Amendment to the Act on Registration of Ultimate Beneficial Owners (UBOs)

Who is the UBO under the new law?

Under current legislation, the UBO is any individual who is the ultimate beneficiary or person with ultimate influence over a company. If it is not possible to identify the actual UBO, the UBO is every individual in the position of senior managing official.

The amendment to the Act on Registration of UBOs has removed the division into two types of primary UBOs. A UBO will be any individual who ultimately owns or controls a legal entity or a legal structure. The institution of substitute UBO, which is any individual in the position of senior managing official, will remain.

Until now, it has also been possible to find out the reasons for the creation of UBO status from the UBO register. This was based on whether the ultimate beneficiary or the person with ultimate influence was registered as the UBO. However, this possibility will no longer be available and the informational value of the UBO register is reduced by the amendment.

A new UBO definition

The amendment further defines who ultimately owns or controls a company, directly or indirectly through another legal entity, i.e. one who:

a has an ownership interest in the company or a share of voting rights of more than 25%;

• DIFFERENCE COMPARED TO THE CURRENT LEGISLATION: Please note that whereas until now, a person who owned an ownership interest of more than 25%, that did not carry a right to profit, voting right, or right to other own resources was not classified as the UBO, now even an ownership interest of more than 25% or a share of voting rights of more than 25% will establish the status of the UBO.

b is entitled to a share of more than 25% on the profit, on other own resources, or on liquidation balance;

c exercises a decisive influence in a company or companies which individually or collectively have more than 25% ownership interest in the company in question;

• DIFFERENCE COMPARED TO THE CURRENT LEGISLATION: Additionally, please also note that point (c) significantly expands the circle of the UBOs as well.

d exercises decisive influence in a company by other means.

What other changes will the amendment bring?

Removal of the exemption for some subjects

The amendment has reduced the scope of subjects who do not have the UBO. As a result, political parties and movements, churches and religious societies, trade unions and employers’ organisations, hunting societies and associations of unit owners will now also be entered into the UBO register.

Automatic transfer of data

Finally, the amendment also changes the rules of automatic transfer of data into the UBO register.

Automatic transfer now also applies to unlimited partnerships (Czech: veřejná obchodní společnost / v.o.s.) that have maximum three partners.

The amendment further simplifies the automatic transfer system by specifying the conditions for recalculation for indirect UBOs.

However, companies that have registered their UBO under the previous legislation (i.e., not under Act No. 37/2021 Coll., on the Registration of the UBO, which has been in force since 1 June 2021) must request an automatic transfer of the data in the future. Nevertheless, in practice, most companies have already amended their registration during the past year to comply with the current regulation and the automatic transfer of data will therefore apply to them.

What does this all mean in practice?

The amendment to the Act on Registration of UBOs will trigger the need for some entities to revise their registered data, as under the new definition of the UBO, someone who is not yet registered as the UBO could now fulfil the conditions to be the UBO of these entities in question and so should be registered.

We therefore recommend that you verify whether the situation described above could also affect you and your company. We will be pleased to assist you if you need to modify your UBO registration.

When must the registration be revised?

The amendment will come into force on 1 October 2022. Your registration will need to comply with the new version of the Act by 1 April 2023.

Will it cost me anything to modify my registration?

If you have already registered the UBO under the current legislation, you are exempt from the fee for the first application for registration under the new rules.

Read this article in Czech here