Failure to Disclose True Beneficiaries Can Be Costly: The Senate Clarifies the Consequences of Excluding Companies

About the Case

The case concerned the removal of a company from the Commercial Register without liquidation. The Register of Enterprises had determined that the company had failed to provide information about its beneficial owners and, after receiving a warning, had not remedied this deficiency. Consequently, a decision was first made to terminate the company’s operations, and later to remove it from the Commercial Register.

A shareholder of the company sought to have both decisions overturned, citing the financial consequences as well, since following the company’s removal, its assets were treated as heirless property. The Regional Administrative Court had ruled in favor of the petitioner; however, the Enterprise Register filed a cassation appeal.

The Court’s Conclusions

The Senate explained that the removal of a company from the Commercial Register without liquidation consists of two stages. In the first stage, a decision is made to terminate the company’s operations, and in the second, a decision is made to remove it from the Commercial Register. If the first decision is not challenged in a timely manner, it becomes final and can no longer be reviewed.

A key finding of the Senate is that, once the decision to remove the company has been enforced, the court can no longer rule on reinstating the company or revoking the decision itself. In such a situation, only a review of the legality of the adopted decision is possible. The Senate has changed the previous case law on this issue.

The Senate also emphasized that the obligation to disclose beneficial owners is established in the interest of society as a whole. If a person fails to fulfill this obligation for an extended period, the termination of the company’s operations and its removal from the commercial register are precisely the consequences that the legislature has prescribed for such inaction. The fact that a company loses its assets or that it has in fact carried out economic activities does not in itself mean that the consequences provided for by law become disproportionate. On this issue as well, the Senate clarified its previous findings.

Another important finding is that a company’s shareholder and the beneficial owner are not automatically the same person. Therefore, information about shareholders does not in itself mean that the Register of Enterprises already has all the necessary information about the beneficial owners.

Practical Implications

This ruling is particularly significant for business owners, board members, and shareholders.

First, it serves as a reminder that reporting the true beneficial owners is not merely a formal requirement—failure to comply may result in the company’s removal from the commercial register.

Second, the ruling demonstrates that once a company has been removed from the register, the options for rectifying the situation are very limited. If decisions are not challenged in a timely manner and the necessary steps—such as appointing a liquidator—are not taken, irreversible consequences may ensue.

Third, company members should not assume that the Commercial Register can determine the true beneficial owners on its own based solely on information regarding shares. The status of a true beneficial owner has distinct legal significance and must be assessed separately.

If you are facing a decision by the Commercial Register, a dispute regarding beneficial owners, or other commercial law issues, timely legal assistance can be crucial. Contact our law firm to assess your rights and explore possible solutions.