On June 1, 2021, Czech Law No. 37/2021 Coll. "On the Register of Beneficial Owners" ("ZESM"). The new register of beneficial owners is a continuation of the still functioning register of data on beneficial owners in accordance with Act No. 304/2013 Coll.
Most of the data entered so far will be overwritten by new entries (§ 59 ZESM).
Beneficial owner records are used to register statutory data on the so-called beneficial owners of national legal entities and legal arrangements (§ 12 ZESM). Compared to current legislation, additional information will also need to be specified (§ 13 ZESM). In particular, in situations where the position of the real owner is established indirectly, a description of the so-called structure of relations is fixed.
The recordings will now be partially available to the public, free of charge on the Internet. The data on the name, state of residence, year and month of birth and citizenship of the beneficial owner, as well as data establishing the status of the beneficial owner, will become public.
The law will introduce a new definition of beneficial owner. The “present” owner is again defined by two terms, namely the ultimate beneficiary and the person with ultimate influence (§ 2 ZESM). The beneficial owner is any natural person who is the ultimate beneficiary or the person with ultimate influence. In accordance with the Law:
- The ultimate beneficiary is a person who may have, directly or indirectly, through another person or legal arrangement, a substantial part of the total benefits from property obtained as a result of the activity or liquidation of a legal entity or obtained as a result of the administration or dissolution of a legal arrangement and does not transfer this benefit
- The person with the greatest influence is the person who, without the direction of another person, can directly or indirectly exercise decisive influence on a legal person or the administration of a legal entity.
The law describes who and in what situations is the ultimate beneficiary or person with ultimate influence in relation to the shares they hold (§ 3 and 4 ZESM). In general, it is assumed that the real owner in the case of a commercial corporation is one with more than 25% of the shares.
In addition, the rules for determining the so-called substitute beneficial owner are regulated in cases where it is not possible to determine the beneficial owner properly (§ 5 ZESM).
For some legal forms, there is an irrefutable presumption that these legal entities do not have a real owner (§ 7 ZESM). These legal forms include, inter alia, the state, municipalities and legal entities created or controlled by them, as well as associations of share holders. According to the new regulation, these persons do not register real owners. If they have already met this obligation, all records will be deleted without compensation.
Compared to the current situation, the new Law introduces sanctions for non-compliance with the registration obligation. First of all, in the absence of any data in the records or in the case of failure to ensure the correction of a violation established by the court, a fine of up to CZK 500,000 may be imposed on the registrant (§ 55 ZESM). A fine can also be imposed on the person who committed the violation by his inaction (for example, the real owner).
In addition to fines, the Act regulates the negative private legal consequences of an unregistered beneficial owner (Section 52 et seq. ZESM). It will not be possible to pay the profit to the unregistered beneficial owner of the business corporation (if paid, despite the prohibition, the care of the proper manager will be violated by the statutory body and unjust enrichment is possible). Likewise, an unregistered beneficial owner will not be able to exercise their voting rights (if the decision is taken by the votes of the beneficial owner, despite the ban, there is a risk that the decision will be invalidated).
