Register of Beneficial Owners
Legal entities in the Czech Republic have yet another duty – to register their beneficial owners in the Register of Beneficial Owners.
The beneficial owner is a natural person who is in fact or legally able to directly or indirectly exercise decisive influence in the legal entity.
This obligation applies to all legal entities registered in public registers. Legal entities registered in the Commercial Register (business corporations) must register their beneficial owner by 1 January 2019; other legal entities (clubs, associations of unit owners, foundations and institutes) as well as trusts must do so by 1 January 2021.
For business corporations, it is assumed that the beneficial owner is a natural person:
- who alone or together with persons acting in concert holds more than 25% of the voting rights or registered capital of that business corporation; or
- who alone or together with persons acting in concert controls the business corporation; or
- who is the beneficiary of at least 25% of the profit of this business corporation.
If the business corporation does not have a beneficial owner or the beneficial owner cannot be determined by these rules, it is considered to be a natural person who is a member of its statutory body.
Initial registration for legal entities registered in the Commercial Register before 1 January 2018 is exempt from the fee if they register by 31 December 2018. Otherwise registration is subject to a fee of CZK 1,000.
The Register of Beneficial Owners is a non-public register and may be accessed only by a limited number of people, primarily the courts, law enforcement authorities, tax administrators, the Financial Analytical Authority, the Czech National Bank and mandatory persons in connection with identification and control for AML purposes (in particular banks and other financial institutions).
If a legal entity does not include the beneficial owners in the register, no direct sanctions are currently in place. For some contracting partners (especially banks) this may be an obstacle to providing a banking product or continuing a business relationship. Proof of beneficial owners will also be required for public procurement or grant applications for European funds.
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