Public and non-public information on trust funds in the beneficial ownership register
- Karel Nejtek
Approximately one year ago, an amendment to Act No. 37/2021 Coll., on the registration of beneficial owners (hereinafter referred to as the “Beneficial Ownership Registration Act”) significantly changed the duties of the trustee in relation to the registration of beneficial owners. The question of some such data being (non-)public is interesting. Which trust fund information is available to everyone, and access to data is restricted by law?
The legislator defines the beneficial owners of a trust fund as all those who, directly or indirectly, exercise decisive influence within it or have income from its management.
Under article 6 paragraph 3 of the Beneficial Ownership Registration Act, regardless of the exercise of decisive influence or income from the management of the fund, the following persons are always registered as the beneficial owners of a fund:
- the founder,
- the trustee,
- the beneficiary and the group of persons, from which beneficiaries may be appointed,
- the protector or another person authorised to supervise the administration of the trust fund and who may appoint or remove the trustee or beneficiary.
In addition to this formal definition, it is always necessary to examine the material element of the beneficial owner. By this we mean:
- the ultimate beneficiary, that is a person who may directly or indirectly, through the trust fund, hold a substantial part of the total financial beneficial created in the administration or termination of the trust fund and does not pass on that beneficial interest; and
- a person with ultimate influence over the management of the trust fund, i.e. a person who can directly or indirectly exercise decisive influence over the management of the trust fund without instructions from anyone else.
The mandatory data that need to be entered in the beneficial ownership register are:
- information identifying the beneficial owner;
- information explaining what the position of the beneficial owner is based on;
- details of the duration when the natural person is the beneficial owner;
- details identifying the trust fund, of which it is a beneficial owner;
- information on procedural aspects of recording the individual data;
- note on discrepancy.
Keep in mind that all mandatory data are available for up to five years after the termination of the trust fund, some of them are public. Some of them are non-public. We will discuss this division in the upcoming lines.
Data, accessible for anyone consulting the beneficial ownership register, reflecting the public nature of the data in the trust funds register. It would, of course, be impractical for the same data to be public in one register and non-public in the other. They are available at no charge and are not tied to any registration. More specifically, they include:
- the name and address of the place of residence or domicile, date of birth and nationality of the trustee;
- the designation and identification number of the trust fund, of which it is the beneficial owner;
- the date, on which the entry or automatic transcript was made;
- the time, at which the valid data were made available;
- note on discrepancy.
The records of the beneficial owners also contain information not accessible to the public. When consulting the register, a common user thus would not find:
- identification data of the founder, the beneficiary and the protector;
- details of the nature of the beneficial owner’s position;
- details of the date, from and until which the natural person is the beneficial owner.
At the same time, it is possible for the trustee or the beneficial owner to request from court that data on an incapacitated beneficial owner be made inaccessible. Unless this is contrary to the public interest, the court will generally grant such a petition.
However, even non-public data may be obtained under specified conditions by one of the following entities:
- court or insolvency administrator for the purposes of court proceedings;
- notary for registration purposes;
- a law enforcement authority for the purposes of criminal proceedings and a public prosecutor’s office for the purposes of exercising other than criminal jurisdiction;
- the administrator of the tax, fee or other similar pecuniary benefit for the purpose of their administration;
- an administrative authority for the purposes of conducting proceedings for an offence;
- an intelligence service for the purpose of performing tasks under the law regulating the activities of intelligence services.
In addition to these entities, the regional court or the Municipal Court in Prague may allow anyone to obtain a partial statement containing information about the beneficial owner of the trust fund:
- if they demonstrate an interest in the prevention of the offences of money laundering and its source offences, as well as the offences of financing terrorism and the support and promotion of terrorism;
- if they request this in relation to a trust fund, through which the ultimate beneficiary may benefit from, or the person with ultimate influence may exercise influence over a foreign legal entity established outside the EU member states.
If you are interested in this topic, please do not hesitate to contact us.
Author: Karel Nejtek