Pursuant to the Beneficial Owners Register Act, all business corporations are obliged to ensure that data of their beneficial owners are properly registered within 6 months of its effective date. This time limit expired on 1 December 2021.
Business corporations that have not complied with this obligation must not pay dividends and their beneficial owners cannot vote at their general meetings or, as the case may be, take decisions as sole shareholders.
Similarly, shareholders that are corporations and have not properly registered data of their beneficial owners cannot receive profit shares or vote at general meetings or, as the case may be, decide as sole shareholders. A typical problematic case is a situation where, under the previous legislation, a company registered as a beneficial owner a person in its statutory body – however, now the definition of beneficial owner has changed and such a person may no longer be considered as a beneficial owner. This leads to the need to correct the entry in the beneficial owners register.
If such a corporation is called upon by the court to remedy the situation and the corporation fails to remedy the situation even within a reasonable period of time set by the court, it commits an offence for which a fine of up to CZK 500,000 may be imposed.
Therefore, corporations that have not yet ensured proper registration of their beneficial owners or have not adapted it to the new legislation should do so as soon as possible.
