The main changes in the Act on the Register of Public Sector Partners

The amendment of the Act No. 315/2016 Coll on Register of Public Sector Partners (“Register”) takes effect as of 1 September 2019 (partially as of 1 November 2019).

We provide the summary of the most important changes:

1. New criteria for determination of the value of benefits from a contract 

The new legislation changes the method of determination of the value of benefits from contract performance which constitute the obligation to register with the Register. The calendar year is not a considered period when assessing exceeding financial limit of recurrent contract performance.

According to the amendment, a company fulfills the financial limit and needs to be registered with the Register if it receives the contract performance in the amount altogether exceeding EUR 250,000, i.e. for the whole duration of the contract, not only for the calendar year.
Performance from several contracts (if a public sector partner enters into several contracts with public sector) will not be added up.

The amendment also implements rules for determination of the value of benefits from a contract (specified in § 2 section 4of the Act on the Register of Public Sector Partners), which facilitates assessment of fulfillment of financial limit and thus the commencement of the obligation to register in the Register of Public Sector Partners. As of 1 September 2019, companies will not include VAT nor contractual penalty into the value of the benefits from contract concluded with public sector.

2. Joint and several liability of the members of the statutory body of a public sector partner 

The new legislation implements joint and several liability of the members of the statutory body of a public sector partner for breaching the statutory obligations. If the members of the statutory body are registered in the Register of Public Sector Partners as ultimate beneficial owners, the Registering body may impose a fine up to EUR 100,000 on all the members of the statutory body, who will be liable jointly and severally.

According to the legislation effective as at 31 august 2019, it was possible to impose the fine individually on each member of the statutory body. 

3. Companies exclusively owned by the issuer of securities admitted for trading on a regulated market 

Until the amendment entered into effect, members of top management were registered in the Register of Public Sector Partners in the case of companies exclusively owned by the issuer of securities admitted for trading on a regulated market provided an authorized person had not identified an individual with right to an economic benefit of at least 25 % of the business. 

Members of statutory body will be registered as ultimate beneficial owners of the companies exclusively owned by the issuer of securities admitted for trading on a regulated market, which narrows the definition of the “member of top management”. It will not be necessary to consider a share of operating income of the Public Sector Partner in case of such companies. However, the verification document must always prove that the public sector partner is exclusively owned by the issuer of securities admitted for trading on a regulated market.

Public sector partner is obliged to ensure the compliance of data about members of the statutory body registered instead of ultimate beneficial owners with the effective legislation by no later than 29 February 2019.

4. The permanent residence address of members of statutory body/ultimate beneficial owners of the company exclusively owned by the issuer of securities admitted for trading on a regulated market

According to the amendment, an authorized person may enter into the Register the registered seat of the public sector partner instead of providing data of the permanent residence address of member of statutory body. The option not to disclose the permanent residence address shall also apply to the identified ultimate beneficial owners in case such disclosure could jeopardize their security and interfere with their rights to protection of the personality and their family.

5. Legal impossibility of registering the company with the Register in the period of 2 years following the removal from the Register ordered by the court

In case the court orders the removal of public sector partner from the Register for stating incorrect data, such subject may be repeatedly registered with the Register only after the lapse of 2 years from the day the decision of removal became effective.

6. Verification of ultimate beneficial owners 

As of 1 November 2019, the authorized person may verify the ultimate beneficial owner whenever and not only in connection with performance/conclusion/modification and likewise. 

Do not hesitate to contact us for further information regarding the Register of Public Sector Partners.