As always, January brings legislative changes. One of them was the Law on public registering of legal entities and individuals that came into force on January 1, 2018 (the law was approved as early as the autumn of 2016). Companies and other legal entities do not have the right to conceal the information about their actual owners any longer. This law is a project of the European Union called Anti-Money-Laundering (anti-money laundering).
Details
Despite the novelty, the Law still has a number of defects, for example, the absence of a real controlling body or the institution of penalties for the provision of incorrect or false registration data. From now on, the information about the actual owners of firms has to be provided to the Register of legal entities and individuals.
The Law is based on the earlier amendment: taking certain measures to legalize income from criminal activity and financing of terrorism (the «Money Laundering Law»). It introduces the procedure on compulsory registration of real owners of corporations listed in the Commercial Czech Registry and Trust Funds (the Trust Fund is a set of assets that does not have a legally registered owner).
Who is the actual owner?
The Trade Czech corporation has clearly indicated who is de facto, i.e. an actual owner of a firm, despite the appointed directors and registered founders.
Who is the real owner:
• a person who, alone or in association with other founders, has more than 25% of the votes of this commercial corporation or owns more than 25% of the share capital;
• a person who, acting alone or in association with other founders, influences the decisions of others in the firm;
• a person who receives at least 25% of the profit of this commercial corporation;
• a person who is a member of the Statutory Body of the enterprise or a representative of this legal entity.
According to the law, the actual owner is an individual who has a legal or factual ability to influence a legal entity, a trust fund or any other type of an enterprise.
Figures
The real owners of the companies will have to be listed in the Register of Real Owners. A registration record will contain name, date of birth, place of residence, identification number, nationality, as well as data on the voting share and profit from the activities of the enterprise.
Within five business days, information about a true owner of a company will be recorded in a corresponding registration court. An application for registration must be submitted only by a person who has a legal right to do so: an official representative, a director, a founder, etc. Apart from the court, notaries are also eligible to register real owners. The registration fee is 1000 korunas.
The rights of business owners
Data about actual owners will become a part of the information system under public administration, which is electronically maintained by a relevant registration court. This data will not be available publicly and will not be provided in extracts of legal entities of the Trade Register. Thus, only the bodies named by law will have access to these records: courts, law enforcement bodies, tax authorities, the Czech National Bank and its institutions, etc.
The data will be stored in the Register for the period while an actual owner performs his/her duties and for another 10 years since the relationship between an owner and a firm ends.
Is the change for the better?
Local organizations that are engaged in the struggle for transparency of the Czech economic space strongly criticize the new law. They believe that it will not significantly affect the current situation. The thing is that neither the registration system nor the authorities that have access to it have a real opportunity to verify the veracity and relevance of the registration data.
Penalties
All owners of registered companies must submit data on the real owners for registration within a legally established period. If the information is not submitted within the mentioned term, the registration court will send a reminder with a deadline for providing the documents. If this reminder is ignored, the entity is threatened with liquidation. Deadline is 1 year (in rare cases 3 years) since the Law came into force, i.e. from January 1, 2018.
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