The obligation to identify the ultimate beneficiaries of entities that are public sector partners is already well known. However, an amendment came into effect at the end of the year that extends this obligation to other entities as well. The following overview provides information on which legal entities are covered by the new legislation. This now includes non-profit organizations and commercial companies that were not previously subject to this obligation under existing legislation.
Expanded Obligation to Register the Ultimate Beneficial Owner
Pursuant to the adopted amendment to Act No. 297/2008 Coll. on the Prevention of Money Laundering and the Financing of Terrorism and on Amendments to Certain Acts, as amended (hereinafter also referred to as “Act No. 297/2008 Coll.”), an obligation has been introduced to identify the beneficial owner and record data on such persons for a significantly broader range of entities than was previously the case.
Pursuant to Section 10a(1) of this Act, a legal entity that is not a public administration entity and a special-purpose association of assets without legal personality is required to identify its beneficial owner and to maintain and continuously update, in paper or electronic form, the identification data on the beneficial owner to the extent specified in Section 7( 1(a) of Act No. 297/2008 Coll., hereinafter “data establishing the status of the beneficial owner pursuant to Section 6a(1) of this Act,” and “data proving the status of the beneficial owner,” unless such data are included in the verification document in the Public Sector Partners Register.
To whom do these obligations apply?
It follows from the above that all legal entities that are neither public administration entities nor issuers of securities admitted to trading on a regulated market, non-investment funds, non-profit organizations providing services of general interest, and foundations will be required to record beneficial owners in the relevant registers maintained by these legal entities.
This obligation therefore also applies to legal entities registered or required to be registered in the Commercial Register, i.e., primarily commercial companies and cooperatives. Based on this adopted amendment to Act No. 297/2008 Coll., Act No. 530/2003 Coll. on the Commercial Register and on Amendments to Certain Acts was also amended.
The amendment in question stipulates that, for a legal entity that is neither a public administration entity nor an issuer of securities admitted to trading on a regulated market, nor an entity registered in the register of public sector partners, identification data regarding the ultimate beneficial owner shall also be entered in the Commercial Register, specifically including the first name, last name, birth number or date of birth (if a birth number has not been assigned), permanent residence address or other residence address, nationality, and type and number of the identity document, as well as information establishing the status of beneficial owner pursuant to a special regulation.
Until now, this was only required in cases specified by law, such as when registering in the public sector partner registry. The legal entities in question are also required to update this information.
Example of a Business Entity
The applicant is a limited liability company established in 1998. Since it has not, to date, “conducted business with the state”—that is, it has not supplied goods or services to the state or a higher territorial unit, either directly or through other persons— it was not required under Act No. 315/2016 Coll. on the Public Sector Partners Register and on Amendments to Certain Acts to identify the ultimate beneficiary and register in the Public Sector Partners Register.
Following the adoption of the amendment to Act No. 297/2008 Coll. on Protection against the Legalization of Proceeds from Criminal Activity and on Protection against the Financing of Terrorism and on Amendments to Certain Acts, the provisions of this Act concerning the obligation to identify and record data on beneficial owners came into effect on November 1, 2018, for a much larger group of legal entities than was the case prior to the entry into force of this new legislation.
Therefore, as of November 1, 2018, this company is also required to identify and register the beneficial owner in the registry in which it is registered (in this case, the Commercial Register) by December 31, 2019.
Example of a Non-Profit Organization
The applicant is a non-profit organization established in 2005 and registered in the register of non-profit organizations maintained by the Ministry of the Interior. Similar to a commercial company, this nonprofit organization was not required to identify the ultimate beneficial owner in the register of public sector partners, as it was not a public sector partner under the law (for example, it did not receive funds from the state budget). However, as of November 1, 2018, this nonprofit organization is required to identify and register the ultimate beneficial owner in the registry in which it is registered (in this case, the registry of nonprofit organizations) by December 31, 2019.
The recorded data will be non-public
Data on beneficial owners will be recorded in the non-public section of the registry and will therefore be anonymous and will not be disclosed (unlike data in the public sector partners registry). H
