Business briefs

Some 25 companies announce intentions to opt for 'squeeze out' buy of minority shareholder stakes; Hotels, language schools exempted from 19pct VAT; MPs look to prevent supermarkets from 'dumping' sales items; Finance Minister Bohuslav Sobotka submits 2006 budget... acknowledges failure to meet 19 of the EU 'convergence' targets; CzechInvest mid-year report: 70 deals worth 25bn mediated by the agency

Some 25 companies announce intentions to opt for 'squeeze out' buy of minority shareholder stakes

This was a slow week for business news, as Tuesday and Wednesday were state holidays. Most action this week came in reaction to legislation considered in Parliament last week. On Friday deputies approved an amendment to the "squeeze-out" provision of the commercial code that allows owners of 90 percent or more of stock in a company to force small shareholders to sell their stakes. The amendment aims at ensuring that small shareholders get a "fair" price for their shares. Some 25 companies have since called extraordinary general shareholders meetings to decide on how to proceed. Among them is the power utility CEZ, which has announced plans to spend 500 million crowns buying out minority stakes in four power distributor companies.

Hotels, language schools exempted from 19pct VAT

Last week, the lower house of Parliament also voted to grant hotels and language schools an indefinite exemption to the 19 percent VAT rate; if singed into law by the president, they will continue to pay 5 percent VAT. However, tighter controls were announced for bars and restaurants this week. They will be required to submit inventory lists to the customs office of all hard alcohols by the end of this month. All new purchases must have the appropriate stamps.

MPs look to prevent supermarkets from 'dumping' sales items

Photo: archive of ČRo 7 - Radio Prague

Deputies are now looking to prevent supermarkets from "dumping" - putting certain items like beer or soda water on sale at below production cost in order to attract customers. Suppliers had complained that they were being pressured to sell to the supermarkets at a loss. The amendment has yet to be approved by the Senate and retailers are expected to lobby against it.

Finance Minister Bohuslav Sobotka submits 2006 budget...

Finance Minister Bohuslav Sobotka

In other news, Finance Minister Bohuslav Sobotka has submitted a long-awaited 2006 budget proposal to the Cabinet that projects a deficit of 76.4 billion crowns, or roughly $3 billion. The draft budget's spending level of 923 billion crowns is above the cap agreed with the European Union as part of the convergence programme, by 8 billion crowns. It also does not include a projected 15 billion crown drop in tax revenue, should the government's new rates for personal income tax come into effect.

... acknowledges failure to meet 19 of the EU 'convergence' targets

Finance Minister Sobotka, however, has said the overall deficit would be less than 3.8 percent of GDP, which is within the Czech Republic's EU convergence commitment. But he acknowledged that the convergence programme is not being met in some 19 budget areas. For example, whereas the number of state workers was to be reduced by 2.5 percent this year, their ranks actually grew by 2 percent.

CzechInvest mid-year report: 70 deals worth 25bn mediated by the agency

Meanwhile, the government agency CzechInvest said in a mid-year report that it had mediated 70 new domestic and foreign investment projects in the first half of 2005. The investments were worth nearly 25 billion crowns and could eventually create up to 8,000 new jobs, said a CzechInvest spokeswoman. The investments went mainly into the automobile and electronics industries, as well into chemical and plastics industries.