The Technology M&A Review: Czech Republic


Technology M&A, together with real estate M&A, account for the largest number of transactions on the market in the Czech Republic. Compared to the previous year, eight more successfully completed transactions were recorded for technology companies in 2019, with a total number of 282 transactions across all sectors.2

The information and communication technology (ICT) sector was one of the main growth drivers of the Czech economy in 2017, expanding its gross value added by 6 per cent, well above the GDP growth rate of 4.4 per cent. As a result, its share in the country's economy rose to 4.7 per cent.3

The above can be demonstrated through several success stories from particular subsectors of the technology industry, including e-commerce, software developers, game development studios, fintech, and IT services, a highlight among them being Avast. Avast is one of the largest IT security companies in the world using next-gen technologies to fight cyberattacks in real time. It had 435-plus million active users and US$837 million in revenue in 2019, and has over 1,700 employees worldwide.4

Since 2016, we have observed a growing trend of the inflow of investors from abroad in terms of the number of individual transactions and an increase in the amount of foreign investments. In 2019, the ratio of acquisitions made by foreign investors to the total number of transactions reached the highest value of all, namely 34 per cent. The most active foreign investors in 2019 came from Germany, with a total of 17 closed transactions, followed by those from the US and Austria.5

Year in review

One of the most significant technology M&A transactions over the past year was a transaction for a majority stake in, which was sold for approximately US$130 million to General Atlantic. 6

Another significant transaction was the sale of ČEZ's ownership interest in CyberX through its investment fund, Inven Capital, to Microsoft. CyberX is an Israeli company providing cybersecurity services, especially in the areas of reducing the risk of service outages, and preventing environmental incidents and the theft of intangible assets. The price of the sale of ČEZ's ownership interest was not published: however, Microsoft paid US$165 million for the whole company.

Another important technology transaction in the media and entertainment sector was the sale of Warhorse Studio, which developed the successful Kingdome Come game, to a Swedish gaming company, THQ Nordic, which made the purchase through its Austrian daughter Koch Media for approximately €42 million. The last significant transaction in this sector was the sale of Beat Games to Oculus VR, an American company that is a subsidiary of Facebook.7

Taking into account the above, there have been significant developments in the technology M&A market. However, as is the same as in many other countries, the situation on the M&A market has been strongly affected by covid-19 measures.

Legal and regulatory framework

The main laws and regulations that govern the behaviour of buyers and sellers in the Czech Republic are as follows:

  1. the Civil Code, as amended,8 regulating all private law matters;
  2. the Business Corporations Act, as amended,9 regulating the basic conditions for conducting business corporations, including, inter alia, their establishment, the distribution of the internal structure of bodies, the responsibilities of members of these bodies, activities within groups, their abolition;
  3. the Act on Transformations of Commercial Companies and Cooperatives, as amended,10 which regulates the transformation of corporations;
  4. the Act on the Protection of Competition, as amended,11 which regulates the protection of competition in the market of products and services against their elimination, restriction, other distortion or imperilment. Transactions exceeding statutory limits shall be notified to the Czech regulatory body, and its consent to such transaction might be required;
  5. the Act on the Public Registers of Legal and Natural Persons and on the Register of Trusts, as amended,12 which sets out conditions for the registration of changes in public registers;
  6. the Act on Copyright and Related Rights, as amended,13 which regulates employee work and the transferability or non-transferability of intellectual property (IP) rights in relation to copyrights;
  7. the Act on Trademarks, as amended,14 which regulates trademarks, and their protection and transferability; and
  8. the Act on Inventions and Rationalisation Proposals, as amended,15 regulating employee work and the transferability or non-transferability of intellectual property rights in relation to patents.

In addition to the above, there are several areas that are regulated by specific laws. This applies, for instance, to the following:

  1. the Act on Radio and Television Broadcasting, as amended,16 applicable to radio and television broadcasting and relevant registrations and licences;
  2. the Act on Electronic Communications, as amended,17 which regulates the provision of electronic communication services and networks;
  3. the Act on Cyber Security, as amended,18 which governs cybersecurity in the Czech Republic and the implementing NIS Directive;19
  4. the Act on selected measures against the legitimisation of proceeds of crime and financing of terrorism, as amended,20 which regulates anti-money laundering procedures;
  5. the Act on Banks, as amended,21 which regulates the establishment, business and dissolution of banks domiciled in the Czech Republic, including their operations outside the Czech Republic, as well as certain relations related to the operation of foreign banks in the Czech Republic;
  6. the Act on Capital Market Business, as amended,22 which regulates the provision of capital market services and the protection of the capital market and investors; and
  7. the Act on Takeover Bids, as amended,23 which regulates takeover bids intended for owners of participating securities issued by a joint-stock company domiciled in the Czech Republic, whose participating securities are admitted to trading on a regulated market.

It is important to mention that certain areas require separate permits and licences that must be obtained from public authorities or registrations, such as, inter alia, the telecommunications sector, the finance and insurance sector, and sectors that important from the perspective of cybersecurity.

In addition, the respective laws and regulations of the EU also directly or indirectly apply within the Czech legal system. Therefore, the legal and regulatory framework of the Czech technology M&A market might be affected by these.

It is important to note that under Czech law, parties are free to choose a governing law and agree on international arbitration or jurisdiction, provided these provisions are reasonable and accepted by both parties.

Key transactional issues

i Company structures

The main types of business corporations recognised under Czech law are as follows:

  1. limited liability companies;
  2. joint-stock companies;
  3. general (commercial) partnerships;
  4. limited partnerships;
  5. cooperatives;
  6. European companies (Societas Europaea); and
  7. European economic interest groupings.

Business activities can also be carried out through other forms of legal entities such as trusts or associations. However, these forms are not used very often for technology M&A transactions.

Branch offices (organisational units of founding companies) are commonly used for technology M&A transactions as they do not have their own legal capacity. A director appointed by the founding company is entitled to act in matters concerning the branch. Both the branch office and its director are registered with the Czech Commercial Register.

For the purpose of technology M&A transactions, the most popular types of business corporations are limited liability and joint-stock companies.

The limited liability company structure is preferred if the number of investors (i.e., shareholders) is rather low and the investors (shareholders) intend to hold their ownership interests for the mid to long term.

The general characteristics of a limited liability company are as follows:

  1. a minimum of one founder (either a natural or legal person);
  2. minimum registered capital of 1 koruna;
  3. 30 per cent of all monetary contributions and 100 per cent of all non-monetary contributions to the registered capital have to be paid up prior to establishment. Registered capital has to be paid up in full within five years of establishment;
  4. it is a requirement to obtain the relevant trade licence and certificate or certificates; and
  5. directors do not need to be Czech nationals.

The joint-stock company is equivalent to the English public limited company (plc). It has a minimum registered capital of 2 million koruny. As in the case of a limited liability

company, a joint-stock company can also be established by a single entity or single individual. Shareholders are not liable for the liabilities of a joint-stock company. The joint-stock company form has a more complicated structure of corporate governance, and there are usually higher expenses associated with its existence and management. Registered capital has to be paid up in full within one year of establishment. If a company has more than 500 full-time employees, one-third of the supervisory board members are elected by the employees. A disproportional distribution of profits may be implemented through preferred shares or shares with special rights.

ii Deal structures

The typical deal structure in technology M&A transactions in the Czech Republic is either an asset deal or a share deal (depending on circumstances of a particular case or the buyer's needs).

The choice of the legal structuring of a particular transaction should be considered carefully as such choice may have different tax consequences.

The advantage of entering into a share purchase agreement whereby an investor purchases the shares in a target company is that the change in the shareholder structure of the target company does not affect the validity of licences or permits authorising the target company to carry out its business activities. Furthermore, in the case of a share deal, the target does not lose the ownership rights to any of its assets as a result of the contemplated transaction.

On the other hand, a purchaser is not entitled to agree with a seller that only certain of a target's liabilities will be assumed. Therefore, share deals can be considered as less attractive in times of a company crisis.

Asset deals can be divided into two subcategories: the purchase of an enterprise or part thereof, providing that the transferred business activity is capable of being operated as a separate business; and a purchase of individual assets.

The advantage of asset deals is that the shareholder structure in a target company remains unaffected due to a contemplated transaction, and the buyer acquires only the legal title to certain assets, which are usually subject to thorough due diligence. The buyer may also limit its exposure to unknown target company liabilities, as it is up to the parties to agree which particular liabilities will be assumed by the buyer.

On the other hand, an asset deal often requires a buyer to renegotiate the contracts concluded so far between the seller and its suppliers, customers or employees. In addition, the preparation of the transaction documentation can be more demanding due to the number of assets or their nature.

An alternative to a share deal or an asset deal is an equity investment through a capital increase. In such case, the general meeting of the target company adopts a decision to increase the registered capital of the company, and the investor assumes the obligation to provide the company with new contributions (mostly monetary). As a result, the investor acquires the shares that are newly created or subscribed.

The sale process usually starts with a discussion about the structure of a transaction and is then followed by due diligence, collection of indicative or binding bids and their evaluation, the execution of the transaction documentation, a transfer of shares (if applicable) and post-completion actions.

Advisers provide their clients with various services from the very beginning of a transaction onwards. The role of advisers in a transaction depends on the nature of the services they provide and the complexity of each transaction. In general, advisers usually, inter alia:

  1. support their clients throughout the whole process of due diligence;
  2. advise them on the most suitable structure for the transaction (from both the legal and tax perspectives);
  3. prepare transaction documentation; and
  4. procure licences, permits and approvals from state authorities.

iii Acquisition agreement terms

The set of terms will vary depending primarily on the final structure of a deal. For example:

  1. whether it is a share or asset deal;
  2. whether the acquirer takes over a significant majority of the shareholding in a target company or just a simple controlling majority; and
  3. whether an asset deal entails the transfer of the whole of a business enterprise or rather a group of selected assets.

For the purposes of this subsection, we have assumed the deal under discussion is a share deal with the acquirer purchasing all or a significant majority of all shares in a target company. The key terms included in a framework share purchase agreement in such a share deal would customarily be as follows.

Type of consideration

There is typically a cash settlement of the purchase price. It is very common that share purchase agreements contain purchase price adjustment mechanisms. The payment of the purchase price is usually divided into two parts, where the first part in the form of the agreed initial consideration (reflecting also agreed estimated cash) is paid out on completion, and the second part (if any) is paid out after completion and once the purchase price adjustment takes place. It is also standard to have earnout arrangements in place, usually dependent upon the future performance of the target's business.

A certain potion of the purchase price is customarily kept in a separate escrow account, the release of which is usually interlinked with satisfaction of agreed conditions subsequent to, or with, the liability of sellers under the provided representations and warranties.

Representations and warranties

The catalogue of representations and warranties is tailormade to closely reflect the target, and its business, operations and assets. They would typically cover all the areas and risks as indicated in Section IX.

Pre-closing covenants

The transaction documentation customarily contains standard pre-closing covenants under which a seller is obliged to use all commercially reasonable endeavours to ensure that the business and operations of a target are conducted (and the assets of the target are maintained) in the ordinary course of business consistent with past practice. Such clauses usually also contain the obligation of the seller to ensure that the business organisation of the target and its relations with business partners are kept and preserved, reflecting past practice. It is standard that certain actions (defined by agreed materiality) could be taken by the seller or by the target only after prior written consent of the buyer.

Closing conditions

Closing conditions usually strictly reflect the specifics of the deal at hand.

It is standard that some part of the closing conditions reflects the findings identified during the due diligence process that are intended to remedy or mitigate identified risks before completion takes place; this customarily includes, inter alia:

  1. obtaining various corporate consents;
  2. obtaining the consent of third parties to eliminate risks arising from change of control clauses;
  3. obtaining the consent of spouses for the consummation of transactions;
  4. waivers from executive directors in relation to the performance of their offices; and
  5. the delivery of various ancillary documents and agreements.

A very common and significant closing condition is the obligation to obtain and deliver a merger clearance consent from the respective competition regulatory office; in the Czech Republic, this is the Office for the Protection of Competition.


Indemnity clauses come into play to manage specifically identified risks (within the due diligence process) associated with a contemplated transaction. From our practice, we note that it is usually necessary to have a very material risk in order for a buyer to be able to push forward indemnity clauses. In the majority of cases, indemnity clauses cover risks connected with taxes (or other public levies), breach of regulatory requirements (e.g., data protection, AML), or ongoing or threatened lawsuits (e.g., arising from actual or threatened infringements of IP rights).

Non-compete and non-solicitation clauses

Other standard deal protection clauses are non-compete and non-solicitation clauses. A non-compete clause imposes an obligation on the seller to abstain (directly or indirectly) from competing with the target's business for a certain agreed period of time after a transaction's completion with respect to a certain geographical area, or with respect to a certain agreed range of business partners, other persons and entities. Based on a non-solicitation clause, the seller usually undertakes for a certain period of time after completion to abstain from luring or hiring away the target's customers, business partners and employees. It is reasonable to require such obligations, as they allow the buyer to enjoy the benefits of its purchase of the target. However, all these restrictive covenants must be always carefully assessed primarily in the context of competition regulation so that they are valid and enforceable.

iv Financing

The type of financing in technology M&A deals depends (along with the structure of the deal itself) predominantly on:

  1. the target company (life cycle, size, etc.);
  2. the nature of the acquirer (whether it is a strategic or financial investor); and
  3. the actual macroeconomic conditions (interest rates, availability of funds as well as the risk attitude of third-party financing providers).

Generally, strategic investors tend to use equity or equity in combination with debt financing. In the case of financial investors, the situation seems similar, as this group of investors usually uses equity or a mix of debt and equity financing.

On top of that, and especially in the cases of an earlier stage of existence of the target companies (typically in their growth phase), financial investors are increasingly tending to utilise more innovative financing instruments such as various convertible loan agreements when the repayment of a loan to the target company is made through an issue of new shares in the target company. In such instances, financial investors aim to exercise their conversion rights just before the occurrence a certain defined exit event (e.g., an initial public offering, a sale of a 100 per cent shareholding to a third-party strategic investor, a sale of a substantial part of the assets of the target).

v Tax and accounting

The tax system in the Czech Republic is similar to that operated in other OECD countries. The main law regulating income taxation is the Income Taxes Act, which covers individuals as well as legal entities. The framework of accounting rules is incorporated in the Act on Accounting. Detailed guidance specifying rules and standards for various types of accounting units is provided in decrees on double-entry accounting and the Czech national accounting standards issued by the Ministry of Finance.

Business entities are subject to a profit tax, while the distribution of profits to individuals is also included in the tax base of individual taxpayers together with an individual's income from other sources. Personal income tax and corporate income tax apply to resident taxpayers on their worldwide income.

The personal income tax system applies a flat rate of 15 per cent on all earned income and income from other sources. The statutory corporate tax rate is 19 per cent. Investment funds, unit trusts and pension funds are subject to a 5 per cent corporate tax rate.

The dividend income of Czech companies is subject to 15 per cent withholding tax if received from a Czech resident company or taxed as regular business income at a reduced rate of 15 per cent if received from a non-resident company, unless the company falls under the scope of any of the statutory exemptions.

The Income Taxes Act admits some exemptions from taxation as follows:

  1. dividends paid by a subsidiary (resident in the Czech Republic or another EU Member State) to its parent company (resident in the Czech Republic or another EU Member State); or dividends and income from a sale of participation in a subsidiary that is a non-EU resident in a country with which the Czech Republic has concluded a double tax treaty, and that are subject to corporate income tax that is at least 12 per cent; or
  2. income from a sale of a participation in a subsidiary (resident in the Czech Republic or another EU Member State).

The exemptions can only be claimed if all the statutory conditions are met. For instance, it is necessary that the parent company holds at least 10 per cent of the registered capital of the subsidiary for uninterrupted period of 12 months.

The fiscal year is the calendar year. Corporate taxpayers may decide to have a fiscal year different from the calendar year. Income tax returns need to be filed and tax liabilities need to be paid within three months of the fiscal year end, although this can be extended for an additional three months if a return is prepared and submitted by an authorised tax adviser under a power of attorney.

vi Cross-border issues

Generally, there are no foreign ownership restrictions applicable in the Czech Republic, and thus foreign entities have the same position and legal regime as Czech entities regarding, inter alia, the ownership of property (including real estate), or the establishment of new businesses (commercial corporations) or the acquisition of existing ones.

However, the Ministry of Trade and Industry (Ministry) has presented a draft Act on Foreign Investments Screening (Act) (in accordance with the Regulation (EU) 2019/452). Under the current draft, foreign investments (i.e., foreign investments from outside of the EU) into strategic sectors, including the production of military materials, or the operation of critical infrastructure or information infrastructure (including certain technology target companies), would have to be approved by the Ministry. Additionally, the Ministry may initiate screening proceedings of foreign investments that may threaten the security, or the internal or public order, of the Czech Republic. The government will have certain powers in the screening process as well. In practice, this would mean that investors from outside the EU would have to obtain approval if investing into specific strategic sectors (including certain technology sectors). The draft Act has not yet been approved by the Parliament.

IP protection

The main laws regulating IP rights in the Czech Republic are, besides the above-mentioned Copyright Act, Trademarks Act and Act on Inventions and Rationalisation Proposals:

  1. the Act on Utility Models;24
  2. the Act on the Protection of Industrial Design;25 and
  3. the Act on the Protection of Topographies of Semiconductor Products.26

These laws cover general aspects of copyrights, databases, trademarks, patents, inventions, utility models, industrial designs and the protection of topographies of semiconductor products.

Moreover, the Czech Republic is a Member State of the World Intellectual Property Organization (WIPO), and is bound by conventions that are administrated by WIPO, especially:27

  1. the Convention Establishing the World Intellectual Property Organization;
  2. the Paris Convention for the Protection of Industrial Property;
  3. the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods;
  4. the Madrid Agreement Concerning the International Registration of Marks;
  5. the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks;
  6. the Amendment to the Madrid Agreement and Protocol concerning the International Registration of Marks – Article 9 sexies;
  7. the Trademark Law Treaty;
  8. the Patent Cooperation Treaty;
  9. the Regulations under the Patent Cooperation Treaty;
  10. the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration;
  11. the Regulations under the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration;
  12. the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks;
  13. the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure;
  14. the Strasbourg Agreement Concerning the International Patent Classification;
  15. the Locarno Agreement Establishing an International Classification for Industrial Designs; and
  16. the Washington Treaty on Intellectual Property in Respect of Integrated Circuits.

The Czech Republic is also a member of the European Patent Organization and party to the European Patent Convention. Moreover, the Czech Republic is a party to the TRIPS Agreement which is administrated by the World Trade Organization. On 26 February 2016, Czech Republic became a party to the Agreement on the Visegrad Patent Institute (VPI) which came into force on 13 December 2015.

Besides recent EU case law,28 there has not been any local significant development in the area of case law in the technology M&A area in the Czech Republic.

When negotiating and closing a transaction, the special attention should be paid to the following:

  1. the limited lifetime of particular IP rights (patents, designs, trademarks);
  2. whether the IP rights can be assigned (note that assignability is limited by law in the Czech Republic);
  3. potential assistance from the seller after the acquisition of IP rights (eventually licensor) to provide updates in relevant databases with respect to the current owner of the IP rights;
  4. change of control clauses in licence agreements;
  5. co-ownership of particular IP rights; and
  6. whether the subject of a transaction is computer programs, particularly from the aspect of the seller providing the source codes to such computer programs.

Indemnity clauses are not very common on the Czech market as they are not specifically recognised by Czech law. Their meaning under Czech law is different from the common law concept. The enforceability of these sections in agreements is therefore questionable. Notwithstanding the foregoing, parties shall be always liable for damage caused intentionally.

Employment issues

The Czech Labour Code contains a specific regulation of non-competition clauses agreed by an employee and his or her employer. A non-competition clause (non-competition agreement) must be concluded in writing. In such a clause, the employee undertakes, after termination of a employment relationship for a certain period not exceeding one year, to refrain from the performance of gainful activity that would be identical to the employer's business activity or that would be of a competitive nature with regards to the employer's business activity. The employer must undertake to provide adequate monetary consideration, at least in the amount of one-half of the employee's average monthly earnings for each month when said obligation is fulfilled. The monetary consideration shall be payable backward on a monthly basis unless some other maturity date is agreed. The employer may conclude with an employee a non-competition clause only if its performance can be justly required from the employee with regard to the nature of information, knowledge, and operational and technological know-how that the employee acquired during his or her employment relationship with the employer and the use of which in an activity could substantially encumber the employer's activity.29

The Czech Civil Code regulates non-competition clauses that are concluded outside the employment relationship. This provision, which prohibits another person from engaging in competitive activities, shall determine the territory, range of activities or group of persons subject to such a prohibition and the period of the non-competition obligation, which shall not be longer than five years. Non-compete clauses that restrict the obligor more than is required for the necessary protection of the obligee are prohibited. If the prohibition is breached, a court may, on the application of the party affected, restrict or cancel a non-compete clause, or declare it invalid. Similar conclusions can be applied regarding non-solicitation clauses.30

In relation to employees' IP rights, the Copyright Act31 and Act on Inventions and Rationalisation Proposals32 contain definitions of employee work under which IP created by an employee is automatically transferred to the employer.

Data protection

Data protection should be considered at all stages of a transaction. It is governed by the GDPR.33 The GDPR is implemented in the Czech Republic by the Act on personal data processing,34 which does not contain any specific regulation relevant to technology M&A transactions.

Therefore, it is important to consider the legal basis for sharing and processing the personal data contained in a transaction. One of the possible grounds for legal processing of personal data contained in such documentation would be a legitimate interest of the data controller (i.e., a potential buyer). However, availing of this legal ground does not allow the buyer to obtain all the personal data processed by the target company, including employee data, at the pre-closing stage.

In relation to non-personal data that is important to the company (e.g., trade secrets), concluding a non-disclosure agreement should be always considered, ideally at the very beginning of negotiations between the parties. The agreement shall be broad and cover all possible information that the other party receives during a negotiation or transaction.


The Czech Republic is a Member State of the European Union. As such, companies conducting business in the Czech Republic are entitled to European subsidies and national subsidies. As such, subsidies are common in special sectors of the market or when new technology is supported by the Czech Republic (e.g., the Technology 4.0 programme, ICT and shared services such as software development, data centres, shared services centres).35

Due to the covid-19 situation, many companies are also entitled to subsidies supporting employment and providing tax and other relief.36

However, agreements governing the granting, utilisation and settlement of subsidies often contain specific change of control clauses. Therefore, when negotiating a transaction, parties should always check whether the target of the transaction is bound by any of these provisions.

Due diligence

Standard areas of due diligence entail particularly the following:

  1. corporate matters;
  2. financial, accounting and tax matters;
  3. the target's assets (both real estate and movables);
  4. supply, consumer and other material business contracts related to the running of the target;
  5. public grants and subsidies;
  6. data protection matters;
  7. employment matters;
  8. public law permits, authorisations, certificates and so forth;
  9. insurance;
  10. disputes and lawsuits; and
  11. other potentially relevant areas (such as environmental matters, competition law matters, various quality certificates).

On top of these, a buyer of a technology company further customarily focuses in respect to IP on the following:

  1. a description of all IP rights used by the target company (in particular patents, trademarks, industrial designs, copyrights or other IP rights), including domain names and a brief description of key know-how or confidential trade secrets; and its significance to the target company's business;
  2. documents on the legal titles of all IP owned or used by the target company;
  3. documents on the registration of any registrable IP in the relevant registers, including ongoing registration proceedings;
  4. licence agreements related to IP according to which the target company provides third parties with rights to use their IP (including either controlled or controlling persons or companies that are connected with the target company);
  5. available documentation regarding currently existing or expected violations of the IP; and
  6. a programme of trade secret protection (i.e., rights of access to trade secrets, contractual arrangements with the target company's employees and third persons regarding the keeping of trade secrets), any evidence of breaches of the target company's trade secrets, and other arrangements between the target company and their employees or third persons regarding keeping the confidentiality of know-how.

Additionally, in respect to IT a buyer would particularly require the following information from the target company:

  1. details on the IT infrastructure of the target company, including:
    • hardware and software (and current live or committed projects);
    • where the hardware is located;
    • to what extent the IT is managed and maintained by the target company itself, or is reliant on third parties; and
    • whether the IT systems are sufficient (from the perspective of their capacity, functionality and performance) for the current and projected needs of the target company;
  2. in relation to each software program, if developed internally, identification of the author or authors of the program and whether any external consultants were involved; and if licensed from a third party, submission of the licence agreement or an agreement on the basis of which the software was developed for the target company;
  3. details of procedures or arrangements in place for maintenance and support, disaster recovery, security, and supplier default or insolvency; and
  4. details of all domain names used in connection with the target company's business, and details of all material intellectual property rights in the design, layout and content of the websites of the target company.

x Dispute resolution

The actual dispute resolution setting varies depending particularly on:

  1. the value of a deal;
  2. the complexity of the deal and the nature of potential disputes that may arise during the performance of the transactional documents;
  3. the governing law of the transactional documents; and
  4. the origin of the involved parties (and the cultural context from which they are coming).

In comparison with past practice, when the involved parties predominantly preferred arbitration, we have recently noticed an increasing tendency for disputes to be resolved by common courts. This is particularly valid in instances when the transactional documents are driven by the English, German, Swiss or other stable law system; in such case, English, German or Swiss courts usually have jurisdiction over potential disputes arising from the transaction documents.

Arbitration is usually the preferred option in cases when there is a high probability of a sophisticated dispute (typically of a technical nature), or when the transaction documents are governed by Czech law and the acquirer is a foreign investor. The strongest arguments for arbitration are less formalised arbitration proceedings; the swiftness of the proceedings; and reliance on the better and more profound understanding of arbitrators of the (commercial or technical) matter at hand. The main drawbacks of the arbitration are usually higher costs; the absence of an appellate review; and variations in the predictability of rulings. Czech law allows for parties to opt for ad hoc arbitration rules as well as for established rules of institutions such as ICC, LCIA or VIAC, which are the preferred foreign options. Of the Czech arbitration institutions, the Arbitration Court attached to the Czech Chamber of Commerce and the Agricultural Chamber of the Czech Republic is a widely recognised and preferred national arbitration option.

Subject to certain restrictions (such as when recognition would contravene Czech public order), foreign judgments and arbitral awards are generally recognised and enforced in the Czech Republic.


As in many other countries, the situation on the M&A market has been deeply affected by covid-19 measures. Future developments are, therefore, unclear.

The situation could, in fact, present opportunities for many investors. According to some opinions, plans for divestments or acquisitions in the next 12 months are at one of the highest levels of recent times (56 per cent of respondents expect activity in the M&A area). When choosing a target company, investors intend to focus on its economic resilience (38 per cent), expecting company prices to fall (39 per cent). However, an expected price decline is not the only motive for buying companies.37

A key merger was announced by Solitea, a company that develops accounting, economic and enterprise information systems. Solitea plans consolidate 23 Czech companies and seven Slovak companies into two national companies. The company has currently 260,000 customers in 15 European countries and approximately 1,200 employees. The current estimated annual revenues amount to 2 billion koruny, and as such, Solitea is one of the fastest-growing IT companies in Central and Eastern Europe. This is expected to be one of the largest mergers on the Czech market in 2020.38

On 7 August 2020, Czech Telecommunication Office launched a tender for granting the right to use radio frequencies to provide electronic communications networks in the 700 MHz and 3400–3600 MHz frequency bands (5G frequencies). The auction is in its initial phase, and due to previous unsuccessful attempts, it is hard to predict when the rights could be granted. However, the auction could have potential for strategic investments and, eventually, for the entry of a fourth operator on the Czech market.

Certain investments could, however, be more regulated in the future. The government presented to the Parliament in April 2020 a bill on the screening of foreign investments. Under the bill, Ministry approval is required before certain foreign investments and other investments can be reviewed retroactively. The Act is expected to come into effect in the third month following its publication in the Collection of Laws (with several exceptions that shall be effective from 11 October 2020). Publication in the Collection of Laws is the last step in the legislative process, after the approval of both the Chamber of Deputies and the Senate, and the President's signature. The length of the legislative process is dependent on many circumstances: therefore, it is hard to predict a more accurate date of the Act's effectiveness.


1 Vojtěch Chloupek is a partner and Ľubomír Brečka, Radomír Pivoda and Jiří Švejda are associates at Bird & Bird.

8 Act No. 89/2012 Coll, Civil Code.

9 Act No. 90/2012 Coll, on Commercial Companies and Cooperatives.

10 Act No. 125/2008 Coll, on Transformations of Commercial Companies and Cooperatives.

11 Act No. 143/2001 Coll, on the Protection of Competition.

12 Act No. 304/2013 Coll, on the Public Registers of Legal and Natural Persons and on the Register of Trusts.

13 Act No. 121/2000 Coll, on Copyright and Related Rights.

14 Act No. 441/2003 Coll, on Trademarks.

15 Act No. 527/1990 Coll, on Inventions and Rationalisation Proposals.

16 Act No. 231/2001 Coll, on Radio and Television Broadcasting.

17 Act No. 127/2005 Coll, on Electronic Communications.

18 Act No. 181/2014 Coll, on Cyber Security.

19 Directive (EU) 2016/1148 of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security of network and information systems across the Union.

20 Act No. 253/2008 Coll, on selected measures against the legitimisation of proceeds of crime and financing of terrorism.

21 Act No. 21/1992 Coll, on Banks.

22 Act No. 256/2004 Coll, on Capital Market Business.

23 Act No. 104/2008 Coll, on Takeover Bids.

24 Act No. 478/1992 Coll.

25 Act No. 207/2000 Coll.

26 Act No. 529/1991 Coll.

28 Judgment of the Court of Justice of the European Union (Fifth Chamber) of 2 April 2020 in case Coty Germany GmbH v. Amazon Services Europe Sàrl and Others (C 567/18); judgment of the General Court (Sixth Chamber), 16 May 2018 (T 712/16), Deutsche Lufthansa AG v. European Commission; judgment of the General Court (Ninth Chamber, Extended Composition), 19 June 2019 (T-307/17), Adidas AG v. European Union Intellectual Property Office; judgment of the Court (Grand Chamber), 12 June 2018 (C 163/16), Christian Louboutin and Christian Louboutin SAS v. Van Haren Schoenen BV.

29 Section 310 of Act No. 262/2006 Coll, Labour Code.

30 Section 2975 of Act No. 89/2012 Coll, Civil Code.

31 Section 58 of Act No. 121/2000 Coll, on Copyright and Related Rights.

32 Section 9 of Act No. 527/1990 Coll, on Inventions and Rationalisation Proposals, as amended.

33 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data.

34 Act No. 110/2019 Coll.,

38 Czech Invest M&A Report Q2 2020, available at

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