Category: Czech Republic

White & Case has advised Memsource and majority shareholder The Carlyle Group on the acquisition of a majority stake in Phrase, a German software localization platform.

Memsource is an AI-powered translation management system headquartered in the Czech Republic. According to White & Case, “Phrase management, including Founders Wolfram Gratz, Frederik Vollert, and Tobias Schwab, remain shareholders in the business following the acquisition.”

White & Case’s team included London-based Partners Kenneth Barry and Will Smith and Associates Will Summers and Lowrie Robertson, Frankfurt-based Partner Bodo Bender and Associates Agmal Bahrami and Thies Schmitte, and Hamburg-based Associate Kristin Brueggert.

The firm did not identify counsel for the sellers.

BBH, working with lead counsel Shearman & Sterling, has advised Citrix on Czech aspects of the USD 2.25 billion acquisition of project management software company Wrike from Vista Equity Partners. Latham & Watkins reportedly advised the seller on the deal.

Citrix is a US-based provider of IT solutions in the areas of digital workplace, healthcare, financial services, education, retail, and manufacturing.

Wrike is a provider of software solutions for project, task, and work management, as well as team collaboration. The company was founded in 2006 and runs its operations in more than 20 locations across the Americas, Europe, and Asia.

Vista Equity Partners is a Texas-based provider of investments to software, data, and tech start-ups.

The BBH team included Partner Tomas Sedlacek and Senior Associates Adam Necas and Kristyna Zivanska.

On December 30, 2020, CEE Legal Matters reported that BPV Braun Partners had advised Immofinanz on the acquisition of retail parks in the Czech town of Litvinov and the Horni Mecholupy neighborhood of Prague from Mitiska Reim. CEEIHM spoke with Stefan Frommel, Head of Transactions at Immofinanz, to learn more about the matter.

CEEIHM: To start, please tell us a few words about Immofinanz.

Stefan: Immofinanz is a commercial real estate group with activities focused on the retail and office segments of seven core markets in Europe: Austria, Germany, Poland, Czech Republic, Slovakia, Hungary, and Romania – we are also active in Serbia, Croatia, and Slovenia. The core business covers the management and development of properties, with the Stop Shop (retail), VIVO! (retail) and myhive (office) brands representing strong focal points that stand for quality and service. The real estate portfolio has a value of approximately EUR 5 billion and covers more than 210 properties.

CEEIHM: What about the targets of the acquisition – what made the retail parks particularly attractive for you?

Stefan: Both assets perfectly fit into our retail park portfolio — called Stop Shop — because of the size of the assets, the tenant mix, and the micro-location.

CEEIHM: How was the deal financed — and did BPV Braun Partners advise on the financing for the deal as well?

Stefan: The deal was mostly financed by our own equity, however, we also took advantage of existing financing. BPV Braun did also advise us in this regard.

CEEIHM: What would you say was the most challenging/complex aspect of the deal?

Stefan: As the deal in the Czech Republic was linked to another portfolio from the same vendor in Serbia, we had to consider more parameters for this deal in order to align both acquisitions in terms of timing and commercial aspects. Since legal advisory in Serbia was not covered by BPV, it had to cooperate with a Serbian firm in this deal. Other challenging aspects were related to the structure of the deal (it was a share deal) as well as several topics that came up during the due diligence process.

CEEIHM: What were the considerations based on which you opted to turn to BPV Braun Partners for legal advice on this deal?

Stefan: We have a very close relationship with BPV for several years and have worked many times together in M&A transactions. We appreciate that BPV has a hands-on mentality as well as deep legal knowledge, and a good commercial understanding, which is important to us.

Originally reported by CEE In-House Matters.

Kocian Solc Balastik has advised Prague-based Daquas on the sale of its shares to ALSO Holding. Noerr, working in cooperation with Germany’s Corvel, advised the buyer on the deal.

Financial details of the transaction were not disclosed, and the deal is expected to close in the spring of 2021, following the approval from the Czech Competition Authority.

ALSO Holding is a Swiss provider of IT hardware and software maintenance services.

Daquas is a Czech company that provides IT consulting, cloud services, and licensing solutions to its clients.

Kocian Solc Balastik’s team consisted of Partner Drahomir Tomasuk and Senior Associate Jan Beres.

Noerr’s team included Partner Barbara Kusak and Senior Associates Michal Janicek, Radim Kotlaba, and Michal Jekielek.

DLA Piper has advised Zip Co Limited on its investment in Twisto Payments. Schoenherr reportedly advised Twisto Payments on the deal.

Financial details of the transaction were not disclosed.

According to DLA Piper, the investment will help to support Twisto’s growth plans and product expansion in its core markets, as well as actively explore emerging market opportunities.

Zip Co Limited is a provider of services in the digital retail finance and payments industry. The company is listed on the Australian Stock Exchange and is headquartered in Sydney.

Twisto is a payments platform which provides its services in the Czech Republic and Poland.

DLA Piper’s team consisted of Sydney-based Partner Adrian Tan and Solicitor Cassian Ho and Prague-based Partner Miroslav Dubovsky and Associate Marcel Janicek.

BPV Braun Partners has advised Kappenberger + Braun on the sale of 100% of its shares in K + B Expert to Electro World, a subsidiary of Slovakia’s NAY Group. Liska & Sabolova reportedly advised the buyer on the deal.

Financial details of the transaction, which is still subject to approval of the Czech Antitrust Office, were not disclosed.

BPV Braun Partners describes K + B Expert as a “leading consumer electronics retailer in the Czech Republic with over 20 brick-and-mortar stores and a successful e-shop.”

Electro World is a Prague-based retailer of electronics and accessories. The company, which was founded in 2002, currently operates 19 stores throughout the Czech Republic.

The BPV Braun Partners included Managing Partner Arthur Braun and Managing Associate Ondrej Ponistiak.

On 1 January 2021, the new Act No. 254/2019 Sb., on Experts, Expert Offices and Expert Institutes (the Act on Experts), entered into force, replacing Act No. 36/1967 Sb., on Experts and Interpreters. This is undoubtedly the most significant change in this area in the last 30 years. Below is a selection of the most important changes:

1. Introduction of an “expert offices” category

As before, expert activities may be performed by experts or expert institutes. However, the expert institutes category is now reserved only for entities such as universities, public research institutions, etc., which perform scientific research activities. The “expert offices” category is newly introduced for business corporations performing (commercial) expert activities.

2. Detailed definition of the requirements of the expert opinion

In contrast to the current legislation, the formal and content requirements of expert opinions are set out in more detail. Under the Ministry of Justice implementing Decree No. 503/2020 Sb., on the Performance of Expert Activities, the expert opinion must contain, inter alia, a specific professional question assigned by the client, a description of the expert’s procedure in data collection, a list of selected sources, etc. Regarding the formal requirements of expert opinions, among other things, the requirements of the title page (e.g. indication of the client and of the subject of the opinion) and the last page of the opinion (e.g. information on remuneration) are determined. These requirements must be met by all expert opinions issued after 31 December 2020.

3. Extension of the scope of the expert’s liability in the performance of expert activities

The new Act partially amends the existing regulation of offences for violations of the Act on Experts. Under the new legislation, persons performing expert activities may be liable for approximately 15 types of offences – for example, non-compliance with record-keeping obligations, non-compliance with the content requirements of the expert opinion, incorrect billing of remuneration, etc. Regarding financial penalties, these are divided into three groups according to severity: up to CZK 75,000, up to CZK 250,000, and up to CZK 500,000.

4. Compulsory insurance of entities performing expert activities

All entities performing expert activities (except for organizational units of the State) are obliged to take out liability insurance for the performance of such activities. The minimum limit of insurance benefit is CZK 1 million for experts and CZK 5 million for expert institutes and expert offices. Confirmation of this insurance must be submitted to the Ministry of Justice.

5. Entitlement to be entered in the list of experts

In contrast to the current legislation, the applicant for an entry in the list of experts has legal entitlement to be entered in the list. As soon as the applicant meets all the statutory conditions, the Ministry of Justice is obliged to enter it in the list. 

6. Introduction of new examinations for experts

The applicant for an expert licence is obliged to pass an entrance examination, which consists of a general part and a special part. The general part of the examination takes place in the form of a written test, in which the applicant’s knowledge in the field of legislation regulating expert activities is tested. The special part takes the form of an oral interview before the examining board, during which the applicant defends a test expert opinion in the selected field and sector.

7. Electronic keeping of an expert diary

Entities performing expert activities are obliged to state data on expert opinions in the electronic records of expert opinions kept by the Ministry of Justice. All data must be recorded within 5 business days of the decisive fact. The content of the records should be accessible only to the Ministry of Justice; however, upon reasoned request, these data may be made available to other public authorities.

8. New list of experts

The new Act on Experts introduces a new list of experts maintained by the Ministry of Justice. This is divided into a public part and a non-public part. In the public part, not only data on the name, field, sector and specialisation of the entity performing expert activities will be available, but also, for example, data on committed offences or suspension of activities.

9. Changes in the remuneration of experts

Under the Ministry of Justice implementing Decree No. 504/2020 Sb., remuneration for expert activities is newly set at CZK 300 up to CZK 450 per hour of reasonably spent work. Compared to the previous legislation, the given amount is uniform for experts, expert offices and expert institutes. Entities performing expert activities shall now be entitled to compensation for the loss of time when traveling to the place of performance of an act or while waiting for its performance.

10. Transition period

Entities that have performed expert activities under the existing legislation shall have 5 years from the entry into force of the new Act to obtain a licence to perform expert activities in accordance with the new Act. If they fail to do so, their licence will expire upon the end of this time period. In addition, in the case of expert institutes and expert offices (or the expert institutes referred to in Section I), they are also obliged to prove, within one year from the entry into force of the new Act, that they perform expert activities through at least one expert (or two experts if it relates to expert offices) authorised to perform expert activities in the relevant field and sector.

By Jan Sturm, Partner, Adam Forst, Managing Associate, and Klara Vitovska, Junior Associate, Havel & Partners

Dentons has advised Skanska on the sale of the Parkview office building in Prague to Deka Immobilien. Wilson & Partners advised Deka Immobilien on the deal.

According to Dentons, Parkview offers a total of 16,000 square meters of space in nine floors above the ground and 227 parking spaces in the three underground floors. The building is 94% leased to companies such as Grant Thornton, Spaces, or Jacobs Douwe Egberts.

Dentons’ team included Partners Jiri Strzinek and Marketa Tvrda and Associate Devid Sutko.

Eversheds Sutherland has advised the Conseq investment fund on the acquisition of Retail Park Podebradska in Prague from the development and investment groups KPD Group and Exafin, which were reportedly advised by Jicha & Holman.

The Eversheds Sutherland team was led by Partner Dominika Vesela and included Lawyer Rudolf Kristian and Trainee Martina Benesova.

Jicha & Holman’s team was led by Partner Robert Holman.

A fundamental change brought about with effect from 1 January 2021 by a major amendment to the Commercial Corporations Act was the long-awaited new setting of the monistic system of the joint stock company’s internal structure. We bring you an overview of the most significant changes and practical complications that arise in current practice.

The Monistic System in Light of the Amendment

The monistic arrangement of joint stock companies has finally become true to its name, when the compulsorily established elected body of the company is only one body, and that is the administrative board. The amendment to the Commercial Corporations Act has thus abolished the position of statutory director.

The position of statutory director has been taken over by the administrative board, which newly accumulates the supervision and management powers; it is therefore not only a supervision body that is in charge of supervising the company’s activities, but also a statutory body that is in charge of the company’s business management.

The members of the administrative board thus have new powers as well as duties in connection with performing the function of the statutory body. Among other things, their powers include the business management and focus of the company, their new duties, in addition to representing the company vis-à-vis third parties, also include drawing up financial statements, convening general meetings, etc.

The Act assumes that the administrative board has three members, but the articles of association may deviate in this respect. Monistic joint stock companies will thus continue to have the opportunity to establish a one-member administrative board.

You can read in more detail in part three of our Guide about what has changed for monistic companies as of the effective date of the amendment to the Commercial Corporations Act.

Practical Implications of the Amendment

As of the effective date of the amendment, the manner of acting and representation vis-à-vis third parties has changed for all monistic joint stock companies – as of 1 January 2021, all statutory directors were automatically deleted from the companies’ commercial registers and their powers were transferred to the companies’ administrative boards in accordance with the Act.

This has the following implications for monistic joint stock companies:

• Implications Related to Deleting the Statutory Director from the Commercial Register

Now it is really no longer possible to find a statutory director in the Commercial Register. As this deletion was not clearly notified by the Commercial Register (no matter how it was foreseen by the Act), we would like to draw your attention to some practical facts that are related to the deletion itself.

In the first place, it should be noted that the expiry of the position of statutory director must be notified to the relevant entities, including the Czech Social Security Administration and health insurance companies. We recommend that you always check with a specific company which notification obligations also result from the contractual obligations that the companies have entered into (for example, this may be a notification to banking institutions).

As the position of statutory director has not existed since 1 January 2021, it is not possible for him/her to continue to bind the company from the position of statutory director. All steps shall be taken by the administrative board from the above date. 

The last significant practical implication related to the deletion (or termination of the position) of statutory director is the invalidation of access to the company’s data box. As the position of statutory director does not exist, the Ministry of Interior has invalidated the login details of all statutory directors. We recommend that you verify that the company can log in to its data box.

• Implications for the Administrative Board of the Monistic Joint Stock Company

Although the duties of statutory directors have been automatically transferred to the administrative board by virtue of law, this does not mean that monistic companies do not have to do anything else in this matter. In addition to informing employees, business partners, authorities and banks, monistic companies are facing other formal steps related to this change than just the printing of new business cards.

Like the board of directors of a joint stock company with a dualistic system, the administrative board is a collective body. It is therefore necessary to amend the company’s articles of association accordingly and subsequently enter in the Commercial Register a new manner of acting and representing the company vis-à-vis third parties. Unless otherwise provided for in the articles of association, each member of the administrative board shall act on behalf of the monistic company individually.

We would also like to add that if the chairman of the administrative board was also a statutory director, the position of statutory director shall not pass only to the chairman of the administrative board, but again to all its members – the above applies.

The recommended step is also the conclusion of a new contract for the performance of the function of members of the administrative board, or its revision so that it corresponds to their new position. The contract on performance of function must always be in writing and approved by the general meeting. Without approval, the contract shall not become effective.

Please note that with regard to the transitional provisions to the amendment, monistic companies are obliged to enter the manner of acting of the administrative board members in the Commercial Register no later than 1 July 2021, or at the next election of new members of the administrative board or change in their number. If the company fails to do so within this time limit, the registry court may request a remedy, or if it does not comply even after a repeated request, the registry court shall decide on the dissolution of the company and order its liquidation.

Increased prudence in representing a monistic company should also be exercised by a single member of the administrative board who was also the company’s statutory director before the amendment entered into force. As mentioned above, it is not possible for him/her to bind the company to anything from the no longer existing position of statutory director. When signing on behalf of the company, it is thus necessary to correctly state the person’s authorisation to represent the company, i.e. that he/she signs as a member of the administrative board. The correct signature can prevent possible disputes with business partners (objection to the relative invalidity of a legal act) or unexpected findings of legal due diligence prior to the transfer of the company.

Finally, although access details to the data box for statutory directors have been invalidated, new access details to the data boxes of companies should already have been sent to the administrative board members as new members of the statutory body. Access details are always sent to the addresses of the administrative board members as entered in the Commercial Register. If an administrative board member is not a Czech resident, we recommend checking whether the details can be delivered in a given country to the recipient’s own hands. Countries where it is not delivered in this way include, among others, Germany, Poland, the Netherlands and the United Kingdom.

Alternatively, access details to the data box can also be requested in person at Czech POINTs or at the embassy of the Czech Republic abroad, they will then be sent to the email address.

Recommendation

In view of the above, we recommend all joint stock companies with a monistic arrangement of the internal structure gradually start to familiarise themselves with the wording of the amendment and prepare to take the necessary steps that will need to be taken in this regard.

It will be necessary to revise the articles of association of these companies and make such changes that their new wording corresponds to the amended wording of the Commercial Corporations Act, at least to the extent stipulated by its mandatory provisions. We recommend making this change as soon as possible, but no later than within 1 year from the effective date of the amendment, or within 6 months from the entry of the manner of acting of the administrative board.

By Ondrej Florian, Partner, and Eliska Dittrichova, Junior Associate, Havel & Partners