A number of important amendments have been made to Acts which affect small to medium-sized enterprises and multinationals operating in the Czech Republic.
Amendment to the Act on penal responsibility of legal persons
The Amendment of Act no. 418/2011 Coll., on penal responsibility of legal persons and proceedings against them In essence, the Amendment extends the scope of criminal acts for which a legal person can be prosecuted.
Previously the Act specified a list of criminal acts, while currently the legal person is able to be prosecuted for any crime or offense specified in the Criminal Code with the exception of those which are expressly excluded by law (eg. a murder, killing, negligence of care etc).
The company would be able to be released from criminal responsibility if it has made all possible efforts to avoid committing the offense. What measures has the company taken to release itself from criminal responsibility? Will it be enough if the company prepares an ethical code, internal control system - for instance a four eyes principle, rules for notification of suspicious action (whistleblowing), employee training and follow up on the infringement of those rules?
Only a judicial practice that shows the effort made by the company is considered satisfactory.
Amendment to the Act on some measurements against the legalisation of revenues from criminal activity and terrorism funding, and on the public register of legal and physical persons
EU directive no. 2015/849 came into a force in June 2015. The directive must be implemented by EU member states by 26 June 2017. Based on the directive, the amendment on some measurements against the legalisation of revenues from criminal activity and terrorism funding (AML Act – Act on Money Laundering) and related acts, for example the act on the public register of legal and physical persons (Act on Public Registers), was approved.
The amendment of the AML Act extends the range of responsible persons and their obligations, and reduces the limit of cash payment to €10,000 from the previous amount of €15,000.
But what affects all companies is the amendment to the Act on Public Registers. The amendment to the Act on Public Registers is effective from 1 January 2018. Companies will be required to enter information about the ultimate beneficial owner (UBO) of the legal entity in the public register. This record will be administered by the respective registry court, however it will not be publicly accessible.
The information on the UBO shall be accessible to persons defined by law only (eg. police, the tax authority, the Czech National Bank and responsible persons according to the AML Act) in connection with the execution of client control and identification. This means banks and financial institutions, insurance companies, auditors, tax advisors, accountants and so on. A breach of the obligation to record information on the UBO will be sanctioned by the existing provisions of the Act on Public Registers, with a fine up to the amount of CZK 100,000. Alternatively, by liquidation of a registered legal person.
Act on Agreement Register
The Act no. 340/2015 Coll. on specific conditions of effectiveness of some agreements, on the publishing of these agreements and on the agreement register (Act on Agreement Register) came into a force on 1 July 2016.
The Act on Agreement Register lays down the conditions for the publication of contracts in the agreement register administered by the Ministry of the Interior, concluded with the bodies stipulated by law (eg. the Czech Republic, municipality, state or national enterprise, health insurance company, the Czech radio or television or the legal entity in which the state or territorial independent unit alone or with other territorial independent units has a majority ownership interest, and so also via other legal person, etc.). The exemptions from disclosure then represent for example, information which cannot be provided under the rules governing free access to information or the contract, if the value is 50.000, - CZK without VAT or lower.
The contracts concluded after 1 July 2016 with the entities stipulated by the law must be published electronically in the agreement register. The Act on Agreement Register specifies that the contract concluded with the above-mentioned entities after 1 July 1 2017 shall come into force when it is published, and a sanction for its non-publication will be its abolition from the beginning.