Legislation News
Amendment to the Act on Certain Measures against the Legalization of Proceeds of Crime and the Financing of Terrorism
On 16 September 2024, the President of the Republic signed a bill amending Act No. 253/2008 Coll., on Certain Measures against the Legalization of the Proceeds of Crime and the Financing of Terrorism, as amended (the “AML Act”), and other related laws (the “Amendment”).
The Amendment implements Regulation (EU) 2023/1113 of the European Parliament and of the Council of 31 May 2023 on information accompanying transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849.
One of the key news is the different classification of persons providing services with a virtual asset or cryptoasset. These are now classified as financial institutions. As a consequence, they are subject to a wider range of obligations under the anti-money laundering and counter-terrorist financing legislation.
Another significant change concerns the possibility of easier identification of the client by the lawyer or notary. If they are in no doubt about the identity of the client or the person acting on behalf of the client, then simply identifying the client’s representative on the basis of a certified power of attorney will suffice.
The Financial Analysis Office (“FAO”) has also been empowered. Selected obliged persons are now required to notify the FAO of a contact person within 30 days (previously 60 days) of being appointed to that position, or within 15 days (from the previous 30 days) from the date of any change in the information subject to the information obligation. This is to support the exercise of supervision by the FAO.
An obligation to check persons carrying cash over EUR 15 000 across borders is introduced, including at the borders of individual Member States of the European Union. A person who transports, sends or receives cash of this value will have to provide information about the transport or shipment when requested by a customs office.
In the case of professional chambers, a fine of up to CZK 1,000,000 may be imposed for the offence of violating the obligation to inform about the initiation, completion and result of the control.
With exceptions, the amendment will enter into force on 30 December 2024.
Case Law
Solidarity of debtors acting in concert
(Judgment of the Supreme Court Case No. 27 Cdo 1605/2023 of 21 May 2024)
The Regional Court in Pilsen dismissed an action by which the applicant sought to “oblige” the defendant to buy out the applicant’s share in a limited liability company in which the applicant held a 30% stake. The applicant based her claim on section 89 of the Business Corporations Act, where the defendant and another shareholder (also with 30% shares each) acted in concert and, as persons controlling the company, should have denied the applicant her right to a share in the profits. On the basis of the evidence, the Regional Court concluded that the defendant did not have passive standing, since if the applicant seeks the purchase of the share from the controlling person, it must seek it from those persons acting in concert.
The High Court, as a Court of Appeal – agreed with the conclusions of the Court of First Instance and upheld its decision. It held that the defendant alone, with a 30% share, could not be regarded as the controlling person and therefore did not satisfy the conditions for passive standing.
The applicant filed an appeal against this judgment with the Supreme Court and based its argumentation on the fact that the community established by Section 78(1), second sentence, of the Business Corporations Act gives the creditor of these debtors the right to choose whether to sue all or only some of the debtors for performance. According to the applicant, any joint and several debtor alone has passive standing. The Supreme Court referred to the interpretation of the provisions of Section 89 of the Business Corporations Act in the judgment in Case No. 27 Cdo 1395/2020, from which it follows that the obligation of the controlling person arises by operation of law, i.e. without the need for a constitutional court decision on the fulfilment of the condition of Section 89 of the Business Corporations Act. In this case, if the applicant considered that all the conditions for the application of section 89 of the Business Corporations Act had been met, then the applicant was entitled to assert its claim only against the defendant, despite the fact that the defendant held a 30% share in the company and would only be considered a controlling person together with another shareholder. The Supreme Court held that the conclusion of the Court of Appeal and the Court of First Instance that the applicant had to bring an action under section 89 of the Business Corporations Act against both persons acting in concert who were jointly the controlling persons was incorrect. On that basis, it set aside the judgment of the Court of Appeal and remitted the case back to the Court of First Instance for further proceedings.
Acquisition of ownership from a person who has acquired ownership from an unauthorized party
(Judgment of the Supreme Court Case No. 29 ICdo 99/2022 of 31 July 2024)
The applicant (the lending institution) filed an action with the Regional Court in Prague, as the insolvency court, for the exclusion of the movables from the debtor’s assets, which the court granted. In this case, the debtor first acquired the movables on the basis of a purchase agreement concluded with Company A. Subsequently, the debtor concluded a loan agreement with Company B (an intervening party in the proceedings), and the parties also concluded a security transfer agreement and a movables loan agreement. Company B thus became the owner of the movables. However, by its dishonest conduct, it prevented the publicity of its ownership by deliberately not having the vehicle (harvester) registered on the technical license. She therefore allowed the debtor to sell the movable property even though the debtor did not become the owner. Following that, the debtor, as seller, entered into a purchase contract with Company C in relation to those movable assets, even though he was no longer the owner of them. That company C later concluded a loan agreement with the applicant under which it negotiated a security transfer of the title to the movables to the applicant. Company B (intervener) subsequently appealed to the High Court in Prague. The Court of First Instance changed the judgment of the first instance by dismissing the action on the ground that the Regional Court had wrongly assumed that the applicant had the burden of proof. In that regard, the Court held that the acquirer does not have to prove his good faith in order to acquire title from an unauthorized person, since he is entitled to a presumption of honesty and good faith.
Against the judgment of the Court of Appeal, the applicant filed an appeal to the Supreme Court (“SC”). In the appeal, he raised a question to the SC, whether Section 1109 of the Civil Code applies if the acquirer acquires the ownership right from the owner who originally acquired the ownership right from an unauthorized person. The Supreme Court in its judgment referred to the judgment of Case No. 29 ICdo 77/2019, where the SC referred to earlier case law conclusions, on the basis of which it explained that the transfer of a security right results in a change of ownership. The debtor thus no longer is the owner of the property provided as security and the creditor acquires this right upon the effectiveness of the security transfer agreement. Upon performance of the secured debt, the ownership right passes back from the creditor to the debtor without further delay; on the other hand, in the event of non- performance, the manner in which the secured transfer is to be implemented must be agreed in the security transfer agreement. The SC criticised the Court of Appeal for having considered the acquisition of the appellant’s title ‘from the debtor’ without taking into account that the title to the movable property had been transferred successively by various legal acts.
The SC concluded that the right of ownership under the provisions of Section 1112 of the Civil Code is not acquired by one who knows that his predecessor acquired the right of ownership from an unauthorized person. In the circumstances of the present case, in the light of the explanatory memorandum and the legal commentary, the ownership would have passed back to the intervener at the time when the transfer between C and the appellant took effect. It was therefore a finding in favour of the appellant. The Supreme Court set aside the contested decision and remitted the case back to the Court of Appeal for further proceedings.
For more information:
Banking, Finance & Insurance:
Daniel Weinhold, Václav Štraser, Ondřej Tejnský
Competition Law / EU Law:
Tomáš Čermák
Dispute Resolution:
Milan Polák, Zbyšek Kordač, Anna Bartůňková, Michaela Koblasová, Michal Švec
ESG – Environment, Social, (corporate) Governance:
Daniel Weinhold, Tereza Hošková
Family Office:
Milan Polák, Zbyšek Kordač, Michaela Koblasová
Insolvency and Restructuring:
Zbyšek Kordač, Jakub Nedoma
IT, Media & Telecommunication:
Martin Lukáš, Jakub Nedoma, Michal Przeczek
Labour Law:
Eva Procházková, Anna Bartůňková, Daša Aradská, Ondřej Tejnský
Mergers and Acquisitions:
Daniel Weinhold, Václav Štraser
Personal Data Protection:
Martin Lukáš, Tereza Hošková, Daša Aradská
Public Procurement & Public Sector:
Martin Lukáš, Tereza Hošková, Monika Švaříčková
Real Estate:
Pav Younis, Václav Štraser
Regulatory and Government Affairs:
Daniel Weinhold
Start-ups, Venture Capital and Cryptocurrency:
Pav Younis, Martin Lukáš, Jakub Nedoma, Michal Švec, Ondřej Tejnský