The Bonds Act is published in the Collection of Laws
On December 11, 2018, the President of the Republic signed the approved bill, amending the Act No. 190/2004 Coll., on Bonds, as amended, and other related acts, approved by both Chambers of the Parliament of the Czech Republic. On December 20, 2018, the Bonds Act was published in the Collection of Laws under No. 307/2018 Coll. The amendment is effective from January 4, 2019.
The reason for submitting this proposal is to eliminate the shortcomings in the current legal framework of mortgage bonds (covered bonds) and to correct some other weaknesses in the bond law, which were highlighted by the practice. The current lower attractiveness and lower competitiveness of the Czech Republic in this area is related to the missing provisions or institutes that are common in other developed countries. This results in a negative assessment of the legal framework for mortgage bonds by credit rating agencies.
Missing institutes of existing bond law are, for example, a security agent, a block monitor, or a forced block administrator. New obligatory convertible bonds are also a new institution.
Another reason for submitting an amendment is the removal of the legal uncertainty of the current law on insolvency law, where insolvency proceedings are the subject of bankruptcy proceedings for mortgage bonds. The amendment asserts that covered bonds (mortgage bonds) are excluded from the assets of the issuer who is bankrupt and the automatic maturity of the bonds will not be triggered by the commencement of insolvency proceedings.
The proposed bill is not transposing, but it is a national legislative arrangement that already reflects to a large extent the European legislation harmonizing the legislation on covered bonds in the EU, which is currently under discussion in the European Council.
Ministry of Finance publishes translation of the Bond Act as amended (effective from January 4, 2019) into English.