Commission Report (2002): Czech Republic

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 5: Company law

Progress since the last Regular Report

Since the last Regular Report, the Czech Republic has continued to make progress in the implementation and enforcement of the acquis in this chapter, in particular within the framework of the ongoing overall judicial reform.

As regards company law as such, no significant developments can be reported.

In the area of accounting, an amendment to the Accountancy Act, which aims to align Czech accounting legislation with the acquis, was approved in September 2001 and entered into force in January 2002. The Act introduces the obligatory use of International Accounting Standards for the consolidated accounts of listed companies, and introduces fair value accounting for certain financial instruments.

In the field of industrial and intellectual property protection, the Czech Republic acceded to the European Patent Convention in July 2002. A new Act on Protection of Geographical Indications and Designations of Origin was adopted in November 2001 and entered into force in April 2002. The Czech Republic deposited its instrument of accession to both the WIPO Copyright Treaty and WIPO Performance and Phonograms Treaty in October 2001.

Further progress has been made in the criminal enforcement of intellectual and industrial property rights (IPR) with the entry into force in January 2002 of the amended Criminal Proceedings Code, which streamlines the investigation and prosecution of IPR crime, by inter alia shortening the preparatory proceedings, merging the role of investigators and police into one service, strengthening the role of the public prosecutor and greatly reducing the possibility of appeal courts returning cases to lower courts.

In September 2002 a significant amendment to the Act on Measures Concerning Import, Export and Re-Export of Goods Violating some Intellectual Property Rights entered into force. The amendment is aimed at ensuring full alignment with the acquis on measures prohibiting the release for free circulation, export, re-export or entry of counterfeit and pirated goods, and strengthens the powers of customs offices to decide in unambiguous cases whether goods are to be released for free circulation or confiscated and destroyed.

In 2001, there was a total number of 80 cases involving seizure of goods infringing copyrights and trademarks, for a value of over CZK 97 million (EUR 2.85 million ). In the year 2000, the number of cases was 67.

As regards the Regulation replacing the Brussels Convention on jurisdiction and enforcement of judgements in civil and commercial matters and the Rome Convention on the law applicable to contractual obligations, preparatory work is now underway to ensure that the Regulation is implemented swiftly.

Overall assessment

As regards accounting, national accounting legislation needs to include requirements additional to IAS to ensure full compliance with the acquis, e.g. disclosure requirements on the number of staff, the emoluments and advances to ``Directors`, the inclusion of the profit and loss account of parent companies in the consolidated accounts as well as audit and publication requirements.

Further efforts are needed to improve the overall business environment, in particular through the more efficient operation of the company register and more effective enforcement of judgements by the commercial judiciary.

Concerning the intellectual property acquis, some further alignment with the EC copyright Directive is required as regards provisions relating to technological measures, rights management information. Also the resale rights Directive remains to be transposed.

With regard to intellectual property rights enforcement, the high levels of software and music piracy which, according to the private sector, are respectively at 43% and 48%, remain a source of concern. Enhancement of the administrative capacity of enforcement bodies, including controls against cross border trade of pirated and counterfeited goods and better co-ordination among enforcement bodies, must remain a matter of priority.

Conclusion

In its 1997 Opinion, the Commission concluded that there should be no major difficulties in bringing Czech legislation fully in line with EC legislation in the medium term in the fields of company law and accounting, and that further efforts were required in the area of intellectual property protection.

Since then, the Czech Republic has made steady progress in aligning with the acquis in this area, particularly as regards transposition in the field of industrial and intellectual property rights. Gradual progress has also been made with regard to strengthening administrative capacity. Overall, a high degree of compatibility with the acquis has been achieved and administrative capacity is generally satisfactory.

Negotiations on this chapter have been provisionally closed. The Czech Republic has not requested any transitional arrangements in this area and has agreed to the proposal put forward by the EU relating to industrial property rights and Community Trademark. The Czech Republic is generally meeting the commitments it has made in the accession negotiations in this field.

In order to complete preparations for accession, the Czech Republic's efforts now need to focus on ensuring full alignment with the acquis along the lines set out above, intensifying measures to combat piracy and counterfeiting, strengthening border controls and, more broadly, further improving co-ordination between enforcement bodies (customs, police, judiciary).

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