Shareholder Approval Needed For Price Proposals

From 1 August 2012, energy companies must obtain shareholder approval for their price proposals, including changes and supplements, before submitting them to the Office for Regulation of Network Industries for approval.

Under this change to the Commercial Code, power of approval may also be delegated to the company's statutory body, by a two-thirds qualified majority vote of all shareholders. This is an improvement on the laws in force between 2008 and 2011 and which did not allow competencies to be delegated by shareholders to the company's executive body.

The change applies to all companies and cooperatives whose prices are regulated under the Act on Regulation in Network Industries (Act no. 276/2001 Coll. as amended). It will mainly affect privatised energy companies in which the State retains a shareholding, and those companies whose shares are held in too diverse ownership to enable delegation of powers to the executive.