Category: Czech Republic

Petr Bratsky has joined Kinstellar’s Prague office as Head of the firm’s local TMT sector and service line.

According to Kinstellar, Bratsky focuses on IP, IT, media and telecommunications, personal data protection, and whistleblowing. Before joining his new team, he spent five years as an Associate with Havel & Partners. Earlier, he spent over two years with Cisar, Ceska, Smutny as a Junior Associate, between 2013 and 2015, and a year with Vejmelka & Wunsch, between 2012 and 2013. Bratsky graduated from the Faculty of Law at Charles University in Prague and holds an LLM degree from KU Leuven.

“We are convinced that Petr will be a great asset to our TMT team and his drive and enthusiasm will help to successfully develop the whole sector also internationally,” commented Prague Managing Partner Lukas Sevcik.

“I am very pleased to have been given the opportunity to further develop the TMT practice at Kinstellar,” added Bratsky. “Rapid technological progress and advancing digitalization are factors that have fundamentally influenced the development of the legal services market in recent years. Clients in all industries now actively require lawyers with technology expertise, whether this relates to ad hoc advice in the day-to-day running of the business or in the context of strategic or transactional advice.”

DLA Piper has advised the Karlin Group on a joint residential investment in Prague with PPF Real Estate. Kocian Solc Balastik advised PPF.

According to KSB, “the agreement between the two companies includes development projects that involve a total investment worth CZK 4 billion. The first joint project is the ‘Simply Holesovice’ residential project near the Bubny railway station, which will offer more than 200 apartments and rental units.”

The Karlin Group is a real estate manager and Prague-based residential and office developer.

PPF Real Estate is a developer and investor with assets in the Czech Republic, Romania, Poland, the UK, and the Netherlands.

DLA Piper’s team included Prague Managing Partner Miroslav Dubovsky and Associates Pavlina Trchalikova and Marcel Janicek.

KSB’s team included Managing Partner Petr Kasik, Lawyer Jakub Porod, and Junior Lawyers Zuzana Slaba and Filip Rehak.

Generally, in the Czech Republic investment incentives are provided by the state to support businesses in regions other than Prague. They are approved by the government in cooperation with the respective ministries and processed by the state agency CzechInvest.

Incentives include corporate income tax relief for up to 10 years, job creation grants up to CZK 300,000 (approximately EUR 12,000) per job, training grants up to 70 percent of training costs, and cash grants on capital investment up to 20 percent of eligible costs. Incentives vary depending on the sector of investment, region, size of the enterprise, and investment volume.

Investment incentives are intended for investors in technology centers, business support service centers, the manufacturing industry, and the manufacturing of special medical products (products of strategic importance intended to protect life and health). Business support service centers are software development, data, shared service, and high-tech repair centers. Business support service centers must provide services in at least in three countries.

The minimum conditions for obtaining investment incentives depend on the supported area of investment and the size of the enterprise. For instance, a small technology center needs to create at least 10 new and invest at least CZK 2.5 million (approximately EUR 100,000) in long-term assets.

The maximum rate of incentives and subsidies granted to large enterprises in relation to eligible costs (i.e. usually the investment) is as follows: 40 percent in the Karlovy Vary and Usti and Labem regions, 30 percent in the Liberec, Hradec Kralove, Pardubice, Moravian-Silesian, Olomouc, and Zlin regions, 25 percent in the Tachov, Pilsen-North, Rakovnik, Kladno, and Melnik districts, 20 percent in the remaining regions of the Pilsen, Central Bohemian, South Bohemian, Vysocina and South Moravian regions. There are no incentives or subsidies granted in Prague.

The maximum state aid rates are increased by bonification of 20 and 10 percent intended for small and medium-sized enterprises, respectively.

Consequently, the maximum state aid for small enterprises is 40 to 60 percent of eligible costs (depending on the region). An enterprise that has less than 50 employees and whose annual turnover and the annual balance sheet total does not exceed EUR 10 million (at the group level) is a small enterprise.

The maximum state aid for medium-sized enterprises is 30 to 50 percent of eligible costs (depending on the region). An enterprise that has between 50 and 250 employees and whose annual turnover does not exceed EUR 50 million and its annual balance sheet totals under EUR 43 million (at the group level) is a medium-sized enterprise.

The maximum state aid for large enterprises is 20 to 40 percent of eligible costs (depending on the region). In some regions, only new economic activities and not the expansion of current activities are supported.

Strategic investments are subject to special rules for the maximum state aid. Criteria for strategic investments depend on the supported area of business. For instance, strategic investments in technology centers require a minimum of 70 new jobs to be created and at least CZK 250 million (approximately EUR 10 million) must be invested in long-term assets.

In relation to strategic investments in the manufacturing industry, a minimum of 250 new jobs must be created and at least CZK 2 billion (approximately EUR 80 million) must be invested in long-term assets. Moreover, in selected (developed) regions the condition of higher value-added must be fulfilled: a minimum of 80 percent of employees have at least the average wage in the region and a) 10 percent of employees are university graduates and there exists a collaboration with R&D institutions corresponding to one percent of eligible costs; or b) two percent of employees are employed towards R&D; or c) 10 percent of eligible costs represent machinery R&D.

The above minimum criteria for strategic investments in the manufacturing industry do not apply to the following investment sectors: the production of pharmaceutical products and preparations, computers, electronic and optical devices, and aircraft, aircraft engines, spacecraft, and related equipment. However, research and development must be implemented using key enabling technology like advanced materials technologies, advanced manufacturing technologies, nanotechnology, biotechnology, photonics, microelectronics, nanoelectronics, and artificial intelligence technologies.

By Rostislav Frelich, Tax Advisor and Leader of Tax Desk, Peterka & Partners

This article was written before the advent of the war in Ukraine and was originally published in Issue 9.2 of the CEE Legal Matters Magazine on March 1, 2022. More current articles on developments in Ukraine can be found in our #StandWithUkraine section. If you would like to receive a hard copy of the magazine, you can subscribe here.

Kocian Solc Balastik has advised Alkohol.cz on receiving an investment from the Rockaway Capital group.

Alkohol.cz focuses on the sale and delivery of a range of alcoholic beverages, also offering online auctions of premium and investment alcohol or express delivery of orders in Prague.

The Rockaway Capital group operates primarily in the areas of e-commerce, e-travel, fintech, media, blockchain, and venture capital.

According to KSB, “by receiving the investment from Rockaway, Alkohol.cz wants to strengthen its position on the domestic market and expand into Europe, especially Germany.”

KSB’s team included Partner Vaclav Rovensky and Lawyer Josef Kriz.

Allen & Overy has advised Jan Drahota, Lubomir Kovarik, and Ceska Zbrojovka Partners on the sale of part of their shares in CZG through an accelerated book-building process.

According to the firm, “Wood & Company Financial Services acted as the sole global coordinator for the transaction.”

“The sellers disposed of 2,030,000 shares,” Allen & Overy informed. “The transaction was upsized by two-thirds. The purchase price achieved in the accelerated book-building was CZK 555 per share, with total aggregate proceeds of the block trade of approximately CZK 1.13 billion.”

CZG, the Ceska Zbrojovka Group, is a Czech company with production facilities in the Czech Republic, the US, and Canada. It produces firearms for military and law enforcement, personal defense, hunting, sports shooting, and other commercial uses.

“The offer of shares through an accelerated book-building process responds to the long-term demand of investors for our shares, which the current small free float could not meet,” CZG Board Chairman Jan Drahota commented. “We believe that higher liquidity will lead to the higher interest of other investors and thus make the shares more attractive.”

“We are pleased to have managed another successful transaction in CZG shares, resulting in the increase of the CZG effective free float by 6%,” Wood & Company Managing Director David Tajzich added.

The Allen & Overy team was led by Prague-based Partner Petr Vybiral and included Junior Lawyer Denisa Jonasova as well as Frankfurt-based Partner Marc Plepelits and Senior Associate Rita Nicole Thomas.

Allen & Overy did not respond to our inquiry on the matter.

JSK has provided pro bono advice to the Czech Technical University on securing a patent from the Industrial Property Office of the Czech Republic on its pulmonary ventilator CoroVent.

According to the firm, the ventilator was developed by the university at the beginning of the coronavirus pandemic. “It had one goal: to be a simple and quickly available alternative in case hospitals do not get conventional ventilators.”

The JSK team consisted of Partner Roman Kramarik and Senior Associate Hana Cislerova.

The Russian aggression in Ukraine, raging for more than two months now, has affected the Czech Republic to a significant extent, impacting the prices of energy across all sectors. Coupled with the rising levels of inflation, the country finds itself out of balance, according to Rowan Legal Partner Jan Frey, who says it is quite hard to predict what the rest of the year will bring.

“The political situation in the Czech Republic is quite difficult due to the Russian aggression in Ukraine,” Frey begins. Following two very tough COVID-19-ridden years, Frey reports that the markets and the economy are once again being tested.

“We’re experiencing high inflation as a consequence of the anti-COVID-19 steps adopted by the former government and the energy crisis the country found itself in at the end of 2021,” Frey continues. The energy situation is by no means easier now, following the start of the war in Ukraine, with “energy prices soaring as a consequence.” Another consequence of the war, he points out, is that the country is currently facing “an onslaught of Russian nationals attempting to divest their assets away from the Czech Republic.”

Compounding the problem, Frey reports that “new legislation entered into force, concerning FDI, which posted more barriers with respect to investments and acquisitions of strategic assets in key sectors of the economy.” He notes that foreign investments are more strictly monitored. “Also, with the rising inflation, we can expect to see more government measures aimed at stifling its negative effects. The situation is changing quite rapidly, however, so it’s difficult to make an accurate prediction.”

Finally, speaking of particular business sectors, Frey reports that IT, telecommunications, and e-commerce have been “less affected by the energy crisis and rising inflation, on the one hand. On the other hand, the lack of stable energy sources and the surging oil and gas prices are impacting the food industry and the agricultural sector,” he says. “The prices of consumer goods are increasing, and this might be something that will mark the whole year,” Frey concludes.

JSK has advised Genesis Capital and Conectart on the acquisition of South-Bohemian call centre operator Atoda. GT Legal advised the sellers on the deal.

Financial details were not disclosed.

According to JSK, “Conectart has strengthened its position on the Czech call centre service providers market with its acquisition of Atoda, the largest domestic contact centre. With more than 2,000 operators, Conectart is the largest contact centre operator in the Czech Republic. The Genesis Private Equity Fund III of the Genesis Capital Group entered this market segment with the acquisition of Conectart in 2020.”

Atoda has been operating in the Czech market since 2005 and cooperates with some 400 operators in five cities in South Bohemia and one in Central Bohemia. Atoda’s original management will continue to run the company after the acquisition. 

The Genesis Capital Group is a group of private equity funds that offer small and medium-sized enterprises in Central Europe assistance in financing their growth and development.

JSK’s team included Partner Tomas Dolezil and Senior Lawyer Helena Hailichova.

GT Legal’s team included Partner Lukas Zahradka and Senior Associate David Fabian.

Allen & Overy has advised the Intermediate Capital Group and Konecta on their partnership agreement with Comdata.

The transaction remains contingent on regulatory approval.

The Intermediate Capital Group is an alternative asset manager. Konecta is a provider of Spanish-speaking customer experience business process outsourcing solutions. Comdata is an Italian company that provides customer management BPO.

According to Allen & Overy, the “agreement creates the sixth-largest player in the attractive customer experience BPO market, with close to EUR 2 billion in revenues, EUR 300 million in EBITDA, 130,000 employees, and clients in Europe and America in a variety of end industries, such as finance and insurance, technology, telco, retail and e-commerce, utilities, industrial, and healthcare.”

Allen & Overy’s team in Prague included Senior Associate Ivana Halamova Dobiskova with additional team members in Madrid, Milan, London, and Paris.

Allen & Overy could not provide additional information on the matter.

Former Squire Patton Boggs Partner Hana Gawlasova has joined Deloitte Legal as a Partner and Head of the firm’s Digital and TMT team in the Czech Republic.

According to Deloitte Legal, Gawlasova “has over twenty years of legal advisory experience in the technology and telecom industry, often with a focus on compliance, privacy, and employment law, among other areas.”

Before joining Deloitte Legal, Gawlasova spent over seven years as a Partner with Squire Patton Boggs. Prior to that, she spent almost seven years with Kinstellar, over six of which as a Partner. Earlier, she spent another seven years with Linklaters.

“My legal advisory services in the field of digitalization, TMT, and cybersecurity have significant technological overlap,” Gawlasova commented. “Partnering up with Deloitte Legal is a perfect opportunity to offer legal-technological solutions to clients, which provides a crucial benefit and added value to clients at a time of an ongoing digital transformation of the public and private sectors.”

“Our colleagues from Deloitte have been working with Hana for several years, so we have a lot to build on,” added Managing Partner Jan Spacil. “Hana’s arrival moves our firm one step toward building complex client-oriented solutions in one of the most promising areas, which Digital and TMT undoubtedly is.”