Registering ultimate beneficial owners (UBO) in the Czech Republic: What foreign companies must file

Registering ultimate beneficial owners in the Czech Republic is no longer optional—it's a legal obligation with serious consequences. If you operate a company here or own shares in a Czech entity, you need to understand what information must be filed and the risks involved. This article provides the specific answers you need to avoid costly penalties and operational restrictions.

Understanding UBO registration: Why it matters for your Czech operations

The Register of Beneficial Owners ( Evidence skutečných majitelů ) is a central system managed by the Ministry of Justice that tracks the natural persons who ultimately own or control Czech legal entities. For foreign investors and multinational corporations, this requirement often comes as a surprise. You might own a Czech company through a holding structure, but Czech law demands tracing ownership back to the actual natural persons.

The system exists primarily to combat money laundering and terrorist financing, implementing EU anti-money laundering directives into Czech law. However, the practical consequence for you is clear. Every Czech limited liability company (s.r.o.) or joint-stock company (a.s.) must identify and register their ultimate beneficial owners or face substantial fines. The obligation applies equally to foreign-owned entities as to Czech-owned ones.

The identification process involves analyzing ownership chains, understanding control mechanisms, and determining which natural persons meet the legal thresholds. In our experience at ARROWS Law Firm, many foreign investors underestimate how intricate this becomes when ownership flows through multiple corporate layers. What seems straightforward on paper often reveals hidden complications in practice.

Who is considered a beneficial owner under Czech law?

The definition of an ultimate beneficial owner is strictly regulated by the Act on the Registration of Beneficial Owners. Understanding this definition is essential because it determines who must be registered. It also dictates who bears responsibility if registration is incomplete or inaccurate.

Under current Czech law, a beneficial owner is any natural person who directly or indirectly owns or controls a legal entity. The law does not recognize legal entities as beneficial owners—only natural persons qualify. No matter how many corporate layers sit between the Czech entity and the real money, you must ultimately identify a human being.

Czech law establishes several alternative criteria that can make someone a beneficial owner:

• Ownership and voting rights threshold : A person directly or indirectly holds more than 25% of voting rights or registered capital in the corporation. If you own more than one-quarter of the company (even through a chain of other companies), you are automatically considered a beneficial owner.
• Profit entitlement : A person is entitled to receive more than 25% of the company's profits, other equity distributions, or liquidation balance. This captures passive owners who receive profits without holding formal voting shares.
• Control through other entities : A person exercises decisive influence in one or more entities that collectively hold more than 25% in the Czech company. If you own a holding company that owns a vehicle that owns 30% of a Czech firm, Czech law may require you to identify yourself as the beneficial owner.
• Decisive influence by other means : A person exercises decisive influence over the corporation through methods beyond share ownership or voting rights. This can include contractual arrangements, board composition rights, or veto rights.

Substitute beneficial owners: When natural persons cannot be identified

If, after exhausting all reasonable efforts to identify a beneficial owner, no natural person can be found, Czech law provides a fallback mechanism: substitute beneficial owners. These are members of the entity's top management—persons who handle day-to-day management and are members of the statutory body.

This substitute mechanism creates practical challenges for foreign companies. Imagine a Czech holding company owned by a family office where no single individual meets the 25% threshold. If no controlling person is identified, the law requires registering the company's executive directors as substitute beneficial owners.

It is important to note that relying on substitute beneficial owners is a "last resort" mechanism. If you register management simply to avoid disclosing the true owners, you risk severe penalties for submitting false information.

Which entities must register and which are exempt?

Most legal entities registered in Czech public registers must comply with UBO registration. This includes limited liability companies, joint-stock companies, partnerships (both general and limited), cooperatives, associations, foundations, and institutes.

However, certain entities are exempt from UBO registration obligations because they have no beneficial owner by definition or their ownership is transparent by law:

• State-owned enterprises and entities controlled by the state or territorial self-governing bodies.
• Municipalities and regional governments.
• Public research institutions and public universities.
• State-funded organizations.
• Certain types of unit owners' associations (SVJ) and trade unions also have simplified regimes or exemptions.

Foreign companies operating through a branch office in the Czech Republic generally do not have a separate UBO registration obligation for the branch itself. A branch is not a separate legal entity. However, if the foreign company establishes a subsidiary as a Czech s.r.o., that subsidiary must register independently.

MicroFAQ – Legal tips on UBO exemptions and entity types

1. Our company is a subsidiary of a state-owned enterprise. Do we still need to register our UBO?
Yes, unless your company meets specific statutory exemptions. State ownership of the parent company does not automatically exempt the subsidiary unless the subsidiary itself falls under the definition of an entity without a beneficial owner. If you are uncertain, contact ARROWS Law Firm at office@arws.cz.

2. We operate in the Czech Republic through a branch office. Do we need to register UBOs for the branch?
Generally, no. A branch of a foreign company does not register a beneficial owner in the Czech UBO register. However, the foreign parent company must likely register its UBO in its home jurisdiction. Consult with ARROWS Law Firm at office@arws.cz to ensure your specific setup is compliant.

3. Can a listed company be exempt from UBO registration?
Not entirely. While companies listed on regulated markets in the EU have lighter identification burdens because their ownership is already transparent, they often still need to go through the registration formality. The lawyers at ARROWS Law Firm regularly advise multinational corporations on these specific requirements.

The registration process: Steps and timelines

The process of registering a beneficial owner involves several distinct phases, each with specific requirements.

Identifying your beneficial owners

Before you can register anyone, you must actually identify who qualifies under the legal criteria. For simple structures, identification takes minutes. For anything more complex, especially when ownership flows through multiple corporate layers, the analysis becomes substantially more involved.

You must examine each ownership layer and determine whether any individual meets the thresholds at each level. If a Czech company is owned 40% by a holding company, you cannot stop there. You must investigate who owns that holding entity until you reach natural persons.

The chain analysis must account for indirect ownership and control. Czech law recognizes that control can arise not only from direct shareholding but from the ability to influence decision-making through other individuals, contractual arrangements, or family relationships.

The law also requires you to document the steps taken to identify beneficial owners. You must possess and store evidence of the ownership structure. Simply registering someone without evidence creates exposure to sanctions if the identification is challenged.

Experts from ARROWS Law Firm have handled this identification process daily for over 150 joint-stock companies. The experience we bring minimizes the risk of identification errors that could trigger regulatory action later.

Gathering supporting documentation

Once you identify who your beneficial owners are, you must compile the required documentation. The law requires you to document the facts justifying the registration status.

For beneficial owners who cannot be verified through Czech domestic registers, you generally need:

• A certified extract from the foreign commercial register for every company in the ownership chain.
• Evidence of their ownership interest or control (shareholder registers, corporate resolutions, trust deeds).
• Personal identification documents (passport copy) to verify the identity of the foreign natural person.

All foreign-language documents must typically be translated into Czech. Official corporate documents—such as extracts from foreign commercial registers—usually require notarization and often an apostille or superlegalization, depending on the country of origin.

Submitting the registration application

The actual submission of the UBO registration occurs through an electronic form available on the Ministry of Justice's website. The form can be submitted by the company itself or, more commonly, by a notary or an attorney authorized by the company.

The form requests standard identifying information about each beneficial owner. You must also specify the grounds for their status as beneficial owner—for example, "indirect share in voting rights exceeding 25%".

Upon successful completion, the system records the beneficial owner. If the person does not have a Czech birth number ( rodné číslo ), the system assigns a unique identification number for the purposes of the register.

Administrative processing and automatic data transfer

One important feature of the Czech system is automatic data transfer ( automatický průpis ) from other public registers. If your Czech company has a single shareholder registered in the Commercial Register who is a natural person holding 100% of shares, the system may automatically register them.

However, automatic transfer creates a critical compliance risk: you are legally responsible for verifying that automatically registered data is accurate. If the automatic transfer is incorrect, the company is liable. At ARROWS Law Firm, we regularly identify situations where automatic transfers have missed the true beneficial owners, requiring timely corrections.

MicroFAQ – Legal tips on registration procedures and documentation

1. Our beneficial owner is reluctant to provide personal identification documents. Can we register the company without this information?
No, you cannot complete the registration without the required data. While you might not need to upload a passport copy to the public file in all cases, the company must possess the data and evidence internally to prove the registration is correct.

2. Our company structure includes ownership through a trust. How do we identify and register the beneficial owner?
Trusts are treated specifically. You typically must register the settlor, the trustee, the protector (if any), the beneficiaries, and any person exercising ultimate control. Contact ARROWS Law Firm at office@arws.cz for guidance specific to your trust structure.

3. Our ownership structure has changed. What is our obligation?
Czech law requires you to update the UBO register "without undue delay" following any change in beneficial ownership. This typically means as soon as the change is legally effective. Failure to update triggers penalties.

Deadlines and update obligations

For new companies : Any company established now must register its beneficial owner without undue delay after its incorporation into the Commercial Register. In practice, notaries often perform this registration simultaneously with the company's incorporation.

Ongoing update obligations : Your responsibility does not end with initial registration. You must maintain current and accurate information at all times. Whenever a change occurs that affects beneficial ownership, you must update the register.

In our experience at ARROWS Law Firm, companies often overlook ongoing update obligations. These delays accumulate compliance risk. At ARROWS Law Firm, we see that international business reorganizations are the most common cause of these compliance gaps.

Complex ownership structures: Multi-tier holdings and international chains

For multinational corporations and international investment groups, identifying beneficial owners across multiple jurisdictions presents substantial practical challenges.

Tracing beneficial ownership through multiple corporate layers

Imagine your Czech company is owned by a Dutch holding company, which is owned by a Luxembourg financial vehicle. Czech law requires you to trace through all these layers to identify the natural persons at the ultimate level.

This analysis is not merely a mechanical process. You must investigate whether individuals at earlier layers have decisive influence over entities at later layers even if they do not hold formal shareholding. You must also account for situations where multiple smaller shareholders collectively exercise control.

Foreign investors establishing Czech holding companies frequently discover that beneficial ownership identification requires engagement with corporate service providers and legal advisors in multiple countries to obtain necessary documentation.

ARROWS Law Firm's international presence enables us to coordinate UBO identification across multiple jurisdictions. This significantly reduces delays. Contact us at office@arws.cz to discuss your cross-border ownership structure.

Nominee shareholders and concealed ownership

Czech law explicitly requires you to look beyond formal legal ownership to identify actual beneficial owners. If nominee shareholders hold shares on behalf of another person, the actual principal must be identified and registered as the beneficial owner.

Failing to disclose the actual principal behind a nominee creates a material compliance failure. If a foreign investor uses a professional nominee service, the company must still obtain the identity of the principal for the Czech register.

Public access and privacy considerations

The level of public access to the UBO register has been a subject of significant legal development in the EU. Following the ruling of the Court of Justice of the European Union (CJEU), the Czech Republic has adjusted its approach.

Currently, while "basic" data regarding beneficial owners is often accessible, full details are restricted to authorized entities. This includes banks, authorities, police, and persons with a "legitimate interest."

However, this privacy protection does not absolve the company from the duty to register the full data. The authorities, tax offices, and financial institutions have full access to the register for their due diligence. If your data is missing or incorrect, these institutions will flag your company.

Sanctions and consequences of non-compliance

The Czech UBO registration system includes multiple layers of sanctions that create substantial operational and financial consequences for companies that fail to comply.

Monetary penalties

The primary monetary sanction for failure to register a beneficial owner or providing incorrect information is a fine of up to CZK 500,000. This fine applies to the legal entity. Additionally, the beneficial owner who fails to cooperate can also be fined.

Fines are typically imposed if the company fails to remedy the deficiency after being called upon by the court.

Non-monetary sanctions: The real danger

Even more painful than the fine are the operational sanctions imposed directly by law.

Prohibition on profit distribution : A company is prohibited from paying dividends or distributing profits to any beneficial owner not registered in the UBO register. Furthermore, if a beneficial owner is not registered, the company cannot distribute any profits to the legal entity controlled by that unregistered beneficial owner.

Suspension of voting rights : An unregistered beneficial owner cannot exercise voting rights at shareholder meetings. More critically, the legal entity controlled by that unregistered beneficial owner also cannot exercise voting rights. This means that if your parent company hasn't registered its UBO, it may be legally barred from voting.

Exclusion from public procurement : Companies with unregistered beneficial owners are excluded from public procurement procedures.

Banking complications : Banks are strictly required to verify UBOs. If your registration is not in order, banks may refuse to open accounts, block transactions, or even close existing accounts to comply with their own AML duties.

Risk summary: Practical dangers facing foreign companies

Risks and sanctions	How ARROWS (office@arws.cz) helps
Missing or outdated UBO registration leading to fines : Companies face fines up to CZK 500,000.	ARROWS Law Firm conducts audits of your beneficial owner information and manages the complete registration process.
Inability to distribute profits : Unregistered beneficial owners (and entities they control) cannot receive dividends.	ARROWS lawyers analyze your corporate structure to ensure your profit distribution mechanisms comply with UBO requirements.
Suspension of voting rights : Unregistered beneficial owners lose voting rights; the parent company cannot vote.	We ensure your UBOs are properly registered so you can exercise full voting authority.
Bank account closure : Banks refuse transactions to companies with incomplete UBO registration.	ARROWS lawyers work with your bank to provide necessary UBO documentation and facilitate account maintenance.
Public procurement exclusion : Companies cannot tender for government contracts.	ARROWS Law Firm prepares necessary UBO certifications required for public tender participation.

Executive summary for management

• Mandatory Compliance : All Czech legal entities must register their beneficial owners. This is a hard legal obligation, not an administrative option.
• Enforcement is Active : Sanctions, including fines and the ban on dividend payments, are currently enforceable. There is no grace period for established companies.
• Multi-jurisdiction complexity : You must trace ownership through every corporate layer across all jurisdictions until identifying natural persons. This includes disclosing principals behind nominees or trusts.
• Operational Impact : Incomplete registration prevents profit distribution and paralyzes voting at shareholder meetings. It can also lead to banks freezing your accounts.
• Expert guidance recommended : Given the complexity of cross-border documentation and the severity of sanctions, using legal specialists minimizes liability risks for directors.

Conclusion of the article

Registering ultimate beneficial owners in the Czech Republic has become a fundamental compliance requirement that no foreign company can ignore. The system requires precise identification of natural persons who ultimately own or control Czech entities. It also demands detailed documentation of ownership chains across international structures.

For foreign investors and multinational corporations, the UBO registration obligation often appears simpler than it proves in practice. What looks like a straightforward shareholder identification becomes complex when ownership flows through holding companies, financial vehicles, or trusts. The process of gathering foreign-language corporate documentation consumes substantial time.

ARROWS Law Firm regularly handles UBO registration for foreign companies operating in the Czech Republic. Our lawyers have handled hundreds of cases—from simple single-shareholder structures to intricate multinational holdings. This daily experience significantly reduces processing time and eliminates the risk of compliance errors.

As a leading Prague-based law firm with international capabilities, ARROWS Law Firm combines deep knowledge of Czech UBO requirements with an understanding of international corporate structures. We can assist you with comprehensive UBO compliance services: identifying beneficial owners, gathering international documentation, and submitting registration applications.

If your company operates in the Czech Republic and you are uncertain whether your beneficial owner registration is current, do not delay. Contact ARROWS Law Firm at office@arws.cz to ensure your company meets all Czech registration requirements.

FAQ – Frequently asked legal questions about UBO registration in the Czech Republic

1. Our Czech company has multiple foreign shareholders with complex cross-border ownership. How do we identify who qualifies as the beneficial owner?
Czech law requires you to trace through each ownership layer until you identify natural persons. Start with the Czech company's direct shareholders, then investigate each shareholder's ownership structure. Contact ARROWS Law Firm at office@arws.cz for guidance on your specific ownership chain.

2. We established our Czech company years ago, and we realize we may not have registered the correct beneficial owners. Can we correct the registration now?
Yes, you should correct beneficial owner information immediately by submitting an updated application to the registration court. Delaying correction increases the risk of sanctions. Contact ARROWS Law Firm immediately at office@arws.cz to conduct a compliance assessment.

3. Our company's beneficial owner is a trust. Who do we register?
For a trust, you must typically register the settlor, the trustee, the protector (if any), the beneficiaries, and any other natural person exercising ultimate control. This is a specific regime under the Act on the Registration of Beneficial Owners. Contact ARROWS Law Firm at office@arws.cz to discuss your trust structure.

4. Our beneficial owner refuses to provide personal identification documents. What are our options?
The company is legally obliged to obtain this information. If the beneficial owner fails to cooperate, they can be personally fined. You must document your efforts to obtain the information. In extreme cases, if the owner cannot be identified, substitute beneficial owners might be registered.

5. We use a professional nominee to hold shares. Do we still need to identify the actual beneficial owner?
Yes. The law requires identifying the actual beneficial owner, not just the formal owner. The principal behind the nominee arrangement must be registered.

6. Our company structure was reorganized recently. Do we need to update our beneficial owner registration?
Yes, you must update the register "without undue delay" following any change. Contact ARROWS Law Firm at office@arws.cz to file necessary UBO updates.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the issue. Although we strive for maximum accuracy in the content, legal regulations and their interpretation evolve over time. To verify the current wording of the regulations and their application to your specific situation, it is therefore necessary to contact ARROWS Law Firm directly (office@arws.cz). We accept no responsibility for any damage or complications arising from the independent use of the information in this article without our prior individual legal consultation and expert assessment. Each case requires a tailor-made solution, so please do not hesitate to contact us.