Proposed New Financial Assistance Rules

Proposals are being debated by the Czech Parliament to allow companies to provide financial assistance for the acquisition of their own shares in certain circumstances.

Although the final version is likely to change, the key elements of the current proposals are:

• a joint stock or limited liability company would be able to make payments (including advances, loans and credit) or provide security for the acquisition of its shares as long as, in general terms, it is done in normal market conditions and does not directly result in the company's insolvency
• any financial assistance provided must not decrease the company's equity below the sum of its registered capital and undistributable funds