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Agreement on Processing of Personal Data CZ / EN

EMISSION OF BONDS

  • Emission and issuance of corporate bonds

    Brief introduction to the topic

    This document generally summarizes the legal regulation of the process of emission and issuance of corporate bonds, including a brief definition of the necessary documentation and legal support for the implementation of the whole process. This document aims only to outline the overall extent and complexity of the services provided. This documents relates to the issuance and emission of corporate bonds in the private placement, which are not intended for trading on a regulated markets. This fact is crucial for the whole process, since in this case the issuance is not subject of the Czech National Bank supervision and approval by national bank. This document in any case does not aim to be a comprehensive legal analysis of emission of bonds and all the legal framework of associated process. The individual aspects mac vary depending on the specific requirements and specific needs of the client.

    1. Briefly to the emission of bonds

    A bond is a loan security representing a long-term commitment of the issuer (debtor) against the owner of the bond. Debtor issue these bonds to obtain the resources that needs for his activities. Whoever gets securities becomes its owner (investor) and for the time of holding of the bonds is entitled to receive payment of the declared interest and repayment of the nominal value of the bond at maturity.

    In accordance with the relevant provisions of the Act. no. 190/2004 Coll., On Bonds, as amended, the bond must contain at least the following elements to be issued:

    1.  the term “bond”, unless the mortgage bonds, treasury bills of the Czech National Bank;
    2.  an indication of the kind of bond that can be provided by reference to the conditions of issuance, unless it is a debt that is not associated with any particular law,
    3.  the issuer identifying information,
    4.  the nominal value as the due amount; It is not required if a collective bond, follows a nominal value which is written in the relevant register,
    5.  the yield of the bond, or an indication that the yield is determined by the difference between the nominal value of the bond and its lower issue price; or if it is clear that the bond is not revenue or where such information can be found,
    6.  date or moment of repayment (the “Maturity Date”), the amount owed (repayment of the bond)
    7.  information on the bondholder unless the bonds has been issued as book-entry securities or collective bond,
    8.  the signature of the issuer, unless the bond has been issued as book-entry securities or collective bond,
    9.  the bond number, unless the bond has been issued as book-entry securities or collective bond and the issue date.

    Issuance of bonds is provided by the issuer or an authorized person who obtain the issuance or will contractually commit itself to become the first acquirer of the issuance or a part, if the bonds may be issued within the period for subscriptions and stages (tranches).

    Since 2012 in the Czech Republic is not mandatory to obtain approval of the private bond issuance conditions by the Czech National Bank, the whole process became fundamentally simple. On the other hand in the case of the obligation to publish a prospectus (according to Act no. 256/2004 Coll., On Capital Market, the prospectus is the subject to the approval by the Czech National Bank. These are cases of public offerings of bonds as investment securities pursuant to the provision no. 34 of above mentioned Act.

    According to above mentioned provision the public offer of investment securities is any communication to a wider circle of persons containing information about securities offered and conditions for their acquire, which are sufficient for the investor to make a decision to purchase or subscribe those securities.

    Tis document does not focus on the issuance of corporate bonds, which will be not publicly offered or traded on regular markets.

    2. Estimated range of services

    Minimum of necessary legal acts

    1. consultation with the issuer (usually repeated personal meetings and consultations by means of communication at a distance);
    2. emission parameters setting;
    3. preparation of emission conditions in accordance with the Law on Bonds;
    4. preparation of wording (of paper) of bonds;
    5. legal advisory within the approval of emission of corporate issuer (analysis of corporate documents of the issuer and adjustment of the necessary internal processes – eg. to prepare the decisions of the Board of Directors, preparation of documents and implementation of the General Meeting, the Supervisory Board, etc.).
    6. preparation of contracts for subscribing;
    7. preparation of list of bondholders;
    8. adjustment of a method of offering and subscribing bonds to end investors;
      other optional services
    9. any attorney escrow of bonds when necessary;

    3. Related costs

    Expected related costs

    1. printing of bonds – assuming printing of bonds as securities with all the necessary security features to ensure the best possible protection against the risks of counterfeiting, as well as with regard to common standards in this area. Of course there are security features such as guilloche motif, iridescent transition, micro lettering. If interested, then the watermark. Cost of production of bonds may vary greatly depending on the amount of bonds, their colors and a number of protective elements.
    2. notarial deed (in the case of a decision of the General Meeting, or in the case of a notarial deed attesting to the fact that there is an issue and subscribing of bonds);
    3. any additional costs depending on individual needs and specific requirements of the client;

    4. Conclusion

    All information contained in this material is for informational purposes only and should not be regarded as legal advice, what in any case is not the purpose of this document.

    Information contained herein, as well as the opinions and views on the issue are solely the opinions of the authors of this material who are not responsible for their use by third party.

    If you would require legal advice or legal assessment do not hesitate to contact our law firm to assess the suitability of the described procedure for your individual needs, if necessary propose appropriate modifications or additions.

Contact
Tetragrammaton a.s.

Žitná 562/10
120 00 Praha 2 – Nové Město

+420 777 025 554
+420 777 775 524

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Agreement on Processing of Personal Data CZ / EN