Recalibration

Mon, 02/05/2016

Czech legislation is to adopt CSDR and provide for improved corporate actions information distribution. By Tomáš Vácha, Senior Relationship Manager, GSS Czech Republic
                                                                                                                                                                                                                       

The Senate in Prague approved amendments to the Capital Market Act that will further align local legislation with EU requirements.

The following changes will be introduced:

  • Transferring a pledged security without the consent of the pledgee will no longer be possible.
  • Keeping central, subsequent and independent records of securities in the Czech Republic will be possible to be done by foreign CSDs.
  • An entity keeping central records of securities, in terms of independent records (not only the CSD), will be able to keep records subsequent to securities records in a foreign country.
  • Issuers will have the right to issue their securities in CSDs that do not provide services in the Czech Republic.
  • The mandatory recording time for investments will be reduced from 12 to 10 years.
  • An obligation to inform entities keeping the central records of securities of any corporate action will be introduced for issuers of publicly traded financial instruments. The entity keeping the central records of securities must then make this information publicly available. This change will improve the rights of investors and will simplify the whole corporate actions information distribution process. It will also provide for a more efficient flow of information from the top of the investor chain down to the ultimate beneficial owners of securities. This amendment is in line with the so-called “Market Standards” that will signify a move towards practice common in other markets and an improvement, especially for foreign investors.