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The beneficial owner of a legal entity – Novelization of the Czech AML Act (part two)

The beneficial owner of a legal entity – Novelization of the Czech AML Act (part two)

In this article we continue to bring deeper insight into the new legislation of the beneficial owner of a legal entity in the Czech Republic introduced by the novelization of the Act. No. 253/2008 Coll., on the prevention of money laundering and terrorist financing (“the AML Act”), which became effective as of 1st January 2017.

III.    Register of the beneficial owners

The novelization of the AML Act also amends the Act No. 304/2013 Coll., on Public Registers of legal entities and natural persons, which newly demands the establishment of the Register of the beneficial owners of legal entities and trust funds in the Czech Republic, whereas the new legislation will be effective as of 1st January 2018.
The new Register of beneficial owners will be kept by register courts, for every registered legal entity and every registered trust fund.

The Register will maintain the following data:

  1. name and place of residence (permanent and temporary);
  2. date of birth and birth certificate number; if any,
  3. citizenship; and
  4. information about
    (i)    interest in voting rights, if the position of the beneficial owner is based on direct participation in the legal entity,
    (ii)    interest in profits, if the position of the beneficial owner is based on the fact that the person is the beneficiary of it, or
    (iii)    other facts, if the position of the beneficial owner is determined in another way.

Data about the beneficial owner shall not be open to public, i.e. they will be kept in the non-public section of the Register.

The data will be accessible only to the respective registered entity and via Internet also to state authorities and subjects determined by the law (Section 118g (3) of the Act No. 304/2014 Coll.), especially to:

  1. Czech courts,
  2. criminal authorities and prosecutor’s offices,
  3. tax administrators,
  4. Intelligence Service,
  5. Financial Analytical Office,
  6. Czech National Bank,
  7. National Security Office or Ministry of the Interior,
  8. Supreme Audit Office,
  9. authorities or subjects according the Regulation (EU) 1303/201318 of the European Parliament and the Council and the Regulation (EU) 1306/201319 of the European Parliament and the Council,
  10. other subject set by the law (e.g. contracting authority of public procurement).

Legal entity already incorporated will be obliged to file with the Register the relevant data about the beneficial owner without undue delay after the date of the effectiveness of the new legislation, i.e. after 1st January 2018. Other liable subjects (e.g. business companies established after 1st January 2018) will be obliged to register their beneficial owner with undue delay after their establishment.

In case of breach of the above mentioned obligation and if the remedy cannot be reached in other way, the respective register court will call upon the liable subject to remedy the situation. If the legal entity does not comply with this call, it may lead to the commencement of the court-ordered liquidation process of the legal entity.

The data about the beneficial owner must be filled with the Register using the official form prescribed by the law, however, the detailed conditions and requirements will be regulated by the relevant regulation, which is being currently prepared by the relevant state authorities.

IV.    Court fees

Furthermore, the novelization of the AML Act amends also the Act No. 549/1991 Coll., on court fees, which newly set the court fee for incorporation of the beneficial owner with the Register in the amount of CZK 1,000. This change will become effective also as of 1st January 2018.

Nevertheless, the obligation to pay this court fee will relate only to legal entities incorporated with the Commercial Register, other liable subjects will be exempted from it.

The legal entities registered with the Commercial Register till 31st December 2017 (i.e. before the new legislation become effective) will be exempted from the court fee for the time period of one year from the date of the effectiveness of the new regulation (i.e. from 1st January 2018 to 31st December 2018).

By this regulation the legislator intends to motivate relevant legal entities to carry out the registration of their beneficial owners with the Register in the set time period of one year.

By Jiří Spousta & Magda Stárková

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