The new Act on the Register of Public Sector Partners approved the text of the law 173 (Anti-Dummy Corporation Act) from the Ministry of Justice seeks to add greater transparency to transactions between the state and private sector companies and was approved by the Slovak parliament on 25 October 2016.
The new Act on the Register of Public Sector Partners http://www.nrsr.sk/web/Default.aspx?sid=zakony/zakon&MasterID=6005 / approved the text of the law 173 (Anti-Dummy Corporation Act) from the Ministry of Justice seeks to add greater transparency to transactions between the state and private sector companies and was approved by the Slovak parliament on 25 October 2016. The Act serves to introduce a register of public sector partners (register) and to stipulate certain aspects to provide a legislative definition of the requirements on those representing the state or public law entities in legal matters involving a third party receiving any form of consideration, including the sale of property of the state, public interest body, communities (villages) or higher territorial units [1]. The obligation to register will also apply to entities that directly or through other persons supply goods and services to entities which comply with the legal definition of a partner of public interest sector. Respectively this obligation will also apply in cases where the entity acquire from these public interest bodies property, rights to property, or property rights while it knows or should know that such transactions bear the obligation to register the entity in the register of public sector partners. This obligation will also concern health care providers, which do have concluded a contract for the provision of health care with the health insurance company [2].
Exemption from obligatory registration are primarily defined by the limits of transactions, which are 100.000 EUR for one-off money transactions, or in the aggregate performance of not exceeding 250.000 EUR per calendar year, in the case of repeating performance. For the acquisition of property, rights to property, or other property rights, the limit is its general value, which in aggregate does not exceed 100.000 EUR.
Existing legislation did not resolve the identification of beneficial owners in any substantial manner and relied upon simple affidavits; this is no longer the case based on the adopted Act and a stricter regime for verifying beneficial owners has been introduced.
The philosophy behind the Act is to grant access to public funds conditional upon registration in the register, with clear identification of the beneficial owners and an authorised party responsible for the provided details. The legislation expands on existing legislation with respect to public control over the register of beneficial owners because the register of public sector partners will be accessible to everyone, from public authorities to businesses and civil society. A new and more abstract definition of the beneficial owner is also introduced, specifically, a natural person who controls or exercises control over their client or the natural person to whose benefit a specific transaction or activity is conducted.
The Act also defines the penalties for failing to comply with the conditions defined in the Act. The registering authority may levy fines against a public sector partner up to the amount of economic benefit obtained by the public sector partner or a fine ranging from 10,000 EUR to 100,000 EUR if such economic benefit cannot be determined; specific violations include when the registration application contains false or incomplete data on the beneficial owner or public officials, failing to comply with the duty to submit an application to make changes to existing data regarding the beneficial owner within 60 days of such change and to provide a verification document with such application or a violation of Section 19 of the Act.
Fines may also be levied against persons who are the statutory body or all the members of the public sector partner’s statutory body at the time of such violation of the conditions defined above ranging from 10,000 EUR to 100,000 EUR.
Public sector partners may be subject to a 1.000.000 EUR penalty, the seizure of company profitsor exclusion of the public sector partner from the register, and therefore loss of the ability to tender for public funds, if false information is provided under the Act.
Slovakia’s Anti-Dummy Corporation Act is the only one in the world that demands companies seeking to do business with the state to disclose their ownership structure and beneficial owners. The Act may serve as an example for Europe in efforts to combat corruption and the non-transparent behaviour of companies.
Register is an information system of the public administration, which is administered and operated by the Slovak Ministry of Justice. The register is available on the website of the Ministry https://www.justice.gov.sk/Stranky/default.aspx . Registration body is the District Court in Žilina. Data entered in the register are not required to be identified for the public authority, and it is possible to obtain an extract from the registry.
This Act enters into force on 01 February 2017.
[1] Definition of these entities is stipulated in the Act, the mentioned entities represent only an example
[2] § 7 of the Act No. 581/2004 on health insurance companies, healthcare supervision
