Accounting services in the Czech Republic: New law on accounting for beneficial owners

New law on accounting for actual owners: numerous changes and high sanctions

Accounting services in the Czech Republic: As of June 1, 2021, the new Law No. 37/2021 Coll., on the accounting of beneficial owners (the “Accounting Law”) comes into force. The main changes it introduces relate to clarification of the determination of the beneficial owner, partial public accessibility of credentials, automatic duplication of information from the Commercial Register, and the introduction of a discrepancy procedure. Last but not least, the Accounting Law also provides for high financial and corporate sanctions for breaches of established obligations.

Clarification of the definition of the actual owner

The beneficial owner is any natural person who is the ultimate beneficiary or the person with ultimate influence. The ultimate beneficiary is considered to be individuals who directly or indirectly receive more than 25% of the total property benefit. A person of ultimate influence is any natural person who can directly or indirectly exercise decisive influence in a commercial corporation. The law sets out more detailed criteria for identifying such a person, and also introduces such concepts as a chain and branching of a corporate structure.

You cannot use excuses that the actual owner cannot be determined

If it is impossible to determine the actual owner, then it is every person in top management. When registering a person from top management as the actual owner, the Accounting Law imposes an obligation to record all steps taken to determine the actual owner and store data on this procedure for many years. Claims that the company has no actual owner is not enough.

Essential information will be publicly available to everyone

Part of the data on the actual owners will be freely available. It will be possible to obtain, for example, information about the name and surname of the actual owner, the state in which he lives, the year and month of birth, citizenship, information about the nature of the position and the date from which the individual is or was the actual owner, etc. An extract from the public part of the accounting of actual owners can be obtained electronically on the website of the Ministry of Justice.

Automatic duplication

In some cases where the beneficial owner is clear from the data in the Commercial Register, the data will automatically be duplicated in the beneficial owner register through the public administration system. However, this data will need to be checked to ensure that it matches the actual state. Automatic redundancy will not apply if the registrant has already applied in the past to register the beneficial owner in the registry.

Fine up to 500,000 CZK

If the registering person fails to ensure that the data is entered in the register of actual owners, or submits for registration data that do not correspond to the actual state, and subsequently does not take measures to bring them into conformity within 15 days, then he/she faces a fine of up to 500,000 CZK (czech crowns). The actual owner may also be fined (the amount of the fine is the same) if he does not provide the necessary assistance during registration. Penalties may be reimposed. Accounting services in the Czech Republic – we will help you avoid fines. If you have any questions, we will be happy to answer https://ucetnictvi-vladimirova.cz/en/contacts/

Possibility of compulsory registration by the court

A significant change is the introduction of a nonconformity review procedure. Any public authority or responsible person, in accordance with Law No. 253/2008 Coll., On certain measures against money laundering and terrorist financing, is required to report a discrepancy in the register of beneficial owners. Based on this, the court will make a note about the discrepancy in the register of actual owners and notify the registered person of the need to bring it into conformity. If the discrepancy is not eliminated or refuted on the basis of a court notification, the court initiates a case on the discrepancy, and the court may subsequently apply one of the sanctions fixed by the Law.

Suspension of the right to vote

If the actual owner of a commercial corporation is not included in the register of actual owners, he cannot exercise the right to vote or make decisions as the sole founder under the threat of invalidation of the decision by the supreme body of this commercial corporation. For the recognition of the invalidity of the decision taken, you can apply to the court within a subjective period of 3 months, and an objective period of 1 year (see §191 and §428 of Law no. 90/2012 Coll., on commercial companies and cooperatives).

Deadline for registration

The new law comes into force on June 1, 2021. Business corporations that have duly and timely registered the beneficial owner in the existing registry in accordance with previous legislation must verify and correct the registered data within a “protection period” of 6 months. Those who did not register the beneficial owner in the existing registry, or did so late, are not subject to the “protection period” and must record or verify and correct the registered data immediately after June 1, 2021 (in some cases this may be replaced by automatic duplication) . In the case of legal entities other than commercial corporations, a 6-month “protection period” always applies. If these legal entities duly and timely registered the actual owner in the existing register in accordance with the previous legislation, then they have 1 year from the date of entry into force of the Law on Accounting to correct or change the registered data.

Prohibition on the payment of a share of the benefit

If the beneficial owner of a commercial corporation is not registered in the register of beneficial owners, then the commercial corporation cannot pay a share of the benefit (that is, a share of profits or other own sources, and a share of the liquidation balance sheet) to either him or the legal entity of which he is the beneficial owner. is also. The right to a share of profits or other own sources that has not been paid ceases to operate by the end of the reporting period in which the decision to pay it was made. If the executive body paid a share of the benefit, it would be violating statutory due diligence.