Prague Stock Exchange Co. Ltd.

04/10/2024 | Press release | Distributed by Public on 04/10/2024 05:17

Czech MPs reject shareholder vote reduction in company transformation law

Czech MPs reject shareholder vote reduction in company transformation law

Prague, April 10 (CTK) - The Chamber of Deputies, the lower house of Czech Parliament, today rejected the criticised provision of the draft amendment to the law on the transformation of companies and cooperatives that aimed to introduce a reduction in the shareholder voting ratio.

Critics feared such reduction could have been used by the state to restructure semi-state energy company CEZ to strengthen its control, while minority shareholders would have been expropriated.

The MPs today removed the controversial section from the government's draft amendment while approving the remaining parts of the bill with modifications and sending the bill to the Senate for consideration.

The government proposal envisaged that instead of the current 90 percent of votes of all shareholders, 75 percent of votes of shareholders present at a general meeting would be sufficient to decide on the division of a company. At the same time, however, holders of at least two-thirds of the share capital would have to be present.

According to experts, if this provision was adopted, only the state, which owns about 70 percent of CEZ, could decide on the transformation of CEZ, as not all shareholders usually attend the general meeting.

The adoption of the bill by the government led to a drop of more than Kc300 below the Kc900 per share level of CEZ shares on the Prague Stock Exchange (BCPP) last summer.

The abolition of the controversial provision has been recommended unanimously by the lower house's constitutional law committee.

Prime Minister Petr Fiala and Finance Minister Zbynek Stanjura defended the government amendment as a general regulation that does not target a specific company and is common in other EU countries. However, experts say that nowhere else in Europe is there a similarly low quorum for dividing a company.

Transformations of companies include mergers, divisions, transfers of assets to shareholders, change of legal form and cross-border relocation of the registered office.

tam/er