Venture capital: Investor nomination and information rights: dos and don'ts

The Legal Industry Reviews: Czech Republic Edition 5 (October 2024) provides an in-depth analysis of the Czech legal market. It covers trends, significant law firms, key legal professionals and major legal developments. The edition discusses the evolving legal landscape, regulatory changes and their implications for businesses and legal practices.

The article written by Schoenherr expert Michal Jendželovský examines investor considerations when nominating representatives to a company's board, especially in the context of Czech corporate governance. Investors in limited liability companies have broader access to business information than in joint stock companies, where shareholders' rights are more restricted by law. In Czech law, there are no true non-executive board members, and the two-tier governance system (statutory and supervisory boards) can add complexity without necessarily offering significant benefits. Investors often appoint nominees to supervisory boards for oversight but must weigh whether this role provides adequate influence, as the nominee's ability to enforce information rights is limited. Investors may instead seek contractual arrangements to safeguard their interests.

The article was first published on LIR Czech Republic.