ranging from watches to train brakes to trucks.

The PRK Partners team included Attorney at Law Jan Ditrych and Associate Natalie Cmiralova.

Are you going to argue legal professional privilege? If so, you may be interested in a recent judgment of the Court of Justice of the European Union (the “CJEU”), which significantly expands the scope of legal professional privilege.

In the judgment, Orde van Vlaamse Balies and Others v Vlaamse Regering, C-694/20, the CJEU extended the interpretation of legal professional privilege beyond “mere” legal defence activity. In other words, the “new” scope of legal professional privilege covers any communication between external counsels and their clients, i.e. any legal advice, regardless of whether it relates to the client exercising their rights of defence.

What does this mean in practice? The new”scope” of confidential communications between external counsel and client applies, for example, to dawn raids conducted by the European Commission at companies’ business premises. The European Commission can no longer take a “cursory look” at “superficial features” of the relevant documents during dawn raids. The European Commission may also no longer ask for such documents in a request for information, which usually follows dawn raids. Even the mere fact of having consulted a lawyer should remain confidential.

Will this judgment also impact national competition authorities? While national legal practice has yet to respond to the judgment, given that national competition authorities are obliged under Council Regulation (EC) No. 1/2003 to apply national competition law in line with the principles of European law, we can expect the extended scope of confidentiality to be reflected in proceedings carried out by the Czech Office for the Protection of Competition.

For all these reasons, we can recommend including external counsel in written communication that may be potentially relevant for national competition authorities. Even communication that was exchanged five years prior to the European Commission’s dawn raid was covered by the confidentiality principle. It is also important to clearly and consistently mark communication as “privileged & confidential”. Discuss sensitive information in person or on the phone rather than in writing. Where possible, it is advisable to keep confidential information in separate files from “usual” corporate information.

By Vladena Svobodova, Senior Associate, JSK, PONTES

DRV Legal has advised Jet Investment on its sale of Benvig Heat Transfer to the shareholders of Montaze Prerov and other investors. JSK advised the buyers on the deal.

The parties did not disclose the value of the transaction.

Jet Investment is a Czech-based, Central European, MIFID-compliant, private equity investment company founded in 1997. 

Benvig Heat Transfer is a mechanical engineering company.

The DRV Legal team included Partner Tomas Antal and Lawyer Vit Brejsa.

The JSK team included Partner Tomas Dolezil and Senior Associate Daniel Pospisil.

Ondrej Florian has become an Equity Partner at Havel & Partners, while Katerina Slavikova, Jaroslav Baier, Ondrej Curilla, Petr Oplustil, and Miroslav Vozab were appointed as Partners at the firm.

According to Havel & Partners, Florian is “responsible for leading the firm’s corporate and private client services team.” Before joining Havel & Partners in 2010, Florian spent over a year with Podrouzek – Monik – Kadecka.

“Ondrej Florian is one of the key members of the firm’s management team and in previous years he has been instrumental in setting and implementing the group’s strategic objectives in the area of corporate law,” Managing Partner Jaroslav Havel commented. “His leadership and expertise have also contributed to strengthening our portfolio of services to private clients. As an Equity Partner, he will be responsible for the further strategic development of these areas and the continuous strengthening of key business relationships with our clients.”

According to the firm, Slavikova is “co-responsible for the management and development of the specialized Pharmaceutical, Healthcare, and Food Law group.” She has been with the firm since December 2017. Before that, she spent over seven years in-house with Danone & Nutricia.

With his Partnership promotion, Baier will also become “co-responsible for the management of the Venture Capital and Private Equity practice group in the Czech Republic and Slovakia,” according to Havel & Partners. Baier has been with the firm since July 2022, when he joined as a Counsel. Prior to that, he spent four and a half years as a Senior Associate with Jan Evan, over a year as an Associate with BADOKH, and a year and a half with Allen & Overy.

Former Counsel Curilla is a public sector law expert. He has been with Havel & Partners for over 16 years, having joined in June 2007.

Oplustil, a former Counsel as well, focuses on public law and environmental law in particular. He has been with Havel & Partners since 2006, having joined as an Associate before being promoted to Senior Associate in 2009, Managing Associate in 2012, and Counsel in 2019. Earlier, he spent a year and a half as a Lawyer with the Office of the Government of the Czech Republic.

Vozab, who has been co-managing the firm’s Brno office, has been with Havel & Partners for more than ten years. He specializes in corporate law, acquisitions, and services for private clients. He joined the firm in 2012, after spending four years as a Junior Lawyer with Scigiel & Partners.

Cytowski and Partners has advised Czech Republic-based automated network assurance platform IP Fabric on its USD 25 million Series B financing led by One Peak and including Senovo and Presto Ventures. Goodwin Procter advised One Peak.

Based in Prague and New York with offices in London, IP Fabric describes itself as helping “companies empower their network engineers to discover, verify, and document large-scale enterprise networks within minutes. IP Fabric automates network infrastructure data collection and provides predefined verifications that highlight inconsistencies, misconfiguration, and issues within enterprise networks.”

One Peak is a technology-focused growth equity investment firm in London.

According to Cytowski and Partners, the financing round “is aimed at strengthening and expanding IP Fabric’s market position. The company will use the funds for its global growth. It had previously secured funding from Senovo, Credo Ventures, and several CEE angel investors.”

“Without network assurance, we are leaving network resilience to chance,” IP Fabric CEO Pavel Bykov commented. “We’ve seen how network outages can cause businesses and critical infrastructure to grind to a halt but, amidst rising complexity and the need to ensure control in the face of rising cyber threats while adhering to regulatory compliance, enterprises lack the means to assure operations for their entire network end-to-end. Organizations must act now because building operational control without a validated baseline provided by network assurance will lead to gaps and unknown unknowns.”

The Cytowski and Partners team included Of Counsel Michal Fert, Associates Eresi Tracy Uche and Heidi Fan, Law Clerk Fabiana Morales Centurion, and Trainee Associate Kunal Kolhe.

Former Dentons Partner Jan Prochazka has joined KPMG Legal in the Czech Republic as a Local Partner.

According to KPMG Legal, Prochazka has “extensive experience in mergers and acquisitions, private equity, joint ventures, and complex corporate reorganizations. His main focus will be bringing together the legal and other consulting services offered by KPMG for transactions.”

Before joining KPMG Legal, Prochazka spent over ten years with Dentons, four of which as a Partner, and almost three years as a Counsel with Dentons legacy firm Salans. Before that, he spent five years with Clifford Chance, an additional two years as an Associate with Salans, and, at the start of his career, five years as an Associate with Altheimer & Gray between 1998 and 2003.

“I am pleased that Jan was impressed by our office and the way we provide services as part of one consulting firm, he will be a great addition,” KPMG Legal Partner Martin Hrdlik commented. “He will deepen our expertise and enable further development of our client portfolio.”

Glatzova & Co has advised Smartlook founders Petr Janosik and Ondrej Machek on the sale of the company to Cisco.

Smartlook deals with analyzing user behavior on websites and mobile applications. Cisco is an IT and networking company.

According to Glatzova & Co, “founders Petr Janosik and Ondrej Machek, who previously owned a majority stake in the company, will continue to collaborate on the development of Smartlook.com and its integration.”

Back in 2020, Glatzova & Co had also advised Smartlook on its Series A (as reported by CEE Legal Matters on December 16, 2020).

The Glatzova & Co team included Partner Jan Vesely and Associate Jan Perinka. 

Glatzova & Co did not respond to our inquiry on the matter.