(Anti-Money Laundering Act)
Act on the Public Sector Partner Registry
According to Minister of Justice Lucia Žitňanská: “The draft Act on the Register of Public Sector Partners is based on the principle that the state must impose stricter transparency requirements on private sector partners with whom it does business, as well as stricter conditions that they must meet in order to be eligible to compete for public funds.”
The draft anti-shell company law is based on the Slovak Government’s Legislative Agenda for 2016 and also draws on the Slovak Government’s policy statement. We could also describe it as a tool for combating money laundering and corruption.
The primary purpose of this law is to establish a register of public sector partners, as well as to address other related issues, in order to define the requirements for entities with which the state enters into legal relationships (or public entities) and from which these entities receive benefits, including the sale of state property.
Unlike the current legal framework, which deals only with processes related to public procurement, the proposed law has a broader scope regarding access to public resources.
The proposed law introduces a stricter procedure for identifying the ultimate beneficiary, as this identification has so far been based solely on a sworn statement by the ultimate beneficiary.
Under the proposed law, a public sector partner will be a natural or legal person
- who will bid for or receive funds from the state budget, the budget of a municipality, or a higher territorial unit,
- that will bid for or acquire performance involving property, rights to property, or other property rights from the state, a public institution, a municipality, or a higher territorial unit
- that will be required to register in the registry pursuant to a special regulation,
- which, directly or through other persons, will supply goods or services to persons under points one through three or will acquire property, property rights or other property rights, and at the same time knows or must know that the services provided by it or the property rights acquired by it are related to a contract under which the public sector partner receives funds pursuant to point (a) or acquires property, property rights, or other property rights pursuant to point (b) (b).
However, a public sector partner under points (a) and (d) shall not be a party to whom funds are to be provided on a one-time basis not exceeding EUR 100,000 or, in total, not exceeding EUR 250,000 in a calendar year, in the case of recurring performance.
Similarly, a public sector partner under points (b) and (d) shall not be an entity that is to acquire property, rights to property, or other property rights whose value does not exceed EUR 100,000.
A public sector partner must be registered in a registry that is accessible to the public for inspection. Without this registration, it will not be possible to enter into business relationships with the state or apply for funding, whether from the state budget, a municipal budget, or the budget of a higher territorial unit. Similarly, a public sector partner without this registration will not be able to acquire property or property rights from the state, a municipality, or a public institution.
In the case of registering the ultimate beneficial owner of a public sector partner, the current requirement for a sworn statement—which, under current law, is sufficient as a basis for registration—is being abolished, and a stricter procedure is being introduced, under which the ultimate beneficial owner will be required to identify themselves precisely. Responsibility for this identification will lie not only with the public sector partner but also with an authorized person, who may be a lawyer, a bank, a branch of a foreign bank, an auditor, or a tax advisor, provided they have their registered office or place of business within the territory of the Slovak Republic. The appointment of such an authorized person will therefore be mandatory for any entity interested in doing business with the state, and without the appointment of an authorized person, successful registration of a public sector partner will not be possible.
The authorized person will oversee the entire public sector partner registration process, carrying out all essential steps in the registration of the public sector partner in the registry and also taking the necessary steps regarding changes to the data recorded in the public sector partner registry. The registering authority will provide all relevant documents related to the registration to the authorized person. The authorized person will essentially act as the representative of the public sector partner in matters concerning the registry and registration, as each public sector partner may have only one authorized person registered in the registry to carry out all essential steps on its behalf.
The authorized person will be required to oversee the identification and registration process with due professional care.
The draft anti-shell company law also regulates the registry and the registration procedure.
The registry will be made available on the website of the Ministry of Justice of the Slovak Republic. The data entered in the registry will be effective against all parties and will not require verification. The registering authority will provide an extract from the registry in electronic form or a confirmation that the data is not entered in the registry immediately upon request.
The registration procedure, which is also regulated in the draft law, should be understood as a standard procedure for the entry, modification, and deletion of data in the register.
Registration will take place exclusively via electronic means to the registering authority’s electronic mailbox, using an electronic form with a guaranteed electronic signature by an authorized person; otherwise, it will not be considered.
The registering authority will be the District Court in Žilina.
During the registration process or when recording any changes to the registration of a public sector partner, the authorized person must provide the necessary cooperation to the registering authority and communicate directly with this authority.
According to the proposed provision of § 4, a public sector partner and, where applicable, other persons will be entered into the register. A public sector partner must be entered in the register at least for the duration of the contract with the public entity.
If the public sector partner is a natural person, the following information will be entered into the register:
- first name and last name,
- residence address,
- organization identification number, if assigned,
- a list of ultimate beneficiaries including first name, last name, residence address, nationality, date of birth of the ultimate beneficiary, and information on whether the ultimate beneficiary is a public official,
- information on the authorized person including
- first and last name, residence or place of business, organization identification number if a natural person,
- name or business name, registered office, and organization identification number if a legal entity.
If the public sector partner is a legal entity, the following will be entered into the register:
- business name or name,
- registered office or place of business,
- legal form,
- organization identification number, if assigned,
- list of ultimate beneficial owners,
- information about the authorized person.
The register will also record the date of each verification of the ultimate beneficial owner’s identity, the date of entry, and the date of deletion for each authorized person and ultimate beneficial owner. Verification documents will also be part of the register.
A public sector partner may have only one authorized person registered in the register at any given time.
Pursuant to the proposed provision of Section 5, the application for registration in the register shall be submitted by the authorized person on behalf of the public sector partner. The public sector partner shall be obligated to cooperate with the authorized person.
The authorized person will be required to provide accurate information in the application for registration, support it with verification documents, and declare that its content corresponds to the actual situation.
Withdrawal of the application for registration will not be possible.
Under the proposed law, an application for registration will be considered incomplete if
- it is not submitted on the prescribed electronic form,
- it does not include all the information required by this law,
- it contains only information that this law does not require to be entered in the register,
- or it is illegible.
If all conditions for registration are met, the registering authority shall make the entry within two business days from the date of submission of the application for registration in the register. Upon making the entry, the registering authority shall issue a confirmation, which it shall send to the authorized person without undue delay. After entering the proposed data, the registering authority shall issue an extract from the register, which it shall likewise send to the authorized person without undue delay. No objections may be filed against the entry made in accordance with the application for registration.
Registration in the register shall be valid for an indefinite period.
Pursuant to the proposed provision of Section 8, if the application for registration in the register does not meet the conditions, the registering authority shall not make the registration and shall notify the authorized person thereof by means of a notice of refusal to register.
The notice of refusal to register will be in electronic form and will specify the exact deficiencies in the application for registration and its attachments that were the grounds for the refusal, as well as instructions on the possibility of filing objections to the refusal. The deadline for filing objections shall be 15 days from the date of delivery of the notice.
Pursuant to the proposed provision of Section 9, if there is a change in the data recorded in the register, the public sector partner will be required to immediately inform the authorized person, and the authorized person will be required to report this within 30 days from the date the change occurred and to submit, along with the application for registration, attachments that will substantiate these facts. In this case, this involves the authorized person cooperating with the registering authority, which, as mentioned above, will be the District Court in Žilina.
The authorized person will be required to maintain constant contact with the registering authority and ensure that the entity with respect to which they act as the authorized person can complete the registration or entry of any changes without unnecessary complications.
If the authorized person becomes aware of a change in the registered data, they will be required to immediately inform the public sector partner.
The registering authority will also be able to verify the identity of the ultimate beneficiary listed in the registry on its own initiative.
Under the proposed law, the registration authority will delete an authorized person upon the request of the registered authorized person. In this case, the public sector partner will be required to ensure the registration of a new authorized person within 30 days of the deletion, including verification of the identity of the ultimate beneficial owner.
In the case of the deletion of an authorized person at the request of the public sector partner, the registering authority shall carry out the deletion only if the request is submitted on behalf of the public sector partner by a new authorized person together with verification of the identity of the ultimate beneficial owner.
The draft law provides for the imposition of various sanctions in the event of a violation of its provisions. The proposed provision of Section 12(1) of the Act in question sets forth the fines to be imposed by the registering authority if a public sector partner provides false information regarding the ultimate beneficial owner in the application for registration or fails to fulfill the obligation to submit an application to amend the registered information concerning the ultimate beneficial owner within the time limit set by the proposed anti-shell company law.
The amount of the fine for a public sector partner is defined in two ways:
- first, the fine is imposed in the amount of the economic benefit that the public sector partner derived from the contract. If this economic benefit cannot be determined, the fine shall be imposed in the range of 10,000 to 1,000,000 euros;
- the statutory body of the public sector partner is subject to a fine ranging from 10,000 to 100,000 euros.
If the registering authority decides to impose a fine pursuant to the proposed Section 12(1), it shall delete the registered public sector partner from the register even without a motion.
Pursuant to the proposed Section 12(2), the registering authority shall impose a fine of up to 10,000 euros on a registered public sector partner if
a) it fails to fulfill the obligation to file a motion to register changes to the recorded data, with the exception of data on the ultimate beneficial owner, within the time limit established by the Anti-Shell Act,
b) fails to fulfill the obligation under Section 11 of the proposed Anti-Shell Act.
Pursuant to the proposed provision of Section 13, a decision to impose a fine under Section 12(1) shall also constitute a decision on exclusion under commercial law. (Author’s note: Disqualification, within the meaning of Section 13a of Act No. 513/1991 Coll., the Commercial Code, as amended, refers to the disqualification of a natural person from holding a position in a commercial company or cooperative based on a court decision.) The excluded person will be a statutory body or members of the statutory body of a legal entity registered in the Commercial Register that is a public sector partner.
Finally, it should be noted that a total of 441 comments were submitted on the proposed anti-shell company law during the public comment period.
However, at its meeting held on August 17, 2016, the Government of the Slovak Republic adopted the draft anti-shell company law, and it was submitted to the National Council of the Slovak Republic.
On September 7, 2016, members of the National Council of the Slovak Republic advanced the draft anti-shell company law to its second reading.
The Ministry of Justice states that if the proposed law is adopted, it could take effect as early as January 2017.
If the proposed legislation is enacted, it could make Slovakia a pioneer in the area of controlling the ultimate beneficiaries of entities that do business with the state, which should primarily lead to transparent management of public resources.
In conclusion, we would like to note that without a public sector partner’s entry in the register, it is not possible for a person to receive payments or assets from public funds, or to successfully participate in public procurement as a supplier of goods or services. If you need to register in the Public Sector Partners Register, be sure to contact truly qualified experts who will ensure that your legal obligations are met professionally and conveniently. Our legal team also handles registration in the Public Sector Partners Register via the website www.partnerverejnehosektora.sk. On the website www.partnerverejnehosektora.sk, you will find all the necessary information on how to proceed with registration in the Public Sector Partners Register.
