Since when can you register your beneficial owner in the Czech Republic?
As of 1 January 2018, a new central Register of Beneficial Owners ("Register") was established in the Czech Republic in line with the obligations imposed on EU Member States under the Fourth Anti-Money Laundering Directive. The Register is maintained by registration courts in the Czech Republic.
Legal entities and trustees are also legally obliged to keep up-to-date records of beneficial owners, and details for verification of their identity, including the basis of beneficial ownership of such persons. Details for identification of beneficial owners must be kept as long as a person is a beneficial owner, and 10 years after termination of such relationship.
Who is a beneficial owner?
A beneficial owner is a natural person who ultimately owns or controls an entity. This is understood as a person who can exercise a decisive influence legally or in fact, directly or indirectly, over a legal entity or a trust fund (or another type of legal arrangement without a legal capacity).
In the case of companies, it is assumed that, inter alia, a beneficial owner is a natural person who exercises more than 25% of the voting rights, or whose stake in the share capital exceeds 25% (individually or jointly with others acting in concert), or a person who receives at least 25% of profits. If there is no beneficial owner (e.g. in case of listed companies and companies with a dispersed ownership structure), or if he/she cannot be determined pursuant to the statutory rules, a member of the company's statutory body should be registered as the beneficial owner in the Register.
In the case of foundations and trust funds, it is assumed that a beneficial owner is a natural person, or a beneficial owner of a legal entity, in the position of, inter alia, founder, trustee or beneficiary.
What details about beneficial owners does the Register contain?
The Register contains the following details about beneficial owners:
How to register a beneficial owner and when?
It is only possible to register a beneficial owner via an interactive electronic form. The legal entity fills in and submits the form to the registration court in an electronic form with a certified electronic signature, via a data mailbox, or in a paper form with an officially certified signature. The registration can also be made on the basis of a power of attorney granted to a third party who executes and submits the requested form.
When registering a beneficial owner, his/her identity must be evidenced, for instance, by providing an official extract from a residents register of the country of his/her citizenship, or, as the case may be, other appropriate documents, such as copy of the beneficial owner's identification card. Documents supporting the grounds on which his/her beneficial ownership is based, such as relevant corporate documents (e.g. list of shareholders, Memorandum of Association) or, as the case may be, affidavits signed by the beneficial owner or the company, will be filed with the registration court as well. From our recent experience, an affidavit about the beneficial ownership of a particular person should be fully sufficient for the registration purposes.
Czech companies now have until 1 January 2019 to register their beneficial owners. Registration of companies' beneficial owner is free of charge until 1 January 2019, and thereafter will be subject to a court fee of CZK 1,000. Other Czech legal entities registered in Czech public registers (e.g. associations, foundations) and trust funds need to register their beneficial owners by 1 January 2021 at the latest. Any changes to the registered beneficial owner(s) should always be registered without undue delay.
Who has access to the Register?
Information about beneficial owners in the Register is not publicly available and data from the Register are not published in the on-line Commercial Register or otherwise.
Only institutions explicitly stipulated by law will have access to the Register for the purpose of fulfilling their statutory obligations, such as courts for the purpose of judicial proceedings, and banks in relation to KYC procedures pursuant to Anti-Money Laundering legislation.
A company can obtain its extract from the Register either on-line via a specific identifier assigned during the registration process, or via a request addressed to the registration court.
A partial extract from the Register can also be obtained by a person who proves a legitimate interest in relation to prevention of certain crimes, such as legalisation of proceeds from crime and its source crime.
What happens if the beneficial owner is not registered?
Although currently there is no direct penalty stipulated by law for non-compliance, the failure to register the beneficial owner may lead to negative consequences. For instance, in public procurement proceedings a contracting authority will disqualify the selected bidder if no information on its beneficial owner can be obtained from the Register, and the bidder fails to identify its beneficial owner upon the contracting authority's request.