Further to our previous articles on the registration of beneficial owners and Act No. 37/2021 Coll, on the registration of beneficial owners (hereinafter referred to as the “Act on the registration of beneficial owners”), in particular the article New legal regulation of the registration of beneficial owners – summary of fundamental changes, which clearly informs about all the requirements and changes in the legal regulation of the registration of beneficial owners, we would like to draw your attention to that on 1 December 2021 the deadline for bringing the registration of beneficial owners into compliance with the Act on the registration of beneficial owners will expire.
Deadline
The Act on the registration of beneficial owners came into force on 1 June 2021, and its transitional provisions prescribe that:
- business corporations which were established up to 31 December 2017 and which have made an entry in the register of beneficial owners in accordance with previous legislation by 1 January 2019, and
- business corporations which were established as of 1 January 2018 onwards and which have made an entry in the register of beneficial owners in accordance with previous legislation within 15 days of their establishment,
shall by 1 December 2021 ensure, that valid data comply with the requirements of the Act on the registration of beneficial owners.
The transitional provision does not apply to other business corporations, i.e. business corporations that have not ensured the registration of data on their beneficial owners according to the existing legal regulations or have done so late. These business corporations are obliged to ensure registration in the register of beneficial owners and compliance of this registration with the Act on the registration of beneficial owners without undue delay after the entry into force of the Act on the registration of beneficial owners.
In the case of registering persons that are not a business corporation and have not ensured the registration of data on their beneficial owner according to the previous regulations, they are also obliged to fulfil this duty by 1 December 2021. If these persons have registered data on their beneficial owners according to the previous legislation, they are obliged to ensure that the valid data comply with the requirements of the Act on the registration of beneficial owners within one year from the entry into force of the Act on the registration of beneficial owners (i.e. by 1 June 2022).
If there was no entry in the register of beneficial owners or if there was a discrepancy between the register of beneficial owners and the actual situation, the registering persons are taking risk of sanctions after the expiry of the above deadline, which we will discuss in this article in more detail.
Obligations to be fulfilled before the deadline
It is necessary for the registering persons to ensure that the data referred to in Section 13 of the Act on the registration of beneficial owners are entered in the register of beneficial owners within the statutory deadline, i.e. by 1 December 2021.
These data include:
- personal details of the beneficial owner,
- an information about the nature of the beneficial owner’s status,
- an information about the size of the beneficial owner’s direct or indirect shareholding, if this shareholding establishes his status,
- an information about the fact establishing the status of the beneficial owner, unless it is based on a share,
- a description of the structure of interrelationships,
- the date from which the natural person is the beneficial owner,
- the date until which the natural person was the beneficial owner,
- the name of the legal person or legal arrangement of which it is the beneficial owner, and
- the identification number of the legal person or legal arrangement of which it is the beneficial owner.
At the same time, registering persons are obliged to ensure that the data is in line with the actual situation and that the data in the register is still up-to-date as of 1 December 2021.
The application for registration in the Register of Beneficial Owners may be submitted through the court or may be made upon request by a notary public.
In some cases there is an automatic transcription into the register of beneficial owners on the basis of information from the public register.
Offences and penalties
The Act on the registration of beneficial owners imposes penalties for offences relating to the registration of beneficial owners. The offences will be decided in the regime of offence proceedings under Act No. 250/2016 Coll., on liability for offences and the proceedings on them, and will be dealt with by the municipal authorities of the municipality with extended competence in whose territorial area the person suspected of the offence has its registered office, or in whose territorial area the beneficial owner who fails to provide the registering person with the appropriate cooperation resides.
The offences of registering persons under the Act on the registration of beneficial owners include failure to ensure that the information on the beneficial owner is entered in the register or that the entry in the register of beneficial owners does not correspond to the actual condition. An offence might also be committed by the beneficial owner, the ultimate beneficiary, the person with ultimate influence and the person through whom the ultimate beneficiary may obtain a benefit or the person with ultimate influence may exercise its influence, if it fails to provide the necessary cooperation to the registering person and if this breach of duty is confirmed by a court.
Offences can be issued by a fine of up to CZK 500,000.
The civil law consequences include preventing the payment of a share of the benefit (meaning profit and other own resources) to persons who are not listed in the register of beneficial owners or preventing the payment of the benefit (share of profit and other own resources) to business corporations that do not have a beneficial owner listed in the register of beneficial owners.
The unregistered beneficial owner will also not be able to exercise voting rights or make decisions as the sole shareholder of the corporation when making decisions by the highest governing body of the corporation. Similarly, any legal entity or representative of a legal arrangement that does not have a registered beneficial owner on its beneficial owner register will not be able to exercise voting rights.
Conclusion
As the deadline for bringing the register of beneficial owners into line with the actual situation expires on 1 December 2021, we recommend that all registering persons check their entry in the register of beneficial owners (https://esm.justice.cz/ias/issm/rejstrik) and assess whether this status is recorded according to the actual condition, eventually seek advice on this.
In the event of any discrepancy between the entry in the register and the reality or complete absence of the entry, it is desirable to remedy this situation by 1 December 2021 at the latest, otherwise the above-mentioned penalties may arise under the Act on the registration of beneficial owners.
In case of any questions regarding this matter or the current legislation, we are at your disposal. Do not hesitate to contact us.
Mgr. Nikol Čišecká, junior lawyer – cisecka@plegal.cz
Mgr. Jakub Málek, partner – malek@plegal.cz
Mgr. Martin Heinzel, senior attorney-at-law – heinzel@plegal.cz
29. 11. 2021