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  • Recording of beneficiary owners

    26. 10. 2018

    With effect from 1 January 2018, the amendment to Act No. 253/2008 Coll., On Certain Measures Against the Legalization of Proceeds from Crime and the Financing of Terrorism, introduced recording of information on beneficiary owners of legal persons, trust funds or other legal entities without legal personality (see our flash at: HERE). The records are kept in a non-public register by the registry courts for each registered legal person and each registered trust fund in a separate entry. The obligation to record beneficiary owners in the registry came into effect on 1 January 2018 with a deadline of one year in the case of persons registered in the Commercial Register, in other cases of three years. The end of the one-year period, which applies to all persons registered in the Commercial Register, is therefore quickly approaching.

    Although the law does not provide for any direct sanctions for a failure to register beneficiary owners, there are practical implications to be kept in mind which follow from business or legal contacts between persons who have not registered as beneficiary owners, if any, and so-called "obligated party". Obligated parties under the above mentioned Act No. 253/2008 Coll. are mainly credit and financial institutions, persons authorized to trade in real estate, auditors, tax advisors, accountants, court bailiffs, notaries, persons authorized to trade in cultural goods or objects of cultural value, persons authorized to trade in used goods, etc. In keeping with the law cited above, these persons are obliged to collect and verify data about beneficiary owners. In the event of a discrepancy between their actual information and the information in the registry or in the event of a failure to register a particular entity (company) as a beneficiary owner, delays in the processing of applications or other matters, and in extreme cases, a refusal to provide services, a report to the Financial Analytical Unit or termination of contracts are to be expected. In this context, it should be noted that the amendment to Act No. 253/2008 Coll. also concerns Act No. 134/2016 Coll., on Public Procurement, according to which the contracting authorities have the obligation to first verify the suppliers in the records of beneficiary owners and then obtain information from the supplier. Failure to register in the beneficiary owners' register can therefore result in the disqualification from the award procedure.

    Detailed information about the disclosure system of beneficiary owners can be found on the website of the Ministry of Justice - see here. The actual application for an entry into the register of beneficiary owners can only be made using the form available at justice.cz/. Please note that the filing procedure is not completely intuitive. We, of course, stand ready to make a record of beneficiary owners on your behalf on the basis of an authorization to that effect.

    If you have any questions about or in connection with the above, please do not hesitate to contact us.

    Author: JUDr. Karel Codl

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