New Squeeze-Out Legislation

Originally published July 2005

On June 3 2005 Act 216/2005 on the squeeze-out of minority shareholders of joint stock companies took effect. This new law gives majority shareholders of Czech joint stock companies the option of squeezing out minority shareholders against payment of adequate monetary compensation. This will promote greater flexibility in the corporate life of the company as administratively demanding general meetings are no longer required. After a squeeze-out, minority shareholders are no longer able to jeopardize decisions of general meetings. Upon publication of the resolution of the general meeting, listed shares are delisted, eliminating the need to fulfil notification obligations towards the security exchanges and thus further reducing administrative costs.