What is the Beneficial Ownership Register?

It is an official, partly public register maintained by the Ministry of Justice. A similar register existed before, which most business owners ignored because, although registration was compulsory, failing to register carried no penalty. However, this new Beneficial Ownership Register was created through implementation of a European directive from 2015, and penalties have now appeared. The register is intended to make companies' organisational structures transparent and combat money laundering and terrorist financing. That may sound rather remote to most of us, but it really does concern all legal entities.

Which companies must report their beneficial owners?

The register must list the beneficial owners of all companies entered in the Commercial Register — meaning limited liability companies, joint-stock companies and limited partnerships. The obligation also applies to cooperatives, unit owners' associations, trusts, public-benefit companies, foundations, associations, registered institutes and other non-profit organisations.

Who actually is the beneficial owner?

A legal entity's beneficial owner is considered to be a natural person (an individual) who directly or indirectly exercises decisive influence over the company. Under the law, this may arise where they:

  • hold more than 25% of the voting rights either alone or together with other people acting in concert;
  • hold an interest in the company's share capital of more than 25%;
  • are entitled to at least 25% of the profit. 

A beneficial owner is anyone who meets at least one of these criteria. 

For non-profit organisations and trusts, the beneficial owner is the founder or trustee, or the person entrusted with supervising the organisation. 

What information must you enter?

Every company must enter the following details about its beneficial owners:

  • first name and surname;
  • residential address;
  • nationality;
  • date of birth and personal identification number;
  • the proportion of voting rights, profit entitlement or share capital held.
How do I enter these details?

Fortunately, automatic entry will apply to most of you! Where the beneficial owner is sufficiently clear from the Commercial Register, these details will be transferred automatically into the Beneficial Ownership Register. So if the shareholders of your limited liability company each hold more than 25%, you do not need to arrange entry yourself.

Wondering who this does not apply to? Most likely companies whose shareholder is another legal entity. Since a beneficial owner can only be an individual and the Commercial Register lists a legal entity, the system will not transfer it automatically.  

If this situation does not apply to you or you need to change the details, entry in the register can be made only through a court or notary. The court has no time limit for making the entry, whereas a notary has 3 days, and notarial services are expected to be cheaper. 

Some of you were already entered in the previous beneficial ownership register. There should be an automatic transfer of data from the old register to the new one. 

What happens if these details are missing?

If the court asks you to supplement or amend the information and you fail to do so within 15 days, the state may impose a fine of up to CZK 500,000.

Will the register be public?

The register will be only partly public: ordinary people will essentially be able to find the same information about you as in the Commercial Register. Complete information will be accessible, for example, to public contracting authorities (municipalities and the state), courts and the tax office.

In my view, most of you have nothing to worry about. Even if the authorities find discrepancies, you face no penalty if you correct them immediately. If you are unsure, do not hesitate to get in touch and we will look at it together. 🙂