The Act No. 204/2019 Coll., implementing the SD II has been published in the Collection of Laws of the Czech Republic on 22 August 2019.
Act amending certain laws in connection with facilitation of exercise of shareholder rights. (In Czech: "Zákon, kterým se mění některé zákony v souvislosti s podporou výkonu práv akcionářů").
The Act became effective on 1 October 2019.
Due to the implementation of SD II the following laws have been amended: Act No. 256/2004 Coll., on Capital Market Business, Act No. 15/1998 Coll., on Supervision in the Capital Market Area and Act No. 104/2008 Coll., on takeover bids.
The changes became effective on 1 October 2019.
Ivan Sagál and Martina Kopcová
The scope of the rules on shareholder identification is limited and will only become relevant for issuing institutions domiciled in the European Union whose shares or similar securities are admitted to trading on a regulated market in the European Union.
The person maintaining a register of financial instruments provides the issuing institution upon its previous request with information about the holder of the owner’s account providing that on such account are evidenced shares issued by the issuing institution. If the account is maintained as the client’s account the request for information is transmitted to holder of the clients’ account (i.e. to intermediary).
The information provided to issuing institutions includes: identification of account's owner (mainly its name, ID, address), number of shares, class of shares etc.
Finally, the issuing institutions provide the shareholder with confirmation on whether and how the shareholder's vote exercised during the general meeting was recorded and counted.
The Act regulates the obligation of institutional investors (e.g. insurance and reinsurance undertakings) and the asset managers to develop and publicly disclose a policy on shareholder engagement.
If the obliged entities decide not to do so, they must disclose sufficient explanation of such decision.
In addition, institutional investors publish on their website main aspects of their investment strategy. If the institutional investors use services of asset managers the institutional investors are obliged to disclose some information regarding their arrangement with the asset manager on their website as well.
Furthermore, the proxy advisors are required to disclose certain information concerning the preparation of their research, advice and voting recommendations. Such information should remain publicly available for a period of at least three years.
Finally, the proxy advisors are also obliged to disclose a link to their codes of conduct or explanation why they do not follow any such code of conduct.
The issuing institutions are obliged to establish a remuneration policy. The policy is submitted to general meeting for approval in case of any significant modification or at least every four years.
The issuing institution may temporarily derogate from the remuneration policy rules if it is necessary due to the long-term interests and sustainability of the issuing institution or for business continuity of its enterprise providing that the policy contains rules for provisional derogation as well as a list of rules that can be derogated.
The issuing institution draws up a remuneration report, providing a comprehensive overview of the remuneration, including all benefits in whatever form, awarded or due during the most recent financial year.
The Act regulates significant transactions with related parties that will be subject to approval of the general meeting and will also be published on the company's website.