Please be informed that the rules for determining and registering ultimate beneficial owners (so-called “UBOs”) in the Czech Republic have significantly changed, by the new Act No. 37/2021 Coll., on the Registration of Beneficial Owners (hereinafter the “Beneficial Owners Registration Act“), that came into force on 1 June 2021. It is therefore very important to check whether the information on the beneficial owner entered in the register of beneficial owners is in compliance with to the new legal situation.
Failure to comply with the obligations and discrepancies in the records may have a significant negative impact. The new law prescribes a ban on pay-out of dividends as well as on exercising voting rights at general meetings of the company, in addition to financial sanctions (fines of up to CZK 500,000).
The beneficial owner is, as under the old law, a natural person who alone or together with persons acting in agreement with him or her holds more than 25% of the voting rights of the company or has a share in the share capital of more than 25% or who is the ultimate beneficiary of at least 25% of the company’s profits. If there is no such natural person, the Beneficial Owners Registration Act has introduced the new obligation to identify a member of the statutory body not of the company identifying and recording its beneficial owner, as was the case until now, but directly of the ultimate parent company.
Business corporations that have not previously registered their beneficial owners must properly do so without undue delay.
Business corporations that have duly performed the registration in accordance with the no longer effective provisions of the old law (Act No. 304/2013 Coll., on Public Registers of Legal and Natural Persons and on the Registration of Trusts), now have 6 months to make sure that the registered data complies with the current law, thus the deadline for this will expire on 1 December 2021.
In view of the impact of these changes on the day-to-day operations of your Czech company and the aforementioned sanctions, we would like to offer you a review of the status of entries in the register of beneficial owners and their updates in accordance with the Beneficial Owners Registration Act, if necessary.
If we can assist you with this or if you have any questions, please do not hesitate to contact us.