Act No. 315/2016 Coll. on the Register of Public Sector Partners and on Amendments to Certain Acts (hereinafter referred to as the “PSP Act”) has undergone another major substantive amendment, which primarily addresses the practical needs of both public sector partners and authorized persons. The primary aim of the amendment to the RPVS Act was to reduce the administrative burden on public sector partners and to provide a more precise legal definition of terms, which would bring greater legal certainty to practice and eliminate the ambiguities that had arisen in practice. A substantial part of the RPVS Act affected by the amendment took effect on September 1, 2019. The remaining provisions affected by this amendment to the RPVS Act took effect on November 1, 2019; these include Articles I, paragraphs 19–21, paragraphs 24, 26, 32, and 49 of the amendment. The aforementioned amendment to the RPVS Act introduced several significant changes that affect not only the activities of the authorized person but, above all, public sector partners and the identification of ultimate beneficiaries (hereinafter “UB”).
Definition of Senior Management
A significant change, which primarily addressed the immense administrative burden on public sector partners, is the definition of the term “senior management” and its members. Under the amendment to the Public Sector Partners Act, the definition of a member of senior management has been narrowed, meaning that only members of a company’s statutory body will be considered members of senior management (hereinafter the “RPVS”) will be considered only members of the company’s statutory body (prior to the amendment, a proxy or senior manager was also automatically considered a member of senior management). The primary aim of this narrowing of the scope of entities was to eliminate the unnecessary administrative burden that was inconsistent with the purpose of the RPVS Act and related to the registration of these entities or senior management in the RPVS.
Also related to the aforementioned amendment is the essential obligation of the authorized person of the given public sector partner to ensure, within the required timeframe, that the registered data on members of senior management is brought into compliance with the amendment to the RPVS Act, no later than February 2,February 2020.
Stating the permanent residence of the KUV is not mandatory
The amendment to the RPVS Act also introduced the option to provide information on the registered office or place of business of the public sector entity (PVS) instead of the permanent residence of the KUV. However, if this right is exercised, there must be objective circumstances justifying that the disclosure of data on the permanent residence of a KUV could endanger their safety, infringe upon their rights to privacy, or endanger the safety of their close relatives and infringe upon the rights to privacy of their close relatives.
The amendment to the RPVS Act also addressed the importance of and measures to ensure the protection of the personal data of the KUV and those close to him.
Material Remedy
The amendment to the RPVS Act is also reflected in the provisions concerning the imposition of sanctions, the content of which also implies a so-called material corrective measure. The significance of this mechanism lies in the imposition of sanctions for violations of the RPVS Act. If the court finds that there has been a violation of the provisions of the RPVS Act, but the manner of the breach of duty, its consequences, circumstances, degree of fault, and the seriousness of the breach are negligible, the court will find the defendant guilty but, in light of the aforementioned circumstances, will not impose any sanction.
Introduction of a disqualification period
The amendment to the RPVS Act introduces a period during which a public sector partner may not re-register in the RPVS after being removed from the RPVS ex officio.
This is a two-year period, which begins to run at the moment of the public sector partner’s removal from the RPVS ex officio or on the date the decision of the registering authority regarding the removal of the public sector partner from the RPVS becomes final.
Under the legal framework in effect until August 31, 2019, a public sector partner removed from the RPVS could re-register in the RPVS as early as the very next day: However, the disqualification period introduced by the amendment prevented such illogical conduct.
The aforementioned two-year ban on re-registration in the Register does not apply to voluntary deletions from the Register.
Liability of the statutory body for damages
The amendment to the RPVS Act also addresses the liability of members of the statutory body for damages.
The legal situation in effect until August 31, 2019, was such that in the event of a breach of obligations under the RPVS Act, or the imposition of a fine on the statutory body, each member of the statutory body received a fine individually. However, the amendment to the RPVS Act introduced a change stipulating that the fine is imposed on the statutory body as a whole, i.e., joint and several liability is introduced, and thus the members of the statutory body are jointly and severally liable.
The amount of the fine remains unchanged—from €10,000 to €100,000.
Verification of the identification of the ultimate beneficial owner
The amendment to the RPVS Act directly establishes and defines the date by which the verification of the identity of the ultimate beneficial owner (UBO) of a public sector partner must be completed by December 31.
This primarily involves harmonizing and standardizing the activities of authorized persons, addressing the chaotic and unregulated situation that existed prior to the amendment to the RPVS Act, when no specific date or timeframe had been defined for these activities.
The verification of the public sector partner’s KUV identification as of December 31, as introduced by the amendment, must be completed by February 28 at the latest.
An authorized person may now verify the KUV identification at any time on a voluntary basis, i.e., even outside the verification events stipulated by the RPVS Act.
New rules for determining the value of contract performance
The amendment to the RPVS Act also established new rules for determining the value of contract performance. Key factors for determining the value of contract performance include, for example, the conditions for calculating it as a value excluding VAT; when determining its amount, contractual penalties are not included in its value, in the case of multiple co-owners, the performance is allocated according to the size of their shares, and so on.
It is also of paramount importance to determine the threshold for the value of performance under the contract, under which registration in the RPVS is mandatory if a public sector partner receives a single payment exceeding 100,000 euros within a single calendar year or, in the case of multiple partial or or recurring payments exceeding EUR 250,000, not within a single calendar year but over the entire duration of the contractual relationship.
