PRAGUE (Reuters) - The Czech Republic's lower house of parliament gave initial approval to a bill containing a proposal on company splits, that critics say is unfair to minority investors and will allow the government to easily break up dominant electric utility CEZ.
Most of the bill, which implements a European Union directive on company law, is uncontested, but the provision on splits has drawn criticism from investors and legal experts.
The provision reduces the majority of votes needed to split publicly listed companies in a way that pushes out minority shareholders from one of the successor firms.
Despite the initial approval of the bill late on Tuesday, the future of the contested provision remained uncertain.
Deputy Karel Haas from the ruling Civic Democrats, who was in charge of introducing the bill, signalled possible changes.
"Out of 315 provisions, 314 are non-problematic and it is fair from me to mention that there is one point for further discussion," Hass told the lower house, according to a transcript of the debate.
The proposed change would lower the majority required to split a firm to 75% of votes at a general meeting with at least 67% of shareholders present - effectively as little as just over 50% of all shareholders -- in cases where investors in the parent company do not get an equal holding in the divided parts.
Critics have said such splits should be treated as squeeze-out of minorities, for which 90% of all shareholders, not just those present, is required.
"This is an uncompromising, hard, unscrupulous step by which you will deal a blow to minority shareholders," said former Industry Minister Karel Havlicek from the main opposition ANO party. "Try to rework this and give it different parameters, or throw it out."
The government has denied the provision is linked to its plans for CEZ, the country's biggest listed firm with a market capitalisation of $23 billion, in which it has a 70% stake.
It said last year amid Europe's energy crisis it intended to take full control of its main power production facilities, but has not presented any concrete plan. A split or takeover of CEZ are possible scenarios.
CEZ shares slumped by more than 7% after the bill was approved by the cabinet in May, and have since underperformed the market.
($1 = 22.1620 Czech crowns)