What is Act No. 34 / 2021 Coll.?

Act No. 34 / 2021 Coll., on the examination of foreign investments and on the amendment of related laws (Act on the examination of foreign investments) — Act on the examination of foreign investment and the amendment of related laws (Act on the examination of foreign investment).

When it became Act No. 34 / 2021 Coll. effectiveness?

Act No. 34 / 2021 Coll. became effective 01.05.2021.

Is Act No. 34 / 2021 Coll. still valid?

Yes, Act No. 34 / 2021 Coll. is still valid and effective.

How many times was it Act No. 34 / 2021 Coll. amended?

Act No. 34 / 2021 Coll. has 7 time versions of the text.

Act No. 34 / 2021 Coll. - Act on the examination of foreign invest...

34

THE LAW

of 19 January 2021

on the examination of foreign investment and the amendment of related laws (Act on the examination of foreign investment)

Parliament has decided on this law of the Czech Republic:

ČÁST PRVNÍ

VERIFICATION OF FOREIGN INVESTMENTS

HLAVA I

GENERAL PROVISIONS

§ 1

Subject matter

This law provides for a direct application of the European Union1)

(a) the rules governing the examination of certain foreign investments in order to protect the security of the Czech Republic and internal or public order; and

(b) certain obligations of foreign investors.

§ 2

Foreign investor

(1) For the purposes of this Act, a foreign investor means anyone who has made or intends to make a foreign investment in the Czech Republic, and

(a) is not a citizen of the Czech Republic or a citizen of another Member State of the European Union;

(b) has no registered office in the Czech Republic or another Member State of the European Union; or

(c) is directly or indirectly controlled by those who comply with the requirements of (a) or (b).

(2) For the purposes of this Act, a foreign investor shall also mean the trust manager of a trust fund that has made or intends to make a foreign investment in the Czech Republic on behalf of that trust fund, if the founder or trustee of the trust fund, the person authorised to supervise the management of the trust fund, who may appoint or withdraw the trust fund, or whose consent to such appointment or recall makes such appointment or recall conditional on the acquired trust fund, or in the interests of which the trust fund has been set up or is managed, if not occupied, complies with the requirements of paragraph 1 (a), (b) or (c).

(3) For the purposes of this Act, a trust fund shall also mean a similar legal arrangement established under foreign law and a trust trustee in a similar position.

§ 3

Foreign investment

For the purposes of this Act, foreign investment means property value in any form provided or provided by a foreign investor for the purpose of carrying out an economic activity in the Czech Republic and which enables a foreign investor to exercise an effective control over the implementation of that economic activity.

§ 4

Change in a person controlling a foreign investor

If, following a foreign investment, a change is made to a person controlling a foreign investor and allows that change to directly or indirectly control a foreign investor in accordance with Article 2 (1) (a) or (b), the procedure set out in Article 7 or 8 shall apply mutatis mutandis.

§ 5

Effective control of economic activity

For the purposes of this Act, the effective control of economic activity shall be:

(a) the possibility for a foreign investor to dispose of at least 10% of the voting rights or to exercise an appropriate influence in the person through whom the economic activity is carried out (hereinafter referred to as "the target person"); the shares of persons who are subject to a single procedure with a foreign investor and the shares of persons who are in agreement with a foreign investor are also included in that share,

(b) the membership of a foreign investor or a person close to him in the authority of the target person;

(c) the possibility for a foreign investor to dispose of ownership rights in the case through which the economic activity is carried out (hereinafter referred to as the "target case"); or

(d) a different level of control resulting in the ability of a foreign investor to gain access to information, systems or technologies that are important for the protection of the security of the Czech Republic or internal or public order.

HLAVA II

PROCEDURES FOR VERIFICATION OF FOREIGN INVESTMENTS

Díl 1

Scope of Ministry of Industry and Trade

§ 6

(1) Ministry of Industry and Trade ("Ministry")

(a) examine foreign investments;

(b) conduct consultations;

(c) conduct negotiations on conditions;

(d) decide on foreign investments;

(e) monitor compliance with the obligations laid down by this law and decisions made under this law.

(2) The Ministry is a contact point and cooperates with the relevant contact points of the European Commission and of the Member States of the European Union, makes comments on foreign investments in other Member States of the European Union, takes into account the comments of other Member States of the European Union and the opinions of the European Commission, and fulfils its obligations towards the European Commission.

(3) In the exercise of its powers under this Act, the Ministry also cooperates with the authorities of other States responsible for examining foreign investment and with the relevant international organisations and institutions.

Díl 2

Investments checked

§ 7

Without authorisation pursuant to Article 14 (1) or conditional authorisation pursuant to Article 15 (3), no foreign investment may be made in:

(a) target persons carrying out the production, research, development, innovation2) or providing the life cycle of military material under the legislation governing foreign trade in military materialm3) or into the target item through which those activities are carried out;

(b) the target person who is a critical infrastructure entity under the Critical Infrastructure Act;

(c) the target person who is the provider of the regulated service under the higher obligations regime (5); or

(d) target persons who develop or produce the goods listed in Annex IV to Council Regulation (EC) No 428 / 2009 establishing a Community regime for the control of exports, transport, brokering and transit of dual-use items, as amended, or into the target item through which such goods are developed or manufactured.

§ 8

(1) In the case of foreign investments which are not foreign investments pursuant to § 7 and are liable to endanger the security of the Czech Republic or internal or public order, the Ministry may initiate an ex officio investigation procedure for foreign investment

(a) on the basis of the outcome of the consultation proposed by a foreign investor to the Ministry under Paragraph 10 (1); or

(b) within 5 years of the date of completion of the foreign investment, if the foreign investor has not submitted a consultation proposal pursuant to Article 10 (1).

(2) The date of completion of the foreign investment referred to in paragraph 1 (b) shall be:

(a) the date of conclusion of the contract or the last of the contracts for which the foreign investment is to be made;

(b) the date on which the effective control of the conduct of an economic activity is acquired; or

(c) the date on which the economic activity begins;

depending on which of these facts occurred later.

(3) Together with the notice of initiation of the procedure, it is official in accordance with paragraph 1 (b). (b) the Ministry shall set a time limit of not more than 15 days from the date of receipt of the notification within which the foreign investor is obliged to provide the Ministry with information pursuant to Article 9.

(4) The Ministry will initiate an ex officio investigation procedure for foreign investment,

(a) if a foreign investor does not submit an application for authorisation of a foreign investment pursuant to Article 7; or

(b) if, after five years from the date of completion of the foreign investment referred to in paragraph 1, it becomes apparent that a foreign investor has acted in such a way as to cover the facts for which it would otherwise be possible to initiate the examination procedure referred to in paragraph 1 (b).

Díl 3

Information and consultation

§ 9

Required information

(1) The foreign investor shall indicate in the application for authorisation of a foreign investment and in the consultation proposal:

(a) the business name or name, registered office and law under which the legal person was established in the case of a legal person, or the name and, where applicable, the names and surnames, the address of the place of residence and, where appropriate, the address of the place of residence, if different from the address of the place of residence, in the case of a natural person, and the identification number of the person, if assigned;

(b) the name and, where applicable, the names and surnames, the address of the place of residence and, where applicable, the residence, if different from the address of the place of residence, the telephone number, the e-mail address and the date and place of birth of the members of the statutory and supervisory bodies of the legal person or other bodies of the management of the legal person;

(c) information on the ownership structure, including information on the final investor and on who controls the foreign investor, the amount of his share and changes in those facts over the last year;

(d) information on products or services and business and business activities, including information on selected economic indicators, as well as, where appropriate, sectoral regulation and specific legal regulation governing the business of a foreign investor in the country of registered office, on the basis of which he has received in that country a licence for business in the field where such authorisation is necessary in that country;

(e) the list of Member States of the European Union in which a foreign investor carries out business activities, including information on subsidiaries and branches in those States;

(f) source of financing for foreign investment;

(g) the amount of foreign investment;

(h) the date of completion or planned completion of the foreign investment;

(i) the business name, registered office and identification number of the target person, if assigned, or the name and address of the target item;

(j) information on the ownership structure of the target person or the owner of the target item before the foreign investment takes place, including information on the final investor and who controls the target person or owner of the target item and the amount of his or her share;

(k) information on products or services produced or provided by the target person or in the target case and on the business and business activities of the target person or the owner of the target item, including information on the economic indicators selected;

(l) the list of Member States of the European Union in which the target person or the owner of the target item carries out business activities, including information on subsidiaries and branches in those States;

(m) information on the involvement of the target person in projects or programmes in the interests of the European Union6); and

(n) the direct or indirect share of the foreign investor in the ownership and voting rights of the target person or the corresponding influence before and after the foreign investment, including information on the shares of persons subject to the single management and persons acting in agreement.

(2) The Ministry may request:

(a) by a foreign investor, other supporting documents not referred to in paragraph 1, where necessary to assess or verify a foreign investment;

(b) the information referred to in points (j), (k) and (l) of paragraph 1 from the target person or the owner of the target item, where it is not available to a foreign investor, as well as other supporting documents not referred to in paragraph 1, where this is necessary to assess or verify the foreign investment.

(3) From the date on which the Ministry requests the supporting documents referred to in paragraph 2, the period referred to in paragraphs 5 and 6 of Section 10 shall not run until they are submitted; for this period, the Ministry may suspend the procedures for examining a foreign investment.

(4) The application and the proposal referred to in paragraph 1 shall be submitted on a specified form. The details of the data and the model of this form shall be laid down by the Government by regulation.

(5) Insufficient disclosure of information or supporting evidence or misleading or false information by a foreign investor may justify the initiation of proceedings for the examination of a foreign investment, for the non-authorisation, prohibition of execution or prohibition of the continuation of a foreign investment.

§ 10

Consultation

(1) If the target person holds a licence for all-area radio or television broadcasting or a periodical print publisher whose aggregate minimum print cost is 100 000 copies per day for the last calendar year, the foreign investor shall, before completing the foreign investment, submit a proposal to the Ministry to consult whether the foreign investment may jeopardise the security of the Czech Republic or internal or public order. In other cases, a foreign investor may submit a proposal to the Ministry for consultation on whether foreign investment may jeopardise the security of the Czech Republic or internal or public order.

(2) The Ministry provides, without undue delay, data received under Section 9 and other findings made, at the same time as a request for an opinion or information on the justification for initiating proceedings for the examination of a foreign investment, the Ministry of the Interior, the Ministry of Defence, the Ministry of Foreign Affairs, the Police of the Czech Republic as well as the intelligence services of the Czech Republic ("intelligence services"), and, where the foreign investment concerns their competence, other authorities of the State and the Czech National Bank.

(3) The authorities and persons referred to in paragraph 2 shall provide the Ministry with an opinion which must include a justification or information within 30 days of the date of receipt of the Ministry's request. In the event that the institution or person referred to in paragraph 2 fails to provide an opinion or information to the Ministry within that period, it shall not consider the reason for the procedure for examining the foreign investment. Opinions and information provided after this deadline shall not be taken into account.

(4) If none of the authorities or persons referred to in paragraph 2 or the Ministry finds no reason to initiate a procedure for examining a foreign investment, the foreign investment shall not constitute a threat to the security of the Czech Republic or internal or public order. The procedure for examining a foreign investment cannot be conducted in the future either; Paragraph 9 (5) is without prejudice to this.

(5) The notification of the facts referred to in paragraph 4 shall be sent by the Ministry no later than 45 days after the date of receipt of the application for consultation to a foreign investor and to the target person or owner of the target item.

(6) Where one of the authorities or persons referred to in paragraph 2 or the Ministry considers it justified to initiate a procedure for the examination of a foreign investment, the Ministry shall, within 45 days of the date of receipt of the request for consultation, send a notice of initiation to the foreign investor.

Díl 4

Management of external investment verification procedures

§ 11

Procedure for the examination of foreign investment

(1) Where a procedure is initiated to examine a foreign investment, the Ministry shall, without undue delay, provide the data received under Section 9 and other findings made, unless they have previously been provided under Section 10 (2),

a) Ministry of the Interior, Ministry of Defence, Ministry of Foreign Affairs and Police of the Czech Republic, and, where the foreign investment concerns their competence, other authorities of the state and the Czech National Bank, together with a request for an opinion,

(b) the Ministry of Finance, at the same time as the request for an opinion; and

(c) intelligence services and other authorities of the State whose competence relates to foreign investment and which do not provide opinions under the law, at the same time as a request for information.

(2) The authorities and persons referred to in paragraph 1 shall provide the Ministry with an opinion including a justification or information within 60 days of the date of receipt of the Ministry's request. at the reasoned request of the competent authority or person, the Ministry shall extend the deadline accordingly.

(3) Where, within the period referred to in paragraph 1 (a), the authority or person referred to in paragraph 1 (a) fails to provide the Ministry with an opinion or does not provide the Ministry with a reasoned request for an extension of the time limit, or does not provide an opinion within an extended period, it shall agree to a decision authorising a foreign investment or a decision authorising a foreign investment without setting the conditions. In the event that, within that period, the Ministry of Finance does not provide the Ministry with an opinion or provides the Ministry with a reasoned request for an extension of the deadline or does not provide an opinion within an extended period, it shall not consider it necessary to comment on a foreign investment. Where, within that period, the authority referred to in paragraph 1 (a) (i) is responsible for: (c) does not provide the Ministry with the information or provide the Ministry with a reasoned request for an extension of the deadline or does not provide the information within an extended period, it shall not have the relevant information.

§ 12

Negotiations on conditions

(1) If the Ministry receives an opinion or information pursuant to Paragraph 11 (2) in the procedure for the examination of a foreign investment, which implies that the execution or duration of the foreign investment should be conditional, or if the Ministry has reason to believe so, it shall negotiate the terms and conditions with the foreign investor before submitting the matter to the Government pursuant to Article 13 (1).

(2) The reasons for conducting negotiations on the conditions referred to in paragraph 1 may include comments from Member States of the European Union or the opinion of the European Commission received by the Ministry on a foreign investment under Regulation (EU) 2019 / 452.

(3) The conditions referred to in paragraph 1 shall govern the original intention of a foreign investor in such a way that foreign investment does not jeopardise the security of the Czech Republic or internal or public order. These conditions may include the obligation of a foreign investor to repropose a consultation when further increases in voting rights or the corresponding increase in influence in the target person, or when changing or extending the subject matter of the foreign investor or target person.

(4) The conditions referred to in paragraph 1 shall not apply to the period prior to the decision referred to in Article 15 (3).

(5) The lack of cooperation of a foreign investor in the negotiation of terms and conditions may constitute grounds for not granting an authorisation, a ban on implementation or a ban on the continuation of a foreign investment.

§ 13

Government hearing

(1) If the Ministry receives an opinion or information in the procedure for the examination of a foreign investment pursuant to Paragraph 11 (2), which implies that the foreign investment may constitute a threat to the security of the Czech Republic or internal or public order, or if the Ministry has reason to believe so, it shall refer the matter to the Government before the decision is taken, within 90 days of the date of the opening of the procedure for the examination of the foreign investment.

(2) A period of up to 30 days shall be added to the period referred to in paragraph 1 if it is a particularly complex case.

(3) For the period necessary for negotiations between the Ministry and a foreign investor on the terms and conditions under Section 12, the Ministry shall suspend the proceedings.

(4) The Government shall, within 45 days of the date on which the matter was referred to it, adopt a resolution on whether a foreign investment may constitute a threat to the security of the Czech Republic or internal or public order. In assessing the matter, the government shall take into account the possible impact of foreign investment on the principles of the democratic rule of law, the protection of the life and health of the people, the defence of the state, the foreign political or security interests of the state, the economic security of the state and, where appropriate, other matters relevant to the protection of the security of the Czech Republic or internal or public order.

Díl 5

Decision

§ 14

Decisions not subject to government resolutions

(1) If the Ministry does not receive an opinion or information pursuant to Article 11 (2) in the procedure for the examination of a foreign investment, which would imply that a foreign investment may constitute a threat to the security of the Czech Republic or internal or public order, and if the Ministry has no reason to believe so, it shall issue a decision authorising a foreign investment.

(2) If the Ministry does not receive an opinion or information pursuant to Article 11 (2) in the procedure for the examination of a foreign investment, which would imply that a foreign investment could constitute a threat to the security of the Czech Republic or internal or public order, and if the Ministry has no reason to believe so, it will issue a decision on the admissibility of a foreign investment without conditions.

(3) The Ministry will issue a decision within 90 days of the date of initiation of the procedure for the examination of a foreign investment.

(4) A period of up to 30 days shall be added to the period referred to in paragraph 3 if it is a particularly complex case.

§ 15

Decisions conditional on government resolutions

(1) In a procedure for the examination of a foreign investment pursuant to Article 7, the Ministry shall, without undue delay, issue a decision on the conditional authorisation of a foreign investment or not to grant an authorisation for a foreign investment and the procedure for the examination of a foreign investment pursuant to Article 8 of the decision on the conditional admissibility of a foreign investment, on the prohibition of the execution of a foreign investment or on the prohibition of the continuation of a foreign investment if the Government decides that such a decision is necessary for the protection of the security of the Czech Republic or internal or public order.

(2) In the procedure for the examination of foreign investment pursuant to § 7, the Ministry shall issue without undue delay a decision on the authorisation of foreign investment and in the procedure for the examination of foreign investment pursuant to § 8 of the decision on the admissibility of foreign investment without conditions if the Government decides that the foreign investment does not constitute a threat to the security of the Czech Republic or internal or public order.

(3) The decision on the conditional authorisation of a foreign investment and the decision on the conditional admissibility of a foreign investment also contains the terms and conditions agreed under Paragraph 12.

(4) If the conditions laid down in the conditional permit decision or decision on the conditional admissibility of a foreign investment have been infringed, or if the foreign investment has been made in breach of the decision not to grant an authorisation or prohibit the execution of a foreign investment and as a result the security of the Czech Republic or internal or public order may be compromised, the Ministry may decide to prohibit the continued duration of the foreign investment.

(5) The decision to prohibit the continuation of a foreign investment shall also include:

(a) the prohibition or restriction of the exercise of the ownership or voting rights of a foreign investor in the target person or regulation of the sale of the target person or of the target item or participation in the target person, if necessary to ensure the security of the Czech Republic or internal or public order; and

(b) the period within which the sale referred to in (a) must be completed.

(6) If a foreign investor does not make the sale of a target person or target item or participation in a target person within the time limit referred to in paragraph 5 (b), the Ministry may arrange for the sale in or outside the public auction through a securities dealer or foreign persons authorised to provide investment services in the Czech Republic. Sales costs shall be borne by the proceeds of the sale.

(7) The decision which was conditional on the Government's order cannot be brought about or examined in the review procedure. An action against such a decision or a request for renewal in which such a decision has been given shall not be granted suspensory effect.

(8) If a decision whose illegality relates to the content of a government resolution subject to that decision has been annulled, the State may not request a regression payment from the official who was directly involved in the decision.

Díl 6

Specific rules on service

§ 15a

Special provisions on foreign service

(1) Addresses under Paragraph 22 of the Administrative Regulation may also be served in proceedings under this Title by means of a public decree, unless the document can be delivered via a public data network to a data box or otherwise in accordance with § 19 (1) or (2) of the Administrative Order in the Czech Republic.

(2) If the Ministry delivers a public order to the addressee in accordance with paragraph 1, it shall simultaneously send him a document via the postal operator or through the competent authority responsible for the service of the documents to a foreign office at his address for service and shall endeavour to inform him of the documents delivered in any other appropriate way; Paragraph 25 (2) of the Administrative Regulation is without prejudice to this.

HLAVA III

USE OF DATA FROM PUBLIC MANAGEMENT INFORMATION SYSTEMS

§ 16

(1) The Ministry uses data from the basic population register in the exercise of its powers under this Act to the extent that:

(a) surname;

(b) the name and, where appropriate, the names,

(c) the address of the place of stay,

(d) date, place and district of birth; for a natural person who was born abroad, the date, place and state of birth;

(e) the date, place and district of death; if there is a death outside the territory of the Czech Republic, the date of death, the place and the State in whose territory the death occurred; where the court's decision on the declaration of death is given, the date indicated in the decision as the date of death or the date on which the natural person did not survive and the date on which the decision was acquired; and

(f) citizenship and, where appropriate, multiple citizenship.

(2) The Ministry uses, in the exercise of its powers under this Act, data from the information system of the population register to the extent:

(a) the name and / or the names, surnames and surnames,

(b) date, place and district of birth; for a citizen born abroad, the date, place and state in which he was born,

(c) sex;

(d) citizenship and, where appropriate, multiple citizenship;

(e) the address of the place of residence and, where appropriate, the address to which the documents are to be served under another legislation; and

(f) the date, place and district of death; if there is a death outside the territory of the Czech Republic, the date of death, the place and the State in whose territory the death occurred; where the court's decision on the declaration of death is given, the date indicated in the decision as the date of death or the date on which the natural person did not survive and the date on which the decision was acquired.

(3) The Ministry uses data from the alien information system in the exercise of its powers under this Act to the extent:

(a) the name and, where applicable, the names and surnames,

(b) the date of birth;

(c) the type and address of the place of stay; and

(d) the date, place and district of death; if there is a death outside the territory of the Czech Republic, the date of death, the place and the State in whose territory the death occurred; where the court's decision on the declaration of death is given, the date indicated in the decision as the date of death or the date on which the natural person did not survive and the date on which the decision was acquired.

(4) In the exercise of this law, the Ministry uses data from the basic register of agendas, public authorities, private users of data and certain rights and obligations to the extent that:

(a) the name of the public authority which issued the information on decisions or other acts of public authorities, including public contracts and general measures, and the identifier of that public authority;

(b) the number and name of the law and the indication of its provision under which the decision was given;

(c) the name and, where applicable, the name, surname, address of the place of residence, date of birth of the natural person in the form of a reference link to a reference indication in the basic register of the population or a commercial company or name, address of the registered office of the legal person in the form of a reference link to the reference figure in the basic register of legal persons, of the natural persons involved and of the public authorities to whom the law or obligation arises;

(d) the name and code of the agenda in which the decision was given;

(e) the definition of the right or obligation of the bodies referred to in (c) to which the decision relates;

(f) the information assigned by the decision by the public authority which issued the decision on the basis of the registration of the decision in the register of documents; and

(g) the date of the acquisition of legal power, enforceability or other legal effects of the decision.

(5) In the exercise of its powers under this Act, the Ministry uses data from the basic register of legal persons, business natural persons and public authorities to the extent that:

(a) the name and, where appropriate, the names of the natural person involved and of the foreign person,

(b) an agendas identifier of a natural person for the agenda of a basic register of legal persons, business natural persons and public authorities; and

(c) the address of the place of residence in the Czech Republic in the form of a reference link (address location code) to the reference address in the basic register of territorial identification, addresses and real estate and, where applicable, residence abroad of the trading natural person and foreign persons.

(6) In the exercise of its powers under this Act, the Ministry uses data on the beneficial owner from the register of beneficial owners to the extent that:

(a) the name and address of the place of stay and, where appropriate, the place of residence, if different from the place of stay;

(b) the date of birth and the birth number, if allocated;

(c) nationality; and

(d) indication of:

1. share of voting rights, where the status of beneficial owner is based on direct participation in a legal person,

2. share of the resources distributed, where the status of beneficial owner is based on the fact that it is the beneficiary; or

3. other facts, if the status of the beneficial owner is otherwise based.

(7) Data which are kept as reference data in the population base register or in the basic register of legal persons, commercial natural persons and public authorities shall be used from the population information system and the alien information system only if they are in the form preceding the current situation.

(8) From the data referred to in paragraphs 1 to 6, only such data as are necessary to fulfil the task may be used in a particular case.

HLAVA IV

COOPERATION BETWEEN STATE INSTITUTIONS AND UNDER THE EUROPEAN UNION

Citation	Act No. 34 / 2021 Coll., on the examination of foreign investments and on the amendment of related laws (Act on the examination of foreign investments)
Regulation Type	Law
Author	-
Collection	Code of Laws

Date of Promulgation	03.02.2021
Effective from	01.05.2021
Effective until	-
Status	Valid

Act No. 34 / 2021 Coll.

Act on the examination of foreign investment and the amendment of related laws (Act on the examination of foreign investment)

Contents