The political landscape in the Czech Republic might soon see a change, Schoenherr Partner Vladimir Cizek says, as “the recent regional elections shook the position of the leading party.” Still, he doesn't expect it to have much impact on foreign investment. He notes that previous political changes have not dissuaded investors from coming to the country, and their stream has been constant for decades.
“The regional elections are usually the test before the parliamentary ones,” says Cizek of the recent elections, in which the opposition parties won almost double the seats of the ruling coalition.
The Czech parliament is expected to vote soon on another set of Covid-related support measures, Cizek says. In addition, he says, important amendments to the Business Corporations Act passed in February of this year are expected to enter into force on January 1, 2021, “and will bring many changes in terms of the general corporate matters and the provision of financing, among other things.”
“We are also eagerly expecting the introduction of a new FDI regulation in the Czech Republic,” Cizek says, referring to the Bill on Screening of Foreign Direct Investments. The bill, which is expected to enter into force by the end of 2020, will enable the Czech Ministry of Industry and Trade to screen investments made by entities registered outside of the EU. Under the bill, investments made in the country’s critical sectors, such as energy, health care, or defense from foreign investors would require approval from the ministry in a screening procedure.
According to Cizek, the amendments to the Business Corporations Act have been welcomed by the business sector, which has been “riddled with hesitation” as of late. According to him, “some large deals were put on hold and there have been a number of postponements." Of course, like elsewhere, the IT industry is thriving, and Cizek points to the recent sale of Socialbakers to Astute, as well as the acquisition of Integromat by Celonis (as reported by CEE Legal Matters on October 20, 2020) as significant recent examples.
