Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Institutional Determinants of Private Equity Market in Czech Republic
Issue: Vol. 10, No 4, 2017
Published date: 12-2017 (print) / 12-2017 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Martina Skalická Dušátková
Brno University of Technology

Marek Zinecker
Brno University of Technology

Tomáš Meluzín
Brno University of Technology
Keywords: institutional economics, private equity, venture capital, tax and legal environment, private equity fund structures
DOI: 10.14254/2071-789X.2017/10-4/7
Index PUBMS: 784f0fd2-f8f9-11e7-94c4-fa163e5d4f72
Language: English
Pages: 83-98 (16)
JEL classification: B25, G24, K23

A well-functioning private equity and venture capital market is affected by a range of institutional aspects. This study intends to answer the question on what is the current tax and legal environment for private equity and venture capital investments in Czech Republic as previous studies have emphasized that a rather poor scope of resources available. Qualitative data with content analysis proved to be the best way to assess the institutional framework. Data collection methods cover a comparative analysis of scientific literature documents and reports, as well as primary data from interviews with experts in the industry. The results of both secondary and primary data analysis were categorized and serious gaps in the institutional framework were identified and discussed. Our results indicate that the issue of legal and organisational structure suitable for private equity and venture capital funds may be resolved through a national equivalent to a Limited Partnership which has already been adopted into Czech law. However, a tax handicap was identified implying that it is necessary to amend the tax legislation so that the legal regulation extends the tax exemption. Another amendment should then be directed towards eliminating or mitigating the barriers imposed on pension. We believe that our findings provide valuable implications for the government, banks, stock exchanges and venture capital industry while formulating new strategies how to increase the level of investments in this specific environment of Czech Republic.


1. Act No. 458/2011 Coll. (2011). In Collection of Laws of the Czech Republic.

2. Act No. 125/2016 Coll. (2016). In Collection of Laws of the Czech Republic.

3. Act No. 148/2016 Coll. (2016). In Collection of Laws of the Czech Republic.

4. Act on Income Taxes, No. 586/1992 Coll. (1992). In Collection of Laws of the Czech Republic.

5. Act on Investment Companies and Investment Funds, No. 240/2013 Coll. (2013). In: Collection of Laws of the Czech Republic.

6. Act on State-Contributory Supplementary Pension Insurance, No. 42/1994 Coll. (1994). In: Collection of Laws of the Czech Republic.

7. Act on Supplementary Pension Savings, No. 427/2011 Coll. (2011). In: Collection of Laws of the Czech Republic.

8. Ahlstrom, D., Bruton, G. D. (2006). Venture Capital in Emerging Economies: Networks and Institutional Change. Entrepreneurship Theory and Practice, 30(2), 299-320. DOI: 10.1111/j.1540-6520.2006.00122.x.

9. Balcerzak, A. P., Pietrzak, M. B. (2016). Quality of Institutions for Knowledge-based Economy within New Institutional Economics Framework. Multiple Criteria Decision Analysis for European Countries in the Years 2000-2013. Economics and Sociology, 9(4), 6

10. Bancel, F., Mittoo, U. R. (2009). Why Do European Firms Go Public? European Financial Management, 15(4), 844-884. 10.1111/j.1468-036X.2009.00501.x

11. Benchmarking European and Legal Environments (2008). Brussels: EVCA.

12. Boyde, E. (2013). Pension Funds Forward on Alternative Route. Financial Times, July 7, 2013. Retrieved from (2017-03-05).

13. Bruton, G. D., Ahlstrom, D., Li, H. L. (2010). Institutional Theory and Entrepreneur-ship: Where are we now and where do we need to move in the future? Entrepreneurship Theory and Practice, 34(3), 421-440. DOI: 10.1111/j.1540-6520.2010.00390.x.

14. Caselli, S. (2009). Private Equity and Venture Capital in Europe. Oxford: Academic Press.

15. Cichy, J., & Gradoń, W. (2016). Innovative economy, and the activity of financial market institutions. Case of Poland. Journal of International Studies, 9(1), 156-166.

16. Council Directive 2011/96/EU of 30 November 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (2011).

17. Cumming, D. J. (2010). Private Equity: Fund Types, Risks and Returns, and Regulation. New Jersey: John Wiley and Sons.

18. Cumming, D. J., Johan, S. A. (2013). Venture Capital and Private Equity Contracting. An International Perspective. Elsevier Insights.

19. Czech Association of Pension Companies. Statistics (2017). Retrieved from (2017-03-05).

20. Czech Private Equity & Venture Capital Association. Comments on the technical amendment (2015). Retrieved from (2017-03-05).

21. Czech Private Equity & Venture Capital Association statistics (n. d.). Retrieved from (2017-03-05).

22. Delibasic, M. (2016). Hypothetical Matrix for Institutional Modeling of the Basis for Economic Development in the Countries of Southeast Europe. Montenegrin Journal of Economics, 12(2), pp. 147-159.

23. Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (2009).

24. Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (2011).

25. Explanatory memorandum of amending law (2013). Parliamentary Press 1004/0. Chamber od Deputies Parliament of the Czech Republic. Retrieved from (2017-03-05).

26. Explanatory memorandum of amending law (2014). Ministry of Finance of the Czech Re-public. Retrieved from (2017-03-05).

27. Explanatory memorandum of the Act on Investment Companies and Investment Funds (2013). Retrieved from (2017-03-05).

28. Explanatory memorandum of Act No. 148/2016 Coll. (2016). Retrieved from (2017-03-05).

29. European Commission (2016). Capital Markets Union: new rules to support investment in venture capital and social enterprises. Press release. Retrieved from (2017-03-05).

30. European Private Equity & Venture Capital Association (EVCA) (2015). Central and Eastern Europe Statistics 2014. Brussels. Retrieved from (2017-03-05).

31. Gloden, A., Jud, T., Peneder, M. (2006). Endbericht: Empirische Untersuchungen und Ergebnisse zur Wirkung von Private Equity und Venture Capital auf die Unternehmensentwicklung. Wien: AVCO – Austrian Private Equity and Venture Capital Organisation.

32. Gregoriou, G. N., Kooli, M., Kraeussi, R. (2011). Venture Capital in Europe. Butter-Worth-Heinemann.

33. Gollay, I. N., Gollay, A. V., Shindina, T. A., Salimonenko, E. N., & Chuvashova, A. D. (2016). Priority areas of analysis of the external environment of a company-innovator depending on a type of introduced innovations. Polish Journal of Management Studie

34. Hsieh, H. F., Shannon, S. E. (2005). Three approaches to qualitative content analysis. Qualitative Health Research, 15, 1277-1288. DOI:

35. Invest Europe (2017). Retrieved from (2017-03-05).

36. Invest Europe (2016a). Central and Eastern European Private Equity Statistics 2015. Retrieved from (2017-03-05).

37. Invest Europe (2016b). European Private Equity Activity 2015. Statistics on Fundraising, Investments & Divestments. Retrieved from (2017-03-05).

38. Jenkinson, T. (2008). The development and performance of European private equity. Ideas Working Paper Series From Repec. Retrieved from (2017-03-05).

39. Khort, J. (2015). Regulation of Pension Fund Investment Allocations in Private Equity: Analysis of the IORP Directive of 2003/41/EC Reform. Retrieved from (2017-03-05).

40. Kuder, D. (2015). Impact of institutional factors on economic growth in the United States in the years 1979-2007. Oeconomia Copernicana, 6(1), 137-159. DOI:10.12775/OeC.2015.008.

41. Lahti, T. (2008). Angel Investing in Finland: An Analysis Based on Agency Theory and the Incomplete Conctracting Theory. Helsinky: Hanken School of Economics, Department of Management and Organisation.

42. Lerner, J., Tåg, J. (2013). Institutions and venture capital. Industrial and Corporate Change, 22(1), 153-182. DOI:

43. Li, Y., Zahra, S. A. (2012). Formal Institutions, culture, and Venture Capital Activity: A Cross-Country Analysis. Journal of Business Venturing, 27(1), 95-111. DOI:

44. Lizińska, W., Marks-Bielska, R., Babuchowska, K., Wojarska, M. (2016). Institutional Efficiency of Local Government in Issuing Administrative Decisions, Exemplified by the Performance of the Government Appeal Board in Olsztyn. Oecnomia Copernicana, 7(2),

45. Mason, C. M., Harrison, R. T. (2004). Improving access to early stage venture capital in regional economies: a new approach to investment readiness. Local Economy, 19(2), 159-173. DOI:

46. Meluzín, T., & Zinecker, M. (2016). Trends in IPOs: The Evidence from CEE Capital Markets. Equilibrium. Quarterly Journal of Economics and Economic Policy, 11(2), pp. 237-341. Doi: 10.12775/EQUIL.2016.015.

47. Metrick, A. & Yasuda, A. (2010). The Economics of Private Equity Funds. Review of Fi-nancial Studies, 23(6), 2303-2341. DOI:

48. Moldavska, A., Welo, T. The concept of sustainable manufacturing and its definitions: A content-analysis based literature review. Journal of Cleaner Production, 166, 744-755. DOI:

49. Pazour, M., David, M. (2011). Fondy rizikového kapitálu s účastí soukromých a veřejných finančních prostředků. Retrieved from (2017-03-05).

50. Peneder, M., Schwarz, G., Jud, T. (2004). Endbericht: Der Einfluss von Private Equity (PE) und Venture Capital (VC) auf Wachstum und Innovationsleistung österreichischer Unternehmen. Wien: AVCO – Austrian Private Equity and Venture Capital Organisation.

51. Private Equity Fund Structures in Europe. Brussels: EVCA, 2006.

52. Private Equity Fund Structures in Europe. Brussels: EVCA, 2010.

53. Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (2013).

54. Strelnik, M. (2016). Corporate restructuring as a risk treatment method. Business: Theory and Practice, 17(3), 225-233.

55. Wills Towers Watson (2013). Global Pension Assets Study. Retrieved from (2017-03-05).

56. Woźniak-Jęchorek, B. (2016). Institutional Determinants of Regional Diversity of Labor Market in Poland. Equilibrium. Quarterly Journal of Economics and Economic Policy, 10(1), 129-151. DOI:

57. Zinecker, M. (2011). Private Equity and Venture Capital: Investment Fund Structures in the Czech Republic. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 59(7), 541-552. DOI: