Czech LEX COVID-19 overview

By Ivan Sagál, Lubomir Brecka, Martina Kopcová, Michaela Hermanová, Gabriela Skvareková

04-2020

The Czech Government has prepared several measures that should help people and businesses in the challenging times related to the outbreak of COVID-19. These measures are currently divided into several draft laws, covering topics such as insolvency, loans, leases, employment, and court proceedings. We have chosen relevant fields briefly described below and we will provide more detailed information about these relevant fields once the final laws are passed by the Parliament (which should be shortly due to the state of legislative emergency).

Court proceedings, enforcement proceedings, insolvency, and corporate governance (click here)

The legislative proposal contains specific provisions about the following areas:

  • potential remission of procedural deadlines missed by the parties due to the COVID-19 related government measures in proceedings before the Constitutional Court, civil, administrative, and criminal courts, in enforcement and insolvency proceedings;

  • insolvency: e.g. exemption from the statutory duty to file debtor's insolvency petition (under certain conditions), disregard of creditors' insolvency petitions filed until 31 August 2020, specific measures related to fulfilment of reorganisation plans, new extraordinary moratorium;

  • corporate governance: remote decision-making of corporate bodies, extension of the term of office of members of appointed corporate bodies;

  • extension of deadline for the discussion/approval of the annual Financial Statements of limited liability companies, joint-stock companies, and cooperatives;

  • termination of long-lasting unsuccessful enforcement proceedings under certain conditions.
Proposed changes related to loans repayment
  • One legislative proposal introduces a debtor's right to benefit from the so-called "protection period" (until 31 October 2020 or 31 July 2020), during which repayment of already concluded loans will be postponed. The aim is to prevent defaults and related consequences for the debtors such as sanctions, negative records in the debtors' registers and the related creditworthiness.

  • A separate legislative proposal relates to consumer loans and introduces new protective limitations regarding payments which the provider may require from a consumer loan in case of a certain default situation and extension of some protective statutory rules to non-consumers (natural persons entrepreneurs).
Employment (click here)

In addition to the widely discussed and covered Antivirus program that should help employers with salaries compensation, the Labour Ministry has also proposed that the employers will not have to submit a confirmation of debtlessness when applying for support within Antivirus (which does not mean that they will
be exempted from their payment obligations). Separately, people should be able to register to the Labour Office online or at any Labour Office.

Commercial leases (click here)

The legislative proposal primarily stipulates that during the "protection period" (until 31 March 2022), the landlord cannot unilaterally terminate the lease solely on the ground of the lessee's default with rent/services payments, provided that the default occurred (i) in the "relevant period" (from 12 March 2020 until 30 June 2020), and (ii) mainly due to the constraints arising from extraordinary measures during epidemics (as defined in the act), which had made it impossible or materially difficult to operate business. The landlord's right to terminate on other grounds and other landlord's rights related to lessee's default are not affected. Similarly, potential other rights of the landlord connected with the default of the lessee such as a right to claim contractual penalty or default interest are not affected.

Non-commercial leases (click here)

Under this legislative proposal, during the "protection period" (until 31 May 2021), the landlord cannot unilaterally terminate the lease solely on the ground of the lessee's default with rent payments, provided that the default occurred (i) in the "relevant period" (from 12 March 2020 until the end of the extraordinary measures during epidemics (as defined in the act) but 30 September 2020 at the latest), and (ii) mainly due to the constraints arising from extraordinary measures during epidemics, which had made it impossible or materially difficult to pay the rent. The landlord's right to terminate on other grounds and other landlord's rights related to lessee's default are not affected.

New obligations for digital platforms in tourism (click here)

Pursuant to the legislative proposal, digital platforms operators that intermediate contacts for the purpose of conclusion of a contract on tourism service (between the provider and the customer), will be obliged to provide certain information (incl. number of concluded contracts, prices, address and provider of the service), to the competent Trade Licensing Office upon its request.

Compensation bonus for self-employed persons (click here)

Under the current wording of the legislative proposal, self-employed persons will receive CZK 500 for each day of the "bonus period" (from 12 March 2020 until 30 April 2020) if they fulfil specific conditions. According to publicly available information, this proposal should be further amended to ease the conditions for the compensation bonus.

Last reviewed: 07 April 2020