Disclosure of contracts in the central register

26.02.2016

In July 2016, the Act on the Central Register of Contracts will very likely take effect in the Czech Republic. The Act has been under preparation for a long time and immensely debated. Written private-law contracts and agreements on granting subsidies or repayable financial assistance, whose party is any of the public-law entities listed in the Act (the State, regions and municipalities, Government-funded organisations, the State Fund, any public university, state or national enterprise, health-insurance company, etc.), must be published in the central register of contracts that is accessible on-line.

There are certain exceptions to that disclosure obligation: e.g. contracts with a value of performance (without VAT) lower than CZK 50,000, contracts where the supply is made prevailingly outside the Czech Republic, and some others. Furthermore, the disclosure obligation does not apply to contracts entered into with a natural person not engaged in business (unless they involve a transfer of title to immovable assets), to technical patterns, instructions and project documentation, to contracts concluded on a commodity exchange, on a regulated market or at auction. An exception is made also for contracts involving a joint-stock company in which a majority stake is held by the State and shares are listed on a regulated market (this exception is likely to address the energy giant, ČEZ) and contracts among health insurers and health care/medical facilities (these are already published under the Act on Public Health Insurance).

There is a ban on publishing certain information that may not be disclosed using the procedure set out in the Act on Free Access to Information (i.e. classified information, personal data, trade secrets, information forming a subject matter of industrial property right and copyright, etc.). Such information must be deleted from the contract before the contract is published.

Contracts must be published by any of their parties as a text (in order to enable full-text search) and with all stipulated formalities, without undue delay, but no later than 30 days after their conclusion.

The effectiveness of contracts that are subject to the disclosure obligation and that will be entered into after 1 July 2017 will be deferred for so long until the relevant contract is published. All contracts that are to be mandatorily published, except for contracts concluded to avert or mitigate imminent harm in connection with an extraordinary event, will not become effective before the moment they are published (the parties can agree on a later date). If the contract is not published within 3 months of its conclusion, it will automatically become null.

In our opinion, the Act on the Central Register of Contracts cannot be viewed as a perfect legislative act. However, although certain provisions of the Act are controversial and unclear, many people believe that its enactment is a step forward on the path towards greater transparency of the Czech public administration and public funds management.