Amendments you should not miss

Law on registration of beneficial owners

Businesses have already become accustomed to the increased administrative burden introduced by the new rules for registering beneficial owners under the AML Directive since the middle of last year. The relatively easy-to-fill-in online form suddenly became a process that took several hours, one frequently requiring the help of legal advisors. Efforts to trace complex ownership structures abroad often failed due to the reluctance of foreign parent companies to provide any data, let alone documents to prove it.

It is not uncommon for our legislators to sometimes choose solutions that are more complicated than they need to be. Thus, the Czech Beneficial Owners Registration Act took the initiative to introduce two deeds of beneficial ownership: a person with ultimate influence and an ultimate beneficiary. This was a European rarity, as the AML Directive does not require such a thing. The already complex tracing of ultimate owners (often in non-European countries) was further complicated by the need to obtain shareholders' agreements, silent partnership agreements and other confidential documents from the owners to prove whether the beneficial owner status was based on the fact that the shareholder had been paid a profit in the previous financial year or on the fact that the shareholder had the required number of votes at the general meeting.

As of 1 October 2022, according to the requirements of the European Commission, the law on the registration of beneficial owners has changed its form. It is too early to assess whether it is for the better. The practice has not yet had time to deal with some of the issues. However, we view every simplification of administration positively and we believe that it will be no different here.

There is no new distinction between "types" of beneficial owners. A beneficial owner is simply anyone who owns or controls a company if he or she has a stake of more than 25% in it. If there is no such person (for example, because no shareholder has a relevant shareholding), members of the statutory body can be registered as beneficial owners. However, in the latter case the ownership structure should be examined and, where appropriate, a member of the parent company's statutory body should be entered as the beneficial owner.

Businesses are advised to check whether their existing entries in the register of beneficial owners comply with the new requirements. In most cases this will be the case; in more complicated cases the registration will need to be revised.


Labour Code

Practicalities (or rather, the COVID-19 pandemic) also necessitated a change in the Labour Code. The insufficient regulation of telework should be replaced by provisions on remote work - work from a place other than the employer's workplace, which will include both the familiar work from home and work from a café. It should now be possible to mandate remote working, albeit only in very rare cases, typically where a decision of a public health authority allows it.

The amendment has not yet been approved; however, we welcome the initiative of the Ministry of Labour and Social Affairs and evaluate the draft amendment in a generally positive light. It explicitly addresses one of the biggest problems: the provision of compensation. The amount of lump-sum compensation an employee is entitled to per hour of remote work should now be explicitly stated. The flat-rate reimbursement applies only to the reimbursement of energy (electricity, water, gas, heating and waste), without prejudice, of course, to the employee's ability to prove other expenses, such as internet or telephone.

For example, we consider the requirement for energy reimbursement for all variants of remote work, including work that is not performed from home and thus does not consume any energy, to be technically inconsistent. It is possible that the legislator envisages that other costs (i.e. those for which the actual amount can be proven, but which will never be done in practice, such as desk wear and tear) will be covered under the flat-rate, which would be consistent with the fact that no distinction should be made between different forms of remote work. However, this should be reflected in the text of the law. Nor is there any reference to situations where the parties agree that the employer, rather than the employee, should pay those costs directly. We hope that these shortcomings will be clarified in the legislative process.

We expressly disapprove of the prohibition on the inclusion of performance in wages. Although we see the argument for a different tax treatment of the two payments, this completely overrides the current economic reality. Yet there is no reason why the parties cannot agree to deviate and increase the wage reasonably just because the employee works from home.

Businesses are advised to prepare for the amendment to take effect, e.g. by drawing up internal regulations or model agreements on work outside the workplace.