5. 11. 2021
Ultimate Beneficial Owners in the Czech Republic and Practical Experience of Registering
The new legislation concerning the register of ultimate beneficial owners (UBO) became a major topic this year. The main reason were new sanctions associated with the non-registration of the UBO, in particular:
prohibition to pay out dividends to the UBO or to an entity without registered UBO, directly or indirectly.
an unregistered UBO may not exercise cannot exercise voting rights, directly or indirectly while companies without registered UBO may not exercise voting rights in other entities.
Under the new legislation, entries in the register of beneficial owners may be made either by a court or by a notary. There are some experiences with the registration of a UBO in first months of operation of the new rules.
To enter a UBO, it is necessary to provide documents from which the UBO follows. These documents do not have to be submitted in the original and do not have to be provided with an apostille or superlegalized. Only the respective power of attorney must be officially verified and, if necessary, provided with an apostille or superlegalized.
The register of beneficial owners is public. However, the public only has limited access, e.g. addresses of the UBO are not available to the general public, although they are entered in the register. Only selected categories of persons/institutions are authorized to view the complete extract.
Registration is subject to an administrative fee; the fee paid to notaries is lower than the fee paid to the court.
In our experience, it easier to register the UBO through a notary, since it is possible to consult the notary in advance on the sufficiency of the documents. On the contrary, the Court refuses the application for registration of UBO if it finds the provides documents insufficient.
Entries made by a notary are also significantly faster. If e.g. the company participates in a public tender and needs to have a registered UBO by a certain date, we are able to communicate this with the notary and ensure the timeliness of the registration.
The procedure has also changed if the UBO cannot be determined or the UBO does not exist. Although the members of the company's senior management are still considered UBO, this is no longer automatically a member of the Czech company's senior management, but rather a member of the legal entity that exercises the greatest influence.
In this context, we would also like to point out that if the company needs to take a decision in the form of a notarial deed and does not have a registered UBO, the notary will check the status of the beneficial owners' register. If the notary finds that the company does not have a UBO registered, it is not possible to take a decision in the form of a notarial deed until the UBO is entered in the register. This can be problematic especially in situations where it is necessary to take a decision in the form of a notarial deed at a specific time.
In view of the above, we recommend that you register the UBO as soon as possible if the company has not yet done so.
Mgr. Dagmar Junková
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