Czech Republic extends definition of beneficial ownership to include those who have 'final influence'
Legal entities and trusts in the jurisdiction are already obliged to register their beneficial owners, but the new law further extends the rules. The definition of beneficial owner is being amended and will include not just natural persons entitled to financial benefits but also those who have 'final influence' over legal entities and trust funds.
Companies who have registered members of their statutory body as so-called substitute beneficial owners are also affected by the new rules. They may have to add other persons to the beneficial ownership register, possibly some senior officers of their parent company. The scope of the data collected will also be broadened.
Entities that have already registered their beneficial owners under the existing law have until 1 December 2021 to amend the register to meet the new requirements. However, all other entities must comply with the new rules by 1 June.
Significant fines and penalties are being introduced for entities that fail to do so. They include a fine of up to CZK500,000, a prohibition on voting at the organisation's general meeting and a ban on the distribution of profits.
A further sanction applies to companies that bid for public contracts. Those fail to register their beneficial owners will not be able to deal with the contracting authority and will be excluded from the tender.
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