From 29th September 2005, new rules on financial collateral arrangements were introduced for professional financial market participants, bringing the Czech Republic into line with EU law.
The new rules apply to public bodies, financial market authorities (i.e. Czech National Bank), financial institutions subject to prudential supervision, central counterparties, settlement agents or clearing houses and legal entities (listed in the Czech Commercial Code) acting in a trust or representative capacity.
There are mandatory provisions regulating the following types of security and deposit:
- pledges over a financial instrument
- pledges over a receivable from deposit
- security transfers of a financial instrument
- security transfers of monies
There are special rules facilitating the realization of such collateral. These should offer relatively simple and reliable methods of collateralisation. The creditor is entitled to retain or to sell the security or deposit, notwithstanding any legal provisions to limit the sale of the pledge assets at auction or compulsory auction ordered by a court.
Law: EU Directive 2002/47/EC
For more information, please contact Kamila Rouckova at kamila.rouckova@cms-cmck.com or on +420 221 098 869
