At the Lawyer of the Year 2019 award ceremony, HAVEL & PARTNERS, the largest Czech-Slovak law firm, handed over a cheque for CZK 100,000 to the Krtek Children’s Oncology Endowment Fund (Nadační fond dětské onkologie Krtek), a charity financially supported by the law firm since 2015. Assisting physicians and healthcare professionals in the Children’s Oncology Clinic at the Brno University Hospital, the fund aims in particular to raise the quality of care and comfort of children staying at the hospital, providing follow-up care over the entire duration of treatment and helping children and their families cope with the consequences.
“If standard treatment covered by health insurance companies does not work, the child is given an additional opportunity–thanks to our regular donors–to receive a customised diagnosis and follow-up care tailored to the little patient. Unfortunately, the additional treatment is not paid by the state. Our endowment fund can, however, use our partners’ and donors’ contributions to cover the costs, and that is the purpose the money from HAVEL & PARTNERS will serve,” says Professor Jaroslav Štěrba, chairman of the administrative board of the Krtek Fund and Head of the Children’s Oncology Clinic at the Brno University Hospital.
“It has become a tradition that we hand over a cheque to a charity at the Lawyer of the Year ceremony. Over the past few years, we have asked all colleagues to select a project to support and a clear majority of them voted for Krtek this year. Its team headed by Professor Štěrba does a really good job, which we admire and respect very much,” says Veronika Dvořáková, head of marketing and a partner at HAVEL & PARTNERS.
Not only does the law firm provide financial support but also free legal assistance to charitable organisations and projects. Last year, the firm provided more than 650 hours of pro bono work, among many other projects, to Nadace Krása pomoci (Beauty of Help Foundation), Nadační Fond AutTalk Kateřiny Sokolové (Kateřina Sokolová’s AutTalk Endowment Fund), Nadační fond Českého rozhlasu Světluška (Světluška Czech Radio Endowment Fund), Spolek/Fond na obranu nespravedlivě stíhaných (Association/Fund for the Defence of the Unjustly Prosecuted), the Museum of Decorative Arts in Prague and the Czech Technical University in Prague. As part of its CSR activities, HAVEL & PARTNERS supports its staff participating in charity runs and sales, providing advisory to children from children’s homes, organising fundraising breakfasts or campaigns for charities, etc. The law firm has also listed charities and sheltered workshops as its regular suppliers of goods and services.
Authors: Václav Audes, Tereza Brousilová
A new price rule of the Ministry of Health on the regulation of the prices of medicinal products and foods for special medical purposes came into effect on 1 January 2020. The rule entails the following changes in price regulation:
Related price rule No. 2/2020/CAU, on the regulation of the prices of provided health services, the setting of maximum prices of health services provided by dentists covered by public health insurance, and specific medical procedures also came into effect as of 1 January 2020.
A completely new special price rule is Rule No. 3/2020/CAU, on the regulation of the prices of individually prepared medicinal products containing cannabis for medical use. Under this rule, individually prepared medicinal products containing cannabis for medical use:
In 2019 HAVEL & PARTNERS, the largest Czech-Slovak law firm, recorded the best economic results in its history. The total turnover of HAVEL & PARTNERS increased by 10% year-on-year in 2019, the first quarter being the most successful, when the turnover growth reached 15.6%. Revenues from net legal services reached CZK 711.5 million, representing a year-on-year increase of more than 9% in HAVEL & PARTNERS’ Czech offices and almost 20% in HAVEL & PARTNERS’ Slovak office. In line with the increase in turnover, profitability also increased due to large synergies and economies of scale. According to preliminary results, the total turnover of HAVEL & PARTNERS in the Czech Republic and Slovakia amounts to CZK 870 million and the turnover of the whole group, including the debt collection agency Cash Collectors and tax advisory services, exceeded for the first time one billion Czech crowns.
“Our excellent business results and the double-digit growth in turnover reflect the top quality of our stable team, with senior positions having almost no fluctuation rate, comprehensive specialisation, and know-how built over the years, and also an individual approach to clients and building strategic partnerships with them. As a result, we have the most stable client base on the market. We appreciate the trust of all our clients as well as leading international law firms, which increasingly choose us as partners for transactions and cross-border projects in Central and Eastern Europe,” commented the firm’s managing partner Jaroslav Havel on the economic results.
HAVEL & PARTNERS’ revenues have been growing continuously since the firm’s founding in 2001. This is mainly due to the provision of legal and related tax services to major Czech, Slovak and international companies, and Czech and Slovak entrepreneurs, including about a third of the richest Czechs and Slovaks. Among the fastest growing areas in 2019 were mergers and acquisitions, which set records last year in terms of both the number and the value of transactions, dispute resolution and arbitration, insolvency and restructuring, regulatory, public procurement, and the competition law and economics advisory group also grew significantly.
“In the future, we will continue to focus primarily on the most comprehensive legal cases, including the resolution of complex disputes. This year we especially want to further develop the tax law advisory group, which we significantly strengthened last year, as well as private client services. We are also planning to further develop the real estate advisory group, where we have extensive know-how, including legislative activity, and we also want to focus more on IT and technology,” said Jaroslav Havel of the firm’s plans for 2020.
Authors: Jan Koval, Štěpán Štarha, Zuzana Hargašová
Entitlement to a longer vacation
The amendment to the Labour Code concerns an increase in the length of the basic scope of paid vacation. Under the amendment, the basic scope of paid vacation for employees who have not yet reached the age of 33, but who take care of a child permanently, will be increased to five weeks. The amendment entered into effect on 1 January 2020.
In practice, the question arises as to how the application practice will deal with the interpretation of the term “to take care of a child permanently”, which is not defined in the Labour Code.
Contribution to the child’s sporting activities
The aim of the amendment is to support the sport of children and youth in the form of an employer’s voluntary contribution to the expenses that its employee incurs for the regular sporting activities of his/her child.
Under the amendment, the employer may grant to an employee whose employment with the employer lasts at least 24 months and at his/her request a contribution, for his/her child’s sporting activities, of 55% of the eligible expenses, but not more than EUR 275 per calendar year in total for all employee’s children, with an authorised person who is exclusively a sports organization registered in the register of legal entities in sport.
The employer’s motivation to provide this contribution to the employee is to exempt him/her from paying taxes and levies by both the employee and the employer.
Extension of exemption from court fees
An amendment to Act No. 71/1992 Coll., on Court Fees, has extended the list of specific disputes that have so far been exempt from court fees, including proceedings relating generally to individual employment relationships, civil servant relationships, and service relationships. Such disputes will be exempt from court fees only if the employer does not act as the plaintiff.
The aim of the Act is to facilitate the defence of employees against unfair practices of employers and to provide employees with the possibility to claim their rights without additional financial burden.
Increase in the 2020 minimum wage
The minimum wage has been increased from EUR 520 to EUR 580 per month for an employee receiving a monthly salary, or from EUR 2.989 to EUR 3.333 for each hour worked by an employee; with effect from 01 January 2020 to 31 December 2020.
Posting of employees within the EU – effective date of an amendment is determined to be 30 July 2020.
An amendment to the Act is intended to transpose the Directive on the posting of workers in the framework of the provision of services into Slovak legislation.
The most important changes include:
So-called “posting chaining” – lays down rules for counting the posting period. If the posted employee replaces another posted employee who has performed the same work task in the same place, for the purpose of dividing it into “short-term” and “long-term”, the posting period will also include the posting period of the replaced posted employee; the performance of the same work task in the same place will be assessed by reference to the nature of the activities carried out, the place where they are carried out, and the nature of the service provided.
Author: Lukáš Syrový
Source: Building World (4/2019)
The latest news from the residential market assert that the apartment price growth rate is slowing down. The prices in the luxury apartment segment are stagnating or even dropping. Yet, the current prices of apartments especially in larger towns are still too high for many people. The situation is even worse given the tightening of the terms for getting a mortgage, making mortgage loans less accessible.
This trend spurs the demand for rental housing. Higher demand increases rents for apartments, especially in Prague. Rents are expected to keep rising, and particularly in Prague apartments, the rent level will be getting closer to that in larger towns in Germany or Austria.
Together with other factors, this leads to an increasing number of residential development projects that are not intended for sale to end users but for rent. There might be a number of various letting concepts – from standard long-term rents to mid-term or short-term rents, which may be linked to the provision of above-standard services to tenants, e.g. regular apartment cleaning services.
Developers who are considering residential projects for rent to end users will first of all have to face the reluctance of banks to finance such projects given the significantly longer repayment period as opposed to standard residential projects intended for sale.
If developers manage to obtain financing for their projects, they should also consider legal risks associated with residential lease.
Compared to landlords, tenants are significantly more protected by law. Landlords are not even allowed to secure a more enhanced position for themselves in lease agreements than that granted to them by law. Provisions in a lease contract restricting tenant’s statutory rights are not taken into account.
The key risk associated with residential lease is when tenants breach their duty to pay rent. In fact, the law does not provide the landlords with an efficient defence against such breach and does not even allow them to use standard mechanisms applicable in the event of such breach in other types of leases (lease of office, retail or warehouse premises).
Namely, the law does not allow the security deposit the tenant provides to the landlord to secure rent payments to be higher than three times the monthly rent. At the same time, the law lays down that the landlord is entitled to terminate the lease by notice if the tenant defaults on the payment of their rent and the service charges for at least three months. Evidently, the landlord may terminate the lease by notice only at the moment when the security deposit provided in not sufficient to cover the overdue rent and service charges. Furthermore, the apartment can be handed over to the landlord within a period of up to one month of the service of the notice, without the tenant’s breaking the law in any way. These statutory provisions take precedence over an agreement. In other words, if an agreement laid down different provisions (more advantageous to the landlord), the provisions could not be validly applied. Currently, there is a rising demand among landlords to secure the obligations of the tenant by a notarial deed that includes a direct enforceability clause. This solution, however, has its limits – it is costly and may arouse negative feelings among tenants. A possible solution lies in making lease agreements for the term of three months with the possibility of renewals, but this is not very practical especially with long-term rents.
The law also forbids confirming any tenant’s obligation by a contractual fine.
It is therefore not possible to apply contractual fines to defaults on rental or service charges payments or for instance on the duty to vacate and hand over the apartment after the end of the lease period. The law in fact stipulates that in the event of default on vacating the apartment, the landlord is merely entitled to receive an amount equalling the rent due for the period of default. Obviously, the amount paid is not a sanction but merely a compensation for the lost rent. It does not motivate the tenant to actually vacate and hand over the apartment to the landlord.
Another issue worth mentioning is the indexation of rent paid for the apartment. Under the law, the landlord is entitled to request an increased rent to the level of usual rent at the given location and time but no more than by 20% in the period of three years. This increase can be laid down in the lease at variance with the above provisions in which case only the provisions of the lease agreement apply. According to the latest case law, however, the landlord’s statutory right to increase the rent is excluded also in case the lease contains rent indexing provisions. According to the law, the tenant has similar statutory right to request a decrease in rent to the usual level. The tenants’ right would not be likely to affect the standard rent indexing provisions in the lease agreement.
The grounds for terminating the lease by the landlord are a different topic. These grounds are laid down by law and cannot be expanded in an agreement. Statutory grounds for terminating a lease by the landlord are rather limited. For that reason, it has become a common practice that residential lease agreements for a fixed term tend to be concluded for one year with the possibility of renewal. Despite the above legal restrictions on residential lease, residential developer projects for rental housing can be expected to be more common in the future. Commercial rental housing should clearly not be the solution to the housing crisis. Instead, what should be done is greater support to housing construction projects. Development projects could be primarily supported through simplification of approval proceedings. That could be achieved in particular by adopting a new building act.
Authors: Jan Koval, Veronika Plešková, Pavla Kaufmannová
You have probably heard about it but have been lucky enough not to encounter it directly as the employer. At least, in the experience of our clients, this phenomenon has spread rapidly, and a displeasing notice may suddenly reach you as well. We talk about ‘virtual’ trade union organisations.
A virtual trade union organisation differs from the traditional one where you at least have an idea what employees have initiated it and they discuss their workplace requirements with you completely openly or at least actively. The difference is that a virtual trade union communicates with you and with its members mainly online and using remote communication, without any specific person designated as a ‘trade union official’ ever knocking at your door. In most cases, the main objective of the union is to get required information about the employer that is usually valuable or funds for its activities, without any intention to actually defend employee rights.
Given that the Czech Labour Code does not stipulate any strict requirements for a trade union origination to start their activities in the employer’s company, it is not difficult for a trade union organisation – and particularly the virtual one – to be built. It takes no more than three members employed with the employer to organise a trade union and a union’s charter to authorise the members to operate in the employer’s company.
What are the right steps to take when you receive an e-mail requesting you to provide information about the company online or directly an invoice for a trade union’s activities in your company or for the operation of web portals? We advise our clients to deal with the situation actively and not to let themselves be backed into a corner. If the trade union organisation claims that you are obliged to create conditions for the organisation to be allowed to carry out its activities properly and to cover, as your circumstances allow, the necessary costs of its maintenance and technical operation, it is partly true. However, this in no way means that you must automatically pay each invoice submitted to you without prior agreement. The essence of collective bargaining is mutual dialogue between the employer and the trade union organisation which should result in a reasonable advancement of the employees’ legitimate interests.
If the trade union organisation begins to make its presence felt in a similar way in your company, we recommend considering the legitimacy of its requirements and/or respond adequately using legal arguments. Upon request, our team of experienced specialists from our Czech and Slovak branch offices will be happy to help.
Authors: Ondřej Majer, Štěpán Štarha, Kristína Saktorová
The State has extended the deadline, but your obligation to register your beneficial owners by the end of 2019 remains unchanged.
We have already informed you about the obligation to register beneficial owners (“BOs”) in the relevant register in which a Slovak legal entity is registered in our previous newsletter available HERE. Legal entities must fulfil this obligation by the end of 2019. Most often, this obligation applies to companies that were registered in the Commercial Register before the amendment introducing this obligation became effective. Registry courts are not managing such workload; therefore, another amendment has extended the deadline for BO registration by registry courts until 30 June 2020. However, the obligation of companies to register their BOs and, hence, to file registration applications by 31 December 2019 remains unchanged.
In the meantime, another amendment[1] has also made it easier to define top management members who now only include statutory body members (typically, executive directors or board of directors members). Top management members shall be considered to be the BOs of the legal entity if none of the individuals could be identified on the basis of the BO definition criteria mentioned further.
A beneficial owner[2] means any individual who ultimately owns or controls a legal entity, as well as each individual for whose benefit a transaction or activity is being conducted by such a legal entity, primarily any individual who (i) has at least 25% direct or indirect shareholding in the legal entity, (ii) has a right to an economic benefit of at least 25% of the legal entity’s business or other activities, or (iii) directly or indirectly controls the legal entity (e.g. has the right to appoint or recall the statutory bodies of the company).
A beneficial owner also means an individual who alone does not meet the criteria mentioned above, but together with another person, acting with such an individual in accord or jointly, meets at least some of such criteria.
Our corporate
team is ready to assist you not only with identification of your BOs, but also
with their registration in the relevant commercial or other register.
[1] By Act No. 241/2019 Coll. amending and supplementing Act No. 315/2016 Coll. on the Register of Public Sector Partners and on Amendments and Supplements to Certain Acts, as amended by Act No. 38/2017 Coll. and amending and supplementing certain laws.
[2] The definition of a BO is laid down in Section 6a of Act No. 297/2008 Coll. on the Prevention of Legalization of Proceeds of Criminal Activity and Terrorist Financing.
The largest Czech-Slovak law firm HAVEL & PARTNERS received in 12th year of the Law Firm of the Year competition an award for Best Client Services, and also won first place in the Mergers and Acquisitions category and for the fourth time in the Public Procurement category. In all other categories, it ranked among the best and most recommended law firms, thus confirming its exceptional position on the Czech legal market, which is also unique in Europe. This prestigious competition is regularly organised by EPRAVO.CZ under the auspices of the Czech Bar Association and the Czech Justice Ministry. The results were officially announced on 4 November 2019 in Prague’s Žofín with the participation of representatives of leading law firms and personalities of the Czech judiciary.
“The first place on which our clients’ positive references have decided is the greatest appreciation of our work, because a satisfied client is the essence of advocacy. We are pleased that our clients repeatedly appreciate our top legal and tax services, time flexibility, loyalty, international standard of quality of our services, but also other added values we bring to them, such as using our unique network of contacts, detailed knowledge of their business sectors and related search for business opportunities, and further legal and managerial training through our academy or sponsoring Czech editions of the world’s best management publication,” Jaroslav Havel, the firm’s founder and managing partner, comments on this year’s success.
HAVEL & PARTNERS also won in the Mergers and Acquisitions category, in which it has been the market leader for more than 10 years, not only in the Czech Republic, but also in Slovakia and throughout Central Europe. “The award in the M&A category, which has been our key specialisation since the founding of the firm and which has brought us major clients and helped us grow into the largest independent law firm in Central Europe, means above all the recognition of more than eighty of our colleagues. They deserve a big thank you for their top expertise, building unique know-how, but also for their dedication at any time of day or night. Similarly, we must thank the ever-growing number of clients for the trust with which they approach us,” adds Jan Koval, a partner who leads the largest transaction team in Central Europe. Over the past ten years, the firm has completed more than 600 transactions worth over CZK 600 billion.
HAVEL & PARTNERS has won the Public Procurement category for the fourth time and is therefore the most successful law firm in this field. “The public sector is very comprehensive and important, from both legal and economic perspectives. Repeated success in combination with client appreciation of our services is for us the best possible proof of a job well done,” summarizes Josef Hlavička, a firm’s partner leading the public sector advisory team of 25 lawyers. In the Czech Republic and Slovakia, this dedicated team covers all legal areas relevant to the public sector, including legislation, and thanks to its unique know-how, it provides legal advice in a very comprehensive and efficient way.
In all other 15 professional categories, our law firm was selected among the highly recommended (top tier) law firms. In the Criminal Law category, in which HAVEL & PARTNERS does not directly participate, SEIFERT AND PARTNERS, with which HAVEL & PARTNERS exclusively cooperates in the field of criminal law, ranked among the best rated law firms.
According to the results of all previous years of the competition, HAVEL & PARTNERS is again the most successful and comprehensive law firm in the Czech Republic and Slovakia according to the number of all nominations and titles. “These outstanding results demonstrate our versatility and top quality services of all of our specialised teams. Currently, we advise our clients in all areas of their business and private life. Since this September, we have significantly expanded the tax team and the portfolio of tax services,” Jaroslav Havel summarizes the firm’s overall results and further development. Law Firm of the Year is a specialised competition evaluating the legal services of firms operating in the Czech and Slovak Republics. It was first announced in the Czech Republic in 2008, and since 2013 it has also been organised in Slovakia.
The definition of insolvency is a key element of the insolvency law. It opens the gate for tools that enable creditors to safeguard their rights vis-à-vis their debtors. Last week, the Czech Supreme Court published a ground-breaking decision which addresses a crucial aspect of balance-sheet insolvency. Many other issues, however, still remain unresolved.
Definition of insolvency
As in other jurisdictions, the Czech Insolvency Act anticipates two forms of insolvency — cash-flow insolvency (illiquidity test) and balance-sheet insolvency (over-indebtedness).
Cash-flow insolvency, in short, occurs when a debtor has multiple creditors with past due claims for more than 30 days which the debtor is unable to satisfy with his (liquid) assets. On the other hand, an over-indebted debtor also has multiple creditors, but concurrently the sum of his liabilities exceeds the value of all of his assets. An important factor taken into consideration is the debtor’s potential future development and whether the debtor may reasonably be expected to continue managing his assets or conducting business.
Whereas the former test is overwhelmingly used, the latter form of insolvency has been successfully availed of only exceptionally, the main reason presumably being the information asymmetry between creditors and debtors regarding the existence of all assets and payables and uncertainty about the valuation of the debtor’s assets.
Supreme Court decision
It has been unclear whether the definition of balance-sheet insolvency requires the existence of two creditors with past due claims. As it follows from the text above, unlike the definition of cash-flow insolvency, the provision on over-indebtedness does not contemplate two creditors with matured receivables; it simply requires the plurality of creditors without specifying further conditions regarding the maturity of their claims.
However, a provision on dismissal of an insolvency petition in another part of the Insolvency Act states that in case of a creditor’s insolvency petition, the insolvency court shall dismiss the petition if it is not ascertained that another creditor has a matured claim.
In the case considered by the Supreme Court, the debtor had several matured claims. In order to avoid insolvency proceedings, it allegedly deliberately agreed upon the prolongation of its claims with some of its creditors, while repaying all the remaining creditors with the exception of the claim of the insolvency petitioner. On the basis of the above-mentioned rule, the High Court in Prague as an appellate court ruled that both forms of insolvency (illiquidity and over-indebtedness) require establishing the existence of at least two creditors with past due claims. Consequently, the court dismissed the insolvency petition with the reasoning that the insolvency petitioner failed to establish the existence of another creditor with a matured claim.
Upon an extraordinary appeal, the Supreme Court rightly reversed the High Court of Prague decision and ruled that in order to establish balance-sheet insolvency, it suffices that the petitioner has one past due claim so that all other claims do not necessarily have to be mature. The Supreme Court, in effect, concluded that the provision on dismissal of an insolvency petition related solely to cash-flow insolvency and not to balance-sheet insolvency.
Other issues unresolved
Although one can praise the Supreme Court decision at hand, several issues are still unresolved. One major question relates to the valuation of businesses and its determination. To my best knowledge there is not a single decision which thoroughly addresses over-indebtedness in detail. In the light of a potential slowdown in the economy, this does not bring any certainty to the respective playing field.
Author: Petr Sprinz
Published on: Lexology
It is a well-known fact that the process of applying for and granting building permits in the Czech Republic is among the lengthiest in the world. Unfortunately, its lengthiness is not outweighed by the quality of decision-making. Quite the contrary: it gets in the way of meaningful, modern and functional architecture. This, however, should fundamentally change as of January 2022 if a new building bill is adopted and comes into effect.
According to the World Bank‘s Doing Business study, the Czech Republic ranked 156th out of 190 countries under review, with the median of the period required to obtain a building permit being 246 days. However, this figure should not be taken so seriously, as the World Bank’s ranking fails to take into account the fact that building permits in the Czech Republic are granted as a result of the authorisation process that is, in most cases, preceded by the often longer planning proceedings. Moreover, these planning proceedings tend to involve twice as many opinions and various other issues and may also be preceded by EIA and dozens of other partial processes during which binding opinions issued by other authorities are reviewed and new ones are issued.
The main causes of today’s situation are the extremely complicated, numerous and continuously changing regulatory obstacles that thwart new constructions. They have become so robust over time that they are overshadowing the actual purpose of buildings and the decision-making process surrounding them. To cite but one example, under the latest major amendment to the Building Act, the building authority is not even entitled to assess the compliance of the construction plan with the zoning plan, and must act pursuant to the binding opinion of the zone planning authority. What is its purpose then? The whole system of building authorisations has degenerated into a huge bureaucratic organism feeding on itself.
The problems during the authorisation process cause companies to make limited offers of reconstructions and new constructions. That indirectly leads to pressure on property prices. Moreover, by the time a permit is finally granted, some buildings have already become morally obsolete or are no longer at the top globally or even in Europe in terms of technology, innovation or architecture. What’s more, legal regulations make it difficult to use brownfields and other free spaces in cities, which in turn makes investors occupy the surrounding open landscape, where they feel less pressure from the regulators.
In an effort to eliminate these problems, in June 2019, the Czech cabinet approved the intended subject-matter of the new building bill, which was prepared in cooperation with the Czech Chamber of Commerce and external experts in administrative law, zone planning, urban planning and architecture. The objective of the intended subject-matter of the bill is to completely recodify the construction law. The recodification should fundamentally streamline the authorisation process, eliminate delays and minimise the number of pending administrative proceedings. In addition to the emphasis on acceleration and streamlining, the intended subject-matter of the bill expects to fully digitise the construction agenda and to promote the unification of methodological management and the quality of state-controlled construction administration. The articulated bill will be prepared by the professional public of the Czech Chamber of Chartered Engineers and Technicians Engaged in Construction and the Czech Chamber of Architects.
The main objective of the recodification could be expressed by the motto: “single authority – single proceedings – single stamp”. To make this motto come true, the bill envisages a single system of regional construction authorities with local branches in municipalities. The supreme body will be the Highest Building Authority, for the time being located in Hradec Králové. The central and local administration will be separated, which will solve problems with political pressures, the transfer of costs to the self-governing units and the systemic (or institutional) bias.
The existing authorisation processes – i.e. planning proceedings, building authorisation proceedings, the EIA process and the often conflicting opinions issued by the authorities concerned – will be integrated into single proceedings, during which the building authority will produce a general decision approving/rejecting the construction. It will no longer be necessary to obtain binding opinions from the other authorities.
Another aim of the subject-matter of the bill is the overall digitisation of the construction agenda. Anonymised information on the status of the proceedings will become publicly available. A fully-fledged electronic administrative file, replacing paper files, will be kept for the participants, their representatives and the authorities. Furthermore, it will be possible (or even mandatory for legal entities and professionals in the field) to file electronic submissions in the information system, including project documentation and other attachments. The bill will also introduce a service for monitoring proceedings relating to owned property and a zone planning geoportal where all information about a certain territory will be available in electronic form, including digital technical maps, where all depicted engineering networks and other elements of the technical infrastructure in the territory will be legally binding.
A national spatial development plan in the form of a government decree is expected to be issued as one of the zone planning tools. Compared to the current status, it will be more binding, there will be higher legal certainty associated with it and the possibility of challenging zone planning documentation will be more limited. The national spatial development plan will contain specific nationally defined plans. One of the main ones is the liner infrastructure plan – with this, it will no longer be necessary to wait till the plans are reflected in documentations issued by regional and municipal authorities. The act will expressly lay down that higher-level zone planning documentation will have preference in application over the lower-level one.
In addition, it will be possible to lay down different requirements for urban planning and the use of land in municipalities based on local particularities in municipal zone planning documentation as opposed to nationally applicable requirements resulting from implementing decrees and technical standards. This will significantly empower municipalities in deciding on the use and development of their territory. Municipalities will also be given the express right to process zoning documentation drafts if they wish to do so.
Further, the concentration principle will be consistently applied in all proceedings. It will therefore not be possible to raise new objections that could have been raised earlier. The same will apply to the preparation of zone planning documentation. One of the most important changes is the introduction of a limitation period for issuing a first instance decision after which the system will automatically issue a building permit, thus ending the now common inactivity of the first instance building authority (it will be possible to lodge an appeal against such decision). A fundamental innovation will be the obligation of the appellate bodies to always decide on the merits, thus eliminating the ping-ponging of decisions, i.e. their annulments by the first instance building authority and referrals of the cases for further proceedings.
Author: František Korbel
Published on: Lexology
A large amendment to Act No. 315/2016 Coll., on the Register of Public Sector Partners and on Amendments and Supplements to Certain Acts (“RPSP Act”), which will come into effect on 1 September 2019, is the result of more than two years during which the RPSP Act has been applied. In particular, it reflects the needs of application practice, whether by the public sector, public sector partners (“PSPs”) or authorised persons. One of the declared objectives of the amendment is also to reduce the administrative burden on the PSPs and the related narrowing of the scope of legal relations, which entails the obligation to register in the Register of Public Sector Partners (the “Register”).
Of the broadly conceived changes, we would like to present those that might be most relevant for you or otherwise interesting for you.
New definition of a public sector partner
The amendment seeks to define more clearly the entities to which the RPSP Act applies. For this reason, the definition of a public sector partner has been narrowed, and hence the circle of persons subject to registration in the Register.
The amendment has exempted from the scope of the RPSP Act, for example, certain entities in the financial sector, persons who receive performance from a public undertaking in the ordinary course of business of the public undertaking and in the course of carrying out core economic activities of the public undertaking, and other entities stipulated by law.
For subcontractors, the amendment more precisely defines the obligation to register in the Register, as the corrective “knows or should know” used so far appeared too general and caused considerable problems in practice. According to the newly drafted correction, a subcontractor is obliged to register if he “knows or, considering all circumstances, should know” that the performance which it supplies is intended for the public sector partner and, therefore, by such performance it contributes to the implementation of a contract concluded with the public sector.
Verification of identification of beneficial owner
The amendment introduces the obligation to set the date by which verification of identification of the beneficial owners (“BOs”) of a public sector partner must be carried out as at 31 December. Whereas this date has not yet been set (which in practice has caused considerable application problems), since the amendment will take effect, the verification of BOs identification in the Register will have to be carried out no later than 28 February.
Under the new legislation, the authorised person may verify the identification of the BOs at any time, on a voluntary basis, i.e. outside verification events envisaged by the RPSP Act.
Given the ambiguity during what period of time a public sector partner is obliged to remain registered in the Register, the amendment stipulates that the duration of a contract means the period during which the public sector partner receives funds, or acquires property, rights to property or other property rights.
New rules for determining the value of performance under a contract
One of the criteria for assessing the obligation to register a public sector partner in the Register is also the value of performance under a contract. In practice, there have been problems in calculating the limit from which registration in the Register is mandatory for recurrent performances above EUR 250,000. To eliminate this problem, the amendment introduces 14 new specific rules to determine a performance value under a contract. These rules should also make it clear whether there is a reason for an entity to register in the Register. The new rules include, e.g., that all performance values shall apply excluding VAT; for two or more contracts, the performance values received under several contracts shall not be aggregated; and that in determining the values of property, rights to property or other property rights, the counter value in terms of money, which a public sector partner is obliged to provide, and not the value of the property provided (e.g. the value of rent paid), shall be used.
The financial limits have remained unchanged, the limit of (i) EUR 100,000 in case of a one-off performance value and (ii) EUR 250,000 for performance values in aggregate.
Material corrective as protection from formalistic decision-making of courts
The amendment introduces a so-called “material corrective” to protect the parties from the formalistic decision-making of the court on sanctions imposed in cases of breaches of the law where the gravity of such breaches is negligible. In such cases, the court shall say “guilty” but shall not impose a sanction for breaching the law (e.g. deletion, fine). Until recently, for example, the registering authority was obliged to delete a public sector partner from the Register if it failed to reliably prove that the BO data entered in the Register were true and complete. However, from the effective date of the amendment, this will not apply (and there will be no deletion) if, given the manner in which the obligation was breached, its consequences, the circumstances in which the obligation was breached and the degree of fault, the gravity of breaching such obligation is negligible.
The amendment also determines the point at which the registering authority assesses the facts as part of the proceedings on qualified complaint, when the legal situation and factual circumstances at the time of initiation of the proceedings are decisive for the registering authority. In this situation, it seems fair for the court to rely on the facts at the time of the initiation of the proceedings on qualified complaint; the additional remedy of breaches or the supplementation of data should not lead to non-imposition of a sanction and discontinuing of the proceedings.
However, it remains that no remedies against decisions of the District Court in Žilina on fine imposition and deletion from the Register are admissible, which, in our opinion, constitutes a rather problematic legislation on the edge of constitutionality.
Introduction of disqualification from registration in the register
The amendment introduces that, at the same time a public sector partner is deleted from the Register by virtue of law, the public sector partner is prohibited from registering in the Register for two years from the effective and valid date of the registering authority’s decision on deletion. Under the current legislation, there is nothing to prevent a public sector partner who has breached its statutory obligations to re-register in the Register, even on the very day after the deletion.
The two-year prohibition on re-registration in the Register does not apply to voluntary deletions from the Register.
Introduction of joint and several liability of statutory body
The amendment to the RPSP Act introduces joint and several liability of the statutory body in case of breach of obligations under the RPSP Act.
The registering authority may currently impose a fine of up to EUR 100,000 on each member of the statutory body. Under the new legislation, when imposing a fine on statutory body members, the registering authority must ensure that the sum of all fines imposed on these members does not exceed the cap limit of EUR 100,000, e.g. if the company has 5 executive directors, the maximum aggregate amount of the fine that may be imposed by the registering authority will be EUR 100,000 and not EUR 500,000, as has been the case so far.
Also, statutory body members shall have joint and several liability for payment of the fine imposed on the statutory body, i.e. statutory body members are jointly and severally liable for payment of the fine.
Narrowing the circle of persons designated as “top management”
We consider a change in the definition of top management to be an extremely important contribution of the amendment. This change was made through an amendment to Act No. 297/2008 Coll., on the Prevention of Legalization of Proceeds of Criminal Activity and Terrorist Financing, known as the AML Act.
The amendment will narrow the circle of persons considered to be top management. Until the amendment to the RPSP Act was adopted, under Section 6a(2) of the AML Act, the top management meant “a statutory body, a statutory body member, a proxy holder, and an officer having direct management powers of the statutory body”; from the effective date of the amendment to the RPSP Act, only “statutory body or statutory body members” will be considered to be top management. Under the new legislation, in the case of registration of top management, only registration of the statutory body or members of the statutory body of a public sector partner is required.
The change was required by the application practice, as there were situations when several dozens of natural persons (as officers having direct management powers of the body) were registered in the Register.
The public sector partner is obliged to align the data on top management members registered in place of the BOs with the new wording of the RPSP Act no later than 29 February 2020.
(Non-)mandatory indication of permanent residence of the bos
Especially in foreign jurisdictions there are cases where the BOs, or data on their permanent residence, are classified or protected. Therefore, the amendment allows the indication of the registered office or place of business of a public sector partner instead of permanent residence of the BOs.
In such a case, it must be proven that there are objectively justified circumstances for which the indication of the address of a BO’s permanent residence could jeopardize the BO’s security or interfere with its personality protection rights or jeopardize the security or interfere with the personality rights of its close persons. The circumstances for which the authorised person has not indicated the address of the BO’s permanent residence shall be specified in an affidavit annexed to the registration application. The reasons specified in the affidavit will not be public.
Changes relating to securities issuers
In the case of issuers of securities admitted to trading on a regulated market that are subject to disclosure requirements, a practical simplification will apply to the registration of the BOs, in which only the statutory body and members of the statutory body of a public sector partner instead of the top management will be registered as the BOs. Instead of data on the permanent residence of a statutory body member, it is sufficient to indicate only the registered office or place of business of the public sector partner without having to prove justified circumstances for which the authorised person has not indicated the permanent residence address.
Time limits to align registration
Under the transitional provisions of the amendment, a public sector partner is obliged to ensure the reconciliation of data on top management members registered in place of the BOs no later than 29 February 2020. Within the same time limit, a natural person and a legal entity that are parties to a contract with the public sector concluded before 31 August 2019 and who meet the conditions for registration in the Register from 1 September 2019 are obliged to ensure their registration in the Register if the value of performance to be received by the public sector partner after 1 September 2019 exceeds the value of performance stipulated in the RPSP Act (i.e. EUR 100,000 / EUR 250,000).
Authors: Ondřej Majer, Ján Kapec, Patrícia Jamrišková
Published on: Lexology
Does copyright vest automatically in the creator, or must the creator register copyright to benefit from protection?
Under Czech law the copyright vests automatically in the creator. However, industrial rights, such as trademarks, patents or industrial designs, have to be registered in the relevant public register for their protection.
What is the duration of copyright protection?
Generally, the proprietary rights of the creator last for the lifetime of the creator plus 70 years after his or her death, while the moral rights terminate upon the death of the creator. However, there is an exception in the case of anonymous or pseudonymous copyrighted work, where the proprietary rights last 70 years from the time the work has been lawfully made public.
Can an artwork protected by copyright be exhibited in public without the copyright owner’s consent?
Generally, the exhibition of protected artwork is not possible without the owner’s consent (because it is one of the proprietary rights to the copyrighted work), but the borrower does not infringe the copyright by lending the original or a reproduction of a copyrighted artwork to a third party who exhibits the work or provides it for exhibition free of charge, unless such use was excluded during the transfer of ownership.
Can artworks protected by copyright be reproduced in printed and digital museum catalogues or in advertisements for exhibitions without the copyright owner’s consent?
Yes, according to the Copyright Act, the copyright will not be infringed if a visual image of it and a reference is included in the catalogue of an exhibition, auction or fair to the extent necessary for such an occasion; the owner’s consent is also not needed for using the visual image in the reproduction and dissemination of the catalogue. It is always necessary, however, to indicate the name of the author, unless the work is anonymous, or the name of the person under whom the copyrighted work is being introduced in public, along with the title of the copyrighted work and the source.
Are public artworks protected by copyright?
Yes, if the public artworks meet the definition of copyrighted work according to the Copyright Act, they are also protected by copyright. However, this copyright is not infringed by anybody who records, renders or expresses that copyrighted public artwork by drawing, painting, graphic art, photography or film, or by anybody who further uses it.
Does the artist’s resale right apply?
Yes, according to the relevant provision of the Copyright Act, where the original work of art (that has been transferred by its author to the ownership of another person) is subsequently sold for a purchase price of €1,500 or more, the author (or his or her heirs for the duration of the proprietary rights of the author) shall be entitled to royalties from any resale of the work as set out in the Annex to the Copyright Act, provided that a gallery operator, auctioneer or any other person who consistently deals in works of art takes part in the sale as a seller, purchaser or intermediary. The royalty ranges from 0.25 per cent to 4 per cent of the relevant part of the purchase price (depending on the amount of the purchase price), but the total amount of the royalty may not exceed €12,500.
The persons liable to pay the royalty shall be the seller and the dealer jointly and severally, who pay it to the relevant collective administrator, the Authors Copyright Protection Organisation – Association of authors of works of art, architecture and visual components of audiovisual works.
The right to royalties shall not apply to the first resale if the seller obtained the original work of art directly from the author less than three years before that resale and if the purchase price of the original work, when resold, does not exceed 250,000 Czech koruna.
What are the moral rights for visual artists? Can they be waived or assigned?
The artist (author) has the following moral rights provided by law, which cannot be waived, transferred or assigned to a third person:
All the moral rights last for the lifetime of the author, but after his or her death, no one may arrogate authorship of the copyrighted work. The copyrighted work may only be used in a way that shall not detract from its value, and the name of the author must be indicated (unless the copyrighted work is anonymous).
Authors: Tereza Ditrychová, Daniela Kozáková
Source: Lexology
