May 13, 2021

Major changes in the Register of Beneficial Owners



On June 1, 2021, Act No. 37/2021 Coll. on the Register of Beneficial Owners (hereinafter referred to as “ARBO”) comes into force. ARBO introduces fundamental changes to the institute of “beneficial owner” which, by its scope and sanctions, affects almost all legal entities domiciled in the Czech Republic.


Current legislation


The register of beneficial owners already existed in the Czech Republic before the above-mentioned amendment and was stipulated under Act No. 304/2013 Coll. on public registers of legal and natural persons, despite the fact that the register of beneficial owners is not by its legal nature a public register in the sense of Act No. 89/2012 Coll. of the Civil Code. The term “beneficial owner” also appears in Act No. 253/2008 Coll. on Certain Measures against the Legalization of Proceeds from Crime and the Financing of Terrorism (hereinafter referred to as the “Anti-Money Laundering Act”), which imposes an obligation to verify ownership relations within the controlled entity.


The legal framework created obligation for legal entities registered in the public register and trusts registered in the register of trusts to register their beneficial owner in the register by the end of 2018. However, the legislation did not create any sanctions enforcing this obligation. That is why many legal entities have not yet registered their beneficial owner. The only impact of non-fulfilling the registration obligation were administrative difficulties within the controlling mechanism of the Anti-Money Laundering Act.


Major changes


Pursuant to Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing, the Czech Republic adopted the ARBO. ARBO aims to clarify certain concepts, reduce administrative burden, increase transparency and, most importantly for many legal entities, set strong sanctions for non-compliance with the obligation to register.


Beneficial Owner


ARBO clarifies the very concept of “beneficial owner“. According to ARBO, any natural person who is a so-called “final beneficiary” or “person with final influence” is considered to be a beneficial owner. In order to fulfil the definition of the beneficial owner, it is sufficient to satisfy at least one of these conditions. The individual terms of this two-component definition are further defined by ARBO.


Final beneficiary means a natural person who may, directly or indirectly through another person or legal arrangement, benefit from a substantial part of the total property generated by the operation or liquidation of a legal person or generated by the administration or dissolution of a legal arrangement. The established practice is that a substantial part means a part greater than 25%.


A person with final influence means a natural person “who may, without instructions from another person, directly or indirectly exercise a decisive influence over a legal person or the administration of a legal arrangement.” (ARBO)


In Art. 7, ARBO specifies legal entities for which there is no beneficial owner. These are, in particular, the state, state-owned enterprises, state-subsidized organizations, political parties, churches or even associations of unit owners. The obligation to register does not apply to these legal entities.


Furthermore, ARBO also regulates situations where it is not possible to trace the beneficial owner. In these cases, a replacement beneficial owner is established. In cases where “no beneficial owner can be identified even with all the efforts that can reasonably be required of the registering entity, or a person with final influence in a corporation is a legal entity that cannot have a beneficial owner, any person in the top management of a business corporation is considered to be the beneficial owner. A person in a senior position is “a natural person who ensures the day-to-day or regular management of the legal person’s activities, such as business management, and is a member of the legal person’s statutory body or a person directly subordinate to the statutory body.”


Transition period and registered data


As mentioned above, the obligation to register the beneficial owner already affects legal persons registered in public registers and trust funds. If business corporations have duly fulfilled their previous obligation to register, they will have a transitional period of 6 months to ensure compliance with the new regulation. However, if they have not made any record, they will be obliged to properly register without undue delay after the entry into force of the ARBO.


For legal entities that are not business corporations, the transition period is more benevolent. If they have already fulfilled their registration obligations, they have a transitional period of 1 year. If they have not fulfilled their registration obligations, their transitional period is only 6 months. It is worth mentioning that within the transitional period adjustments to entries in the register of beneficial owners will not be charged.


It is recommended that legal entities check whether they are affected by the so-called automatic transcription before submitting changes to the register (see more below).


The scope of published information is newly changing. The legal person and trust funds will be newly obliged to state:


  • Data identifying the person of the beneficial owner;
  • Data explaining what the position of the beneficial owner is based on, including information on the possible structure of the business relationship;
  • Data on the duration of the position of the beneficial owner;
  • Details of the legal person or legal arrangement of obliged person;
  • Data concerning the procedural aspects of the entry of individual data (when they were made or made available);
  • Data related to the so-called discrepancy proceedings (see below).


Automatic transcription


One of the objectives of the above-mentioned directive was also to reduce the administrative burden on registering entities. For this purpose, an automatic transcript is newly established, which “copies” obvious information from public registers into the register of beneficial owners. The automatic transcription may be activated by a court proposal or a request from a notary, or if the registering entity does not ensure the entry of data in the register by 1 June 2021. However, if the data entered in this way are incorrect, the registering entity is obliged to correct them.


Publicity of the register of beneficial owners


Another objective of the above-mentioned directive was also to increase transparency. Newly, the register of beneficial owners will be a publicly accessible list on the internet. However, in certain cases, “data inaccessibility” may be activated upon request. This institute responds to the fact that minors may also be in the position of beneficial owners and it is in the public interest to keep this information private.


Discrepancy proceedings


Discrepancy proceedings are also a new institute. If a public authority or a liable person, within the framework of the Anti-Money Laundering Act, finds discrepancies between the reality and the registered data, it shall notify the competent register court, which shall mark a note of the discrepancy in the register and initiate proceedings. Following the results of the proceedings, the registration will either be modified, retained or, in the event of failure to find the beneficial owner, deleted.




For legal entities and especially business corporations, the most significant change in the current legislation is the introduction of new sanction mechanisms. Sanctions imposed on the basis of ARBO can have the nature of a public fine of up to CZK 500,000 for both the registering entity and the “inactive person” (e.g. the beneficial owner).


However, the new sanction mechanism also introduces civil law sanctions. Not registered beneficial owner will not be able to receive dividend payments from his share and/or his right to the dividend from the share will expire within the entire accounting period. Another sensitive sanction of a private law nature is the restriction of voting at the General Meeting and/or restriction of making decisions in the role of single shareholder within the scope of the General Meeting.



Attorneys at rutland & partners have vast experience in corporate law and extensive knowledge of the anti-money laundering measures, which include the register of beneficial owners.

Do not hesitate to contact us for more information.



Vojtěch Makovec, partner

rutland & partners, law firm

Tel: +420 226 226 026


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