Register of public sector partners
Act on Register of Public Sector Partners
Act No. 315/2016 Coll. on Register of Public Sector Partners entered into force on February 1, 2017. Pursuant to the Act, state, local government and their controlled entities (public sector) can only transfer funds and property to persons who are registered in a public register and who have disclosed their ultimate beneficial owner(s). Such recipients of funds or property from public sector are referred to as public sector partners.
Public Sector Partner (Partner)
Starting from February 1, 2017, individuals and legal entities that have entered into or will enter into any agreement with a state, local government, or legal entity financed or controlled by the state or local government are considered to be “Partners.” The law provides for certain exemptions from the general definition of “Partner,” which, however, are very narrow. For example, (i) a person that received a one-off payment or property, the value of which does not exceed EUR 100,000, and (ii) a person who received multiple payments, the aggregate amount of which does not exceed EUR 250,000 during a period of one calendar year, shall not be a Partner. Person receiving funds or property below the thresholds will generally not be subject to the Act.
If a Partner, which supplies goods or services to the public sector, uses subcontractors, these subcontractors and their contractors (at all levels of the supply chain) are also considered to be Partners, provided however that the financial thresholds mentioned above are satisfied and that the respective person is aware or should be aware that its supplies are intended for the public sector.
A person is also a Partner (among other instances) if it carries out business activities in energy sector, provided that it has been issued a permit under Section 6(2) of Act No. 251/2012 Coll. on Energy.
Foreign individuals or legal entities are also Partners provided that the criteria above are satisfied.
Registration and Data Verification
Each Partner has to be registered in the register prior to entering into any public sector agreement. A person, which entered into a relevant agreement prior to February 1, 2017, has until July 31, 2017 to fulfill its registration obligation. For the purpose of registration, the Partner has to appoint a so called “authorized person,” which procures the registration on its behalf. Only an attorney, notary public, bank, auditor, and tax advisor can act as an authorized person. The authorized person has to periodically verify the information on ultimate beneficial owner recorder in the register at least once a year.
In case of breach of the obligation to register correct and complete information, the Partner and ultimate beneficial owner may face a fine up to the amount equal to the economic benefit obtained in connection with the breach or up to EUR1 mil. If a Partner fails to satisfy its registration requirements, it will also face the risk of its contractual party being entitled to terminate the agreement. Member(s) of the statutory body of the Partner which fails to comply with the obligations under the Act may also risk being prohibited to perform the function of member of statutory or supervisory body.
If you have any questions regarding the Act, please contact one of the authors listed below or your usual Barger Prekop contact.
Banking & Finance
|This document is of a purely informative nature and cannot be construed as legal advice or legal analysis.|