3. Kinstellar is a leading independent law firm in Emerging Europe,
Turkey and Central Asia, with offices in Almaty (Kazakhstan),
Belgrade (Serbia)*, Bratislava (Slovakia), Bucharest (Romania),
Budapest (Hungary), Istanbul (Turkey) and Prague (the Czech
Republic).
Operating as a single fully-integrated firm, Kinstellar delivers
consistently high-quality services across all jurisdictions in an
integrated and seamless style. We are particularly well suited to
servicing complex transactions and advisory requirements spanning
several jurisdictions.
We deliver:
market experience and local knowledge across a wide range of
sectors
in-depth understanding of the legal, regulatory and commercial
issues surrounding any type of transaction or project in the region
a dedicated team of local and internationally-qualified lawyers
a responsive, commercial approach and style
value for money.
Emerging Europe and Central Asia’s
Leading Independent Law Firm
Regional experienceKinstellar offices
* Kinstellar advises international and local clients in Serbia in cooperation with Zajednička advokatska kancelarija Marić & Mujezinović.
4. Established in 1992, our Prague office is a leading law firm in the
Czech Republic. Our work advising multinationals, international
financial institutions, governments, and domestic clients covers many
of the most significant transactions ever completed within New Europe.
The Prague office is comprised of five Partners, four Counsel / Of
Counsel, and close to 30 Associates, qualified in one or more of the
following jurisdictions: Czech Republic, Slovakia, United Kingdom,
Germany, and Canada. The core of our team has been working
together in the Czech Republic for over 16 years and is well balanced
between senior, mid-level and junior lawyers, complemented by
translators, paralegals and support staff. Our diverse language
capabilities, covering Czech, English, Slovak, Armenian, German,
French, Russian, enable us to offer a truly flexible service to our
international clients.
Our market leadership in the Czech Republic has been repeatedly
recognised by independent reviewers and achieved top directory
rankings in the following areas:
Corporate/M&A
Banking & Finance and Capital Markets
Real Estate and Construction, and
TMT
THE AREAS OF PRACTICE OF THE PRAGUE OFFICE INCLUDE:
Foreign Direct Investments
General Industry, Manufacturing and Engineering
Corporate, Mergers and Acquisitions
Banking, Finance & Capital Markets
Competition / State Aid
Compliance, Risk and Sensitive Investigation
Dispute Resolution
Energy
Infrastructure & Projects
Life Sciences & Healthcare
Private Equity
Real Estate
Restructuring & Insolvency
Telecoms, Media and Technology
Kinstellar Prague
5. What Clients say about our Prague team ...
‘Excellent for corporate and M&A advice’. Legal 500, 2013
Kinstellar ’s ‘friendly and professional’ team ’ [...].
Legal 500, 2013
Kinstellar displays ‘great knowledge and negotiating skills’.
Legal 500, 2013
It has a growing reputation for its ability to field highly
experienced lawyers on cross-border deals.
Chambers Europe, 2013
Kinstellar is ‘good value, with quick turnaround times, and is
very commercially oriented’. Legal 500, 2013
7. Content
Market overview
Legal System of the Czech Republic
International Treaties
Corporate Establishment
M&A in the Czech Republic
Case Study
8. Market Overview
Access to EU markets
EU 28 countries all are part of the European
single market – free movement of goods, capital
and workers.
CEE countries still enjoy significant cost
advantages over EU 15, while at the same time
having full market access and advantages of full
EU membership.
9. Market Overview
Need for infrastructure
Much infrastructure is still below EU standard
Massive infrastructure investment will continue in the next decade
Railways
Motorways
Electricity generation
Energy infrastructure
Municipal infrastructure
EU funds will continue to be allocated to improve
Regional quality and local development
10. Market Overview
Drivers of inward investment in the Czech
Republic and CEE region
Cost efficiencies
Expanding EU market
Excellent platform for access to EU market for
new EU countries
Attractive labour force
Attractive tax regimes
Incentives from local governments
Proximity CIS, CEE, SEE – springboard to New
Europe
11. Market Overview
Decisive factors for investments in the
Czech Republic
Labour cost and quality
Logistics (transportation networks)
Industrial background
Governmental support and transparency in
procedures
Stability: financial, political, legal
Standard European economy
Friend of the United States
Good opportunity (No. 5 in TOP 20 Emerging
Markets by Bloomberg)
12. Legal System in the Czech Republic
Civil law system
Very similar (and comparable) to Germany.
Part of the European Union. Fully compliant with EU legislation
Extensive reform of legal system and modernisation after EU accession
Still formalistic: requirements like notarisation and legalisation can be onerous
Stable environment with sufficient protection of rights
Established and efficient court system
In brief: standard European jurisdiction
13. Important International Czech – US Treaties
Bilateral Investment Treaty
Treaty concerning Encouragement and Reciprocal Protection of Investments, entered into force
on 19 December 1992 (amended on 1 May 2004)
Double Taxation Treaty
The Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital, entered into force on 23 December 1993
Other Treaties
Agreement on Social Security between the Czech Republic and the United States of America,
entered into force on 1 January 2009
14. Corporate Establishment
First steps
Available corporate structures
Commercial Register
Trade licences
Limited liability company
Joint-stock company
Branch office
15. First Steps
1. Choosing an appropriate corporate structure
2. Establishing the company, branch or
purchasing a shelf company
3. Applying for trade licences
4. Registering in the Commercial Register
5. Registering for taxes, social security, and
health insurance
16. Available Corporate Structures
1. Limited Liability Company (in Czech “společnost s ručením omezeným” or “s.r.o.”)
2. Joint-Stock Company (in Czech “akciová společnost” or “a.s.”)
3. General Commercial Partnership (in Czech “veřejná obchodní společnost” or “v.o.s.”)
4. Limited Partnership (in Czech “komanditní společnost” or “k.s.”)
5. Cooperative (in Czech “družstvo”)
6. Branch office (in Czech “organizační složka”)
17. Trade Licences
Obligatory application
Different requirements in respect of obtaining
different types of trade licences
Types of trade licences
• Licensed trades
• Notifiable trades
– craft trades
– regulated trades
– unregulated trades
18. Limited Liability Company
• Legal entity
• Created by registration
• Typically used for small to medium-size
enterprises
• Chaining restriction
• Minimum capital CZK 1 (approx. EUR 0.04)
• Executive directors
• General meeting
19. Joint-Stock Company
• Legal entity
• Created by registration
• Typically used for larger enterprises
• Unlimited number of shareholders
• Minimum capital of CZK 2,000,000 or EUR 80,000)
• Bearer or registered shares in the form of either certificated or book-entred shares
• Board of directors
• Supervisory board
• General meeting
20. Branch Office
1. Not a legal entity
2. Created by registration
3. Unlimited liability of the founder
4. No share capital
5. Branch manager
21. Comparison Limited Liability
Company
Joint-Stock Company Branch Office
Liability of the
Founder
Not liable if capital paid
up (with exceptions)
Not liable if capital paid
up (with exceptions)
Founder fully liable
Establishment By notarial deed By notarial deed Notarial deed not
necessary
Minimum Registered
Capital
CZK 1 (approx. EUR
0.04)
CZK 2 million or EUR
80,000
Not applicable
Executive Body Minimum one executive
director
Minimum three
members of board of
directors
One branch manager
Supervisory Board Voluntary Minimum three
members
Not applicable
Timing
(establishment) *
1 month 1 month 1 month
Registration fees Approx. EUR 500 Approx. EUR 500 Approx. EUR 350
* Does not include time necessary for obtaining all documentation from the investor.
22. M&A in the Czech Republic
All sectors of the Czech economy are opened to foreign investments
No restrictions – foreign and domestic investors treated identically
Incoming investment mainly from the Netherlands, Germany, Austria, the United States, South
Korea, Japan and Switzerland
Active smaller private equity funds (e.g. Genesis)
Trends:
Smaller number of larger transactions
Domestic investors play increasingly important role
24. Czech Republic and Emerging Europe
Czech Republic: ranked as the best performer in the CEE (overall M&A maturity score of 71%)
Strategic advantage: buyers able to do deals in various currencies
CEE M&A transactions increased by 28% (from 378 in 2012 up to 485 in 2013)
The deal value increased proportionately by 26% year-on-year
Emerging Europe: generally healthier economies than Western Europe
Relatively sound financial sector
Technically advanced economies
25. Czech Republic and Emerging EuropeE
Europe
Proximity: Similar cultural, historical or
language background. Similar approach to
business.
Atractivity: Turkey, Romania and Poland.
Czech Republic remains competitive.
Success: Investments in the Czech Republic
will be most successful if seen as part of the
Emerging Europe. Build on Czech strategic
advantages.
26. Why the Czech Republic?
Optimistic mood – more active M&A market expected in 2014. Why?
Strong industrial tradition
Safe destination: Very limited legal and cultural issues. Single market
Growing acquisitions of small- and mid-sized companies
Number of small- and mid-sized enterprises up for sale (with founders being close to retirement and
searching for suitable buyers)
27. Quickly and safely? Comments on Czech M&A Deals
Preliminary Steps
• Initial commercial discussions
• Structuring and valuation
• Process Letter / Information Memorandum
• Due diligence / Data room
• Confidentiality / Exclusivity / Break fee agreement
• Agreement in principle / heads of terms?
Contract negotiation
• SPA
• Other documents
Signing / Announcement
• Sign SPA
• Satisfy conditions precedent:
• Public / private approvals
• Other conditions
• Prepare for transfer – pre-closing obligations
Closing
• Post completion matters
• Price Adjustment
Purchaser
Due
Diligence
Vendor Due
Diligence
28. Quickly and safely? Comments on Czech M&A Deals (Cont.)
Stable institutions and rule of law
Faster and more efficient work of courts
Representations and warranties
Ways how to enable financial assistance
New Private Law
The new Civil Code and the new Business
Corporations Act effective from January 2014
Significantly limit the reasons for the invalidity of
contracts
30. Case Study
NET4GAS
The sale of Czech Transmission System Operator Net4Gas was the one of the biggest and the most
complex M&A deal in the Czech Republic in 2013
Type of business: NET4GAS operates more than 3,600 kilometres of pipelines in the Czech
Republic and is responsible for the national transmission of natural gas as well as international gas
transit
Parties involved: RWE (Seller), Borealis Infrastructure Management Inc./Allianz SE (Purchasers),
NET4GAS (Target)
Deal Value: appr. EUR 1.6 billion
External bank financing (syndicated loan with more than 20 banks participating – approximately
EUR 1.2 billion)
34. The main contact
Kamil Blažek is a Partner and firm-wide Head of the Projects & Infrastructure practice at Kinstellar. He has been with the firm
since 2000. Kamil specialises in Commercial Law, M&A, Foreign Direct Investment, Energy, Project Finance and Real Estate &
Construction Law.
Kamil studied law at Charles University in Prague and Regensburg University in Germany. He has worked as professional legal
advisor in the Czech Republic and Central and Eastern Europe for close to 20 years. From 2000, he worked at the global law
firm Linklaters and since 2008 has been as a partner in the Prague office of the international law firm Kinstellar, which
exclusively focuses on the emerging markets in the Central and Eastern Europe and CIS. Kamil has been involved in a number
of complex transactions in the Czech Republic, other Central and Eastern European countries, Russia, and China.
He has advised numerous clients in the automotive sector (for example, Denso, Inteva, Hyundai, Toyota Tsusho and Delphi), in
the real estate sector (ECE, ECM Real Estate Investment, Hochtief Development, Unibail, Czech Property Investments, and
Babcock & Brown), in the banking sector (KBC/ČSOB, Erste/Česká spořitelna, Merill Lynch, ING, and BNP Paribas), and in the
energy sector (RWE, Ruhrgas/E.ON, Electrabel, EnBW, ČEZ, Duke Energy and Statkraft).
Kamil is Chairman of the Association for Foreign Investments (AFI) in the Czech Republic. In co-operation with governmental
agencies and institutions, primarily the Ministry of Industry and Trade of the Czech Republic and CzechInvest, AFI is actively
supporting foreign investors entering the Czech market, the promotion of domestic investments, the enhancement of Czech
companies’ competitiveness, and a favorable business environment in the Czech Republic. AFI also promotes innovation be
encouraging co-operation between the public research/development sector and the private sector.
Kamil speaks Czech, English, German and Russian.
Kamil Blažek
Partner
