On 1 January 2017, the amendment to the AML Act (Act No. 253/2008 Sb. on Certain Measures Against the Legalization of Proceeds from Crime and the Financing of Terrorism, as amended) came into effect, under which legal entities including trusts are required to record and continuously update details to determine and verify the identity of the beneficial owner. The beneficial owner must also be determined during the due diligence on the client (or commercial partner) in transactions in excess of a legal limit (the limits are not particularly high!). The collected data and verification of the beneficial owner as well as details about their position must be archived 10 years after the relevant individual ceased to be the beneficial owner.
On 1 January 2018, the amendment to Act No. 304/2013 Sb. on Public Registers of Legal and Natural Persons will come into effect, under which beneficial owners will be recorded in a non-public register.
The beneficial owner is defined as an individual who, alone or together with entities acting in concert, holds more than 25% of the voting rights or capital or receives more than 25% of profit. Such a person, however, does not need to be a beneficial owner - what matters is the material factor (i.e. that it is an individual who is in fact or by law entitled to exert, directly or indirectly, decisive influence on the entity). If the beneficial owner cannot be determined or if no individual corresponds to the definition, the legal fiction applies that the beneficial owner is the statutory body or the individual with a similar position as the member of the statutory body (the statutory body is thus recorded in the register).
Those who legitimately protect their privacy and want to continue to protect it are taking specific measures.
It can be expected that there will be more interest in trusts although the definition of beneficial owner applies to them, too. The dedicated assets, however, have no owner in fact, and the beneficiary can be named at a later point, too. We can also expect an increased interest in foreign companies and trusts, which are impacted by the new law only if they hold shares in Czech companies (and even here the duties can be restricted). However, there are also creative solutions based, for example, on contractual arrangements providing an option to buy shares or securities.
Many people fear, however, that the register of beneficial owners might complicate the situation further, much like when anonymous shares were abolished.
From 1 January 2018 on, all legal entities will be required to file a request to record their beneficial owners in the register. The same will apply to trusts. The court fee for entering the details will be CZK 1,000.
Author: Michael Dobrovolný, Manager SMART Office & Companies, e-mail: email@example.com, phone: +420 267 997 764