Will the register of beneficial owners be non-public in the future?

The Court of Justice of the European Union recently ruled that an article of an EU directive that requires Member States to make registers of beneficial owners accessible to the general public is invalid. The case involved a dispute between a company and the Luxembourg Commercial Register, where the company sought to have its beneficial owner's details withheld from the public.

On the basis of this preliminary ruling, the Court of Justice held that the provision in the European Directive requiring that information on the beneficial owners of companies be made available to the general public was contrary to the Charter of Fundamental Rights of the European Union, which guarantees, inter alia, the right to the protection of personal data. Access by the general public to the personal data of the owners of companies is an interference with that right, particularly where that data is accessible on the internet and can not only be freely searched but also stored and disseminated. In such a situation, defending against misuse is then very difficult.

According to the Court of Justice, such an interference with the right to the protection of personal data is disproportionate in relation to the objective pursued – the prevention of money laundering and terrorist financing – and it is not clear how access to such data by the general public contributes to that objective. Even after the abolition of the provision on access by the general public, the data in the register can be accessed by certain entities such as tax authorities. It is therefore not the abolition of the register of beneficial owners as such, but only the abolition of access to it by the general public.

The Czech law on the beneficial ownership register remains unchanged for the time being, but it is expected that it will soon be amended following the judgment, either by limiting public access to the register or by limiting the scope of publicly available data. In the meantime, it should also be possible at least on an individual basis to request that one's data be made inaccessible in the register. Should you wish to have this matter addressed now, please do not hesitate to contact us.

 

On the possibility of publishing financial statements with blacked-out data

The Supreme Court has suggested in a recent order that there may be a legitimate interest in publishing financial statements without certain disclosures.

In the present case, the appeal was against a company which had been ordered by the court to be wound up with liquidation on the ground that the company had failed to file the required documents (financial statements) even when requested to do so by the court. The company first appealed against the court's decision and then appealed to the Supreme Court. One of the arguments was that the publication of the complete financial statements could be abusive in competition and also negatively affect the right to privacy of the sole shareholder.

The Supreme Court dismissed the appeal, but on the objection that disclosure of certain information could cause prejudice to the company, the Supreme Court held that in such a case it would be possible to consider disclosing the financial statements without the information. The order does not specify what the data might be, but it can be assumed that it would probably not be possible to black out most of the accounts, but rather to black out only selected data. The development of the practice of the registry courts and the subsequent case law in this matter may therefore bring about a major shift in this matter.

 

Will „kurzarbeit“ (short-time work) save companies in the event of a gas shortage?

As in the case of the coronavirus crisis, one of the measures under consideration in the crisis is the simultaneous enabling of the so called 'kurzarbeit'. According to the ministry's proposal, companies that would be unable to allocate at least 20 % and up to 80 % of their weekly working time to employees in such a situation would be entitled to the allowance.

Under the draft regulation, eligibility for the allowance would depend on the subscription level ordered and the group in which the employer is classified under the Gas Emergency Decree. However, it will only ever apply to those employers whose gas supply is restricted by a given off-take level, i.e., employers who are so-called protected customers under the Ordinance.

Under the Employment Act, the employer's allowance for wage compensation paid by the employer is 80 % of the wage compensation so paid. The condition for payment of the allowance is that the employer pays wage compensation to the employees at a rate of at least 80 % of their average earnings, i.e., even if the allowance is received, the employer will incur costs of at least 16 % of the employee's average earnings.