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directly or indirectly through another person or legal entity: (i) has an interest in the company or an interest on voting rights in the company exceeding 25%; (ii) has a right to a share of profit, other of its own resources or the liquidation balance of the company exceeding 25%; (iii) exercises a controlling influence in a company or legal entity which individually or collectively has/have a shareholding in that company of more than 25%; or (iv) exercises decisive influence in the company by other means. Moreover, when there is no natural person who meets the criteria described above, the members of top management of (i) the company, or (ii) if the company belongs to a group of business or legal entities, of the ultimate parent legal entity, shall be identified and registered with the Register as its beneficial owner(s) (known as “spare beneficial owners”) . The members of the statutory body of the company are responsible for identification and registration of beneficial owner(s) with the Register as well as keeping internal records on them. They shall also proceed with any changes therein without undue delay. The beneficial owners as well as other legal entities in the ownership structure are obliged to provide the company with all necessary support for the registration. The following data of the beneficial owners of companies are to be registered with the Register (i) full name, residency address, nationality and birth date of the beneficial owner, (ii) detailed description of his/her position as beneficial owner within the company, (iii) amount of his/her
direct/indirect share or other information, if the position of beneficial owner is not based on his/her share (iii) description of the relations in the structure of the group of legal entities, if such structure exists and (iv) the day since when the person became beneficial owner and the day when the person ceased to be the beneficial owner. There are several types of access to the data registered with the Register. In general, only the full name, nationality, month and year of birth and the country of the beneficial owner, the day since he/she became beneficial owner and a brief description of his/her position are available to the public, other data can only be obtained based on particular authorization or a justified request. If the company fails to register its real beneficial owner(s), the public authority may initiate proceedings against it in order to eliminate discrepancies. Various sanctions such as fines up to CZK 500,000 (approximately EUR 19,500) may be imposed on the company, beneficial owner(s) or even on entities in the ownership structure. The exercise of voting rights and of the right to receive distributions is prohibited to a beneficial owner who is not registered with the Register and/or to shareholders of a legal entity with no duly registered beneficial owner(s). 4. Foreign investment, thin capitalization, residency and material visa restrictions 4.1 Thin capitalization rule Thin capitalization rules govern the maximum amount of tax-deductible interest and other related financial costs (such as credit processing) paid on credits and loans in situations where they exceed the limits imposed by the Income Taxes Act (ITA). Thin
ILN Corporate Group – Establishing a Business Entity Series
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