Czech cybersecurity laws impact foreign investment scrutiny

New cybersecurity regulations in the Czech Republic are creating unintended complexities for foreign investment. Companies classified under higher obligation regimes or those categorized as critical infrastructure are now subject to mandatory state screening for foreign investments.

According to Jiří Švejda, an attorney at Dentons, many firms are currently unaware that their cybersecurity status directly affects their ability to change ownership structures. Under the law, screening applies to foreign investors who acquire an effective level of control, which can be triggered by holding as little as 10 percent of voting rights.

Failure to comply with these regulations can result in significant sanctions, including the restriction of ownership or voting rights, or even a forced sale of shares. Experts recommend that companies incorporate foreign investment screening into their ongoing regulatory risk assessments rather than waiting for a specific investment offer.