An amendment to the Investment Companies and Investment Funds Act (ICAIF) passed in its second reading and introduces a major change to common fund transformations. It should allow a new type of transformation.

Until now, the transfer of assets from a project company to a common fund, which owned 100% of its shares, has been highly problematic. In practice, the merger of a management investment company with a project company on behalf of a common fund has encountered significant legal hurdles. The law did not allow for transformations other than those permitted by the ICAIF, and the Czech National Bank itself concluded in its opinion that such a merger entailed considerable risk.

The amendment should allow the transfer of the project company's assets into a common fund if the common fund is its sole shareholder. The transfer could be permitted either by the shareholders' meeting or by the statutory body of the management company acting as the general meeting of the dissolving company, subject to the prior opinion of the depositary.

Author: Lukáš Tománek

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