Under the Czech Act on the Registration of Ultimate Beneficial Owners (Act No. 37/2021 Coll.), the UBO is the natural person who ultimately owns or controls a legal entity. For corporations, a UBO is typically identified in two main ways. Firstly, through material ownership, which is defined as a person who directly or indirectly holds more than a 25% share in the capital or voting rights, or has a right to more than 25% of the profits (§ 4(1) of the Act). Secondly, through control, which refers to a person with “ultimate influence”. This is generally defined as the ability to make the decisions of the highest governing body align with their own will, for instance, by having the power to appoint or remove the majority of board members (§ 4(2-4) of the Act). The Act of course provides for more detailed rules.

If, after exhausting all reasonable efforts, no UBO can be identified based on the criteria above, the law establishes a substitute mechanism. In such cases, every member of the entity’s governing body (i.e., the top management) is registered as its UBO (§ 5 of the Act). The Act also provides highly specific rules for other legal arrangements, such as foundations, institutes, and trusts, identifying persons like founders, trustees, or beneficiaries as UBOs (§ 5a and § 6 of the Act). For a comprehensive overview of the rules, please see our detailed article on the current regulation.

Which Entities Must Register Their UBO?

The obligation to register a UBO applies to most legal entities registered in Czech public registers, including business corporations (like s.r.o. or a.s.), foundations, associations, and institutes. The law, however, provides for several exemptions, such as State-funded organizations, state regions and municipalities, public research institutions and public universities etc.

The UBO Identification and Registration Process in the Czech Republic

The process involves both correctly identifying the UBO based on legal criteria and then formally registering them with either the competent registration court or a notary. While the application itself is submitted on a prescribed electronic form, the crucial first step is the correct identification. ECOVIS ježek provides full support throughout this process, handling the analysis of your ownership structure to identify the UBO and managing the subsequent registration with the authorities.

In many cases, the necessary data is automatically transferred (a so-called “automatický průpis”) from other public registers. However, it is always the company’s responsibility to verify that the automatically registered data is correct and complete, as relying on an incorrect automatic entry does not absolve the company of liability.

Public Access to the Czech UBO (ESM) Register

Since June 2021, a significant part of the UBO Register has been made publicly accessible free of charge and without registration. The public can view the following information about a UBO:

• Full name
• Country of residence
• Year and month of birth
• Nationality
• Information on the nature of their position (e.g., size of share, voting rights)

The public portal can be accessed at esm.justice.cz. While this provides access to Czech data, the process for obtaining information from other EU countries varies. For more information, see our guide on obtaining extracts from UBO registers across the EU.

Consequences of Non-Compliance in the Czech Republic

Failure to comply with UBO registration duties carries significant sanctions that can directly impact a company’s operations and finances. The primary consequences include:

• Fines: A fine of up to CZK 500,000 (approx. €20,000) can be imposed on the legal entity for failing to register its UBO or for providing incorrect information. The same fine can be imposed on a UBO who fails to provide the necessary cooperation. For a more detailed overview of the penalties, please see our dedicated article on sanctions for failing to register a UBO.
• Inability to Pay Out Profits: A legal entity is prohibited from paying out profits, shares in other own resources, or shares in the liquidation balance to a UBO who is not registered in the UBO Register, or to a legal entity of which the unregistered person is the UBO.
• Ban on Voting Rights: An unregistered UBO (or a person who is a shareholder in a company controlled by an unregistered UBO) is prohibited from exercising their voting rights at the general meeting of a business corporation. Any decisions made in violation of this prohibition are invalid.
• Exclusion from Public Procurement and Subsidies: A company that has not registered its UBO may be excluded from public procurement procedures. Contracting authorities are required to verify the UBO of the selected supplier. Similarly, providing information about the UBO is often a condition for receiving public subsidies.

Ensure Your Compliance and Avoid Penalties in the Czech Republic

Correctly identifying your Ultimate Beneficial Owner and ensuring their proper registration is a critical legal requirement. Our team of experts provides a comprehensive service that covers both the UBO identification based on your specific corporate structure and the complete handling of the registration process. By entrusting this task to us, you can be confident in your compliance and avoid the severe penalties associated with any errors. Contact our team for personalized advice or book an online consultation directly through our platform.