The Czech Republic has introduced fines of up to CZK 500,000 ($24,000) and extended the definition of beneficial ownership to include those who have 'final influence' as part of a package of measures in a completely new law for the registration of beneficial owners which goes live on 1 June 2021.
The law includes direct sanctions, the inability to vote at the general meeting or a ban on the payment of profits, according to a briefing note by law firm Eversheds Sutherland.
"There are several changes compared to the current law, including the definition of the beneficial owner itself, which will be each natural person who is the final beneficiary or a person with final influence.
There are several changes compared to the current law, including the definition of the beneficial owner itself, which will be each natural person who is the final beneficiary or a person with final influence."
"While the position of the final beneficiary is based on the possibility to obtain property benefit (eg profit), the person with final influence has the possibility to exercise a decisive influence.
It is therefore a broader concept than the current definition in the AML Act, which may in some cases result in the obligation to register other persons in the Register of Beneficial Owners, the law firm said.
"Companies that have registered members of the statutory body as so-called substitute beneficial owners should also take note. The law now requires the registration of other persons in such cases, and in some cases top managers of the parent company will be required to register. The scope of collected data will also be broadened and, finally, the Register of Beneficial Owners will become public to the specified extent."
It added "Last but not least, the obligation to determine and register the beneficial owners under the new law may also affect participants in public contracts who, as a result of the absence of registration, will not be able to conclude a relevant contract with the contracting authority to perform the public contract and will be excluded from the tender.
Eversheds Sutherland further warned that it is in the interest of each registrant to check the record of the beneficial owner and to adjust it if necessary.
"Those who have duly registered their beneficial owner within the deadlines under the current law have time until 1 December 2021. Everyone else must comply with the new law by 1 June 2021."