The companies have to register information on its beneficial owners, including the reasons why a particular person is considered a beneficial owner, in the special Register of Beneficial Owners. The register will not be made public but will only be available to legally stated persons / state bodies, usually in connection with their duties under the Act. No 253/2008 Coll. on some measures against money laundering and terrorist financing (“AML Act”). Companies are obliged to register their beneficial owner(s) and underlying reasoning by 1 January 2019 at the latest.

 

Who is beneficial owner

Under the Article no. 4 (4) of the AML Act the beneficial owner of a legal entity is considered a “natural person having the factual or legal ability to directly or indirectly exercise a decisive influence on the legal entity“.

The beneficial owner of business corporations is considered a natural person who meets the abovementioned condition and who:

  1. alone or together with other persons acting in concert with that person has more than 25% of the voting rights in the company or holds more than a 25% share in its registered capital;
  2. alone or together with other persons acting in concert with him controls the person stated in point 1;
  3. is the beneficiary of at least 25% of the company’s income; or
  4. is a member of the statutory body, the representative of the legal entity appointed as a statutory body, in cases where there is no beneficial owner or if it is not possible to determine the beneficial owner based on points 1-3.

 

Sanctions for non-compliance

The Register of Beneficial Owners is not considered a public register, i.e. there are no standard direct sanctions in case the Company does not fulfil its duty to register its beneficial owner(s).

Nevertheless, other negative consequences under other Acts could be applicable, e.g under the Act on Public Procurement or Insolvency Act, AML Act, as well as the general liability of directors for the caused damage under the Business Corporations Act

 

How to register

For the registration, the following documents will be usually required:

  • documents evidencing position of the beneficial owner, in other words documents evidencing why a particular person is considered a beneficial owner; and
  • documents evidencing an identity (existence) of the beneficial owner (in case the beneficial owner is not registered in the Czech Registry of inhabitants).

 

For more information, please contact Jiří Absolon or your contact person in our office.

This article is for informational purposes only and does not provide legal advice on any subject matter.