MPs pass gov't version of bill regulating bearer shares

Prague, Feb 19 (CTK) - The Czech Chamber of Deputies Tuesday smoothly passed the government's bill that regulates bearer shares by binding firms to enter their bearer shares into a central depository or deposit them as bearer shares in paper form in a bank.

If the companies failed to do so, bearer shares would be changed into registered shares.

The bill was supported by 160 of the 162 deputies present. The remaining two deputies abstained from the vote.

The bill will be now discussed by the Senate, the upper house of parliament.

The Justice Ministry, which worked out the bill, said the entering of bearer shares into a central depository or their deposition in paper form in banks will enable their owners to be identified by the police, state attorneys and judges, and also by entities that place public orders and by subsidy providers.

In a preceding vote, the deputies rejected a controversial version of the bill submitted by budget committee chairman Pavel Suchanek (Civic Democrats, ODS), under which the already existing bearer shares could continue to exist but such shares should no longer be issued as from next year.

The firms bidding for public orders would have to announce their owners, Suchanek suggested.

His proposal was backed by 18 deputies for the senior ruling ODS. Earlier Tuesday, the ODS leadership voiced support for the government's version, which was finally supported by a majority of ODS deputies.

Prime Minister Petr Necas (ODS) said he is convinced that the government's bill is a step in the right direction though it is no miraculous solution.

"I think this path, which enables the preservation of this type of shares but clearly says where the information on them is deposited and which also enables access to it by the authorised institutions in case a suspicion of crime emerged, is an appropriate compromise," Necas told CTK.

The opposition Social Democrats (CSSD), nevertheless, say this is only a little step towards making companies transparent and that it will be difficult to identify the owners.

The law will be possible to circumvent. "If the owner wants to stay anonymous, he will found a firm in the Cayman Islands and the Czech law will not apply to him," said CSSD deputy Jan Chvojka.

Czech Economic Chamber President Petr Kuzel called the bill a reasonable compromise which is important for uncovering the structure of some joint stock companies mainly in connection with public procurement and subsidies.

However, it is not omnipotent. Other instruments must be used as well to enhance the transparency of spending public money, Kuzel said in a press statement.

Bearer shares are far from usual abroad. According to available information, they exist, besides the Czech Republic, only in the Marshall Islands and the Nauru island republic in the Pacific, the areas with 60,000 and 10,000 inhabitants, respectively.