Czech Republic has introduced a regulation for screening of foreign investments made in public or private companies. It is effective from May 01, 2021.
Any investment made by a foreign legal entity or natural persons from countries outside the EU to gain effective control on the economic activity of the company or entity (target person in Czech Republic) will come under the purview of this regulation.
There is an obligation to notify to the Czech Ministry of Industry and Trade about such investments where following conditions are fulfilled:
- Investment is made by a foreign person;
- To exercise the control; and
- A field related to ensuring public order and security of the Czech Republic.
Reporting is required for all investments that are incomplete before May 01, 2021, and those that meet the criteria as mentioned above. Here, the date of completion of the investment is when:
- Last contracts concluded on the basis of which the investment is made;
- Acquiring an effective degree of control over the target person; or
- The start of the economic activity.
Implication:
Any foreign legal or natural person wishes to make investments in Czech Republic need to make essential reporting to avoid any penalty.