Register of public sector partners

On 1 February 2017. Law no. 315/2016 on the Register of Public Sector Partners entered effect.

Who does the law affect? Who is a public sector partner?
Persons who receive funds from the state budget, the budget of a state dedicated fund, the budget of a public body, the budget of a municipality, the budget of a regional government or the European structural and investment funds, legal persons established by statute, a legal entity which is completely or mostly funded by the state, a municipality, regional government or a legal entity established by law, which is controlled by the state, a municipality, regional government or a legal entity established by statute or in which the state, a municipality, regional government or a legal entity established by statute appoints or elects more than half the members of its management or supervisory body, from health insurance or receives state aid or investment aid or receives performance, the subject of which is the property, rights to property or other proprietary rights of the state, a public institution, municipality, regional government, legal entity established by statute or by a legal entity which is wholly or mostly funded by the state, a municipality, regional government or a legal entity established by statute, which is controlled by the state, a municipality, regional government or a legal entity established by law or where state, municipality, higher territorial unit or a legal entity established by law appoints or elects more than half the members of its management or supervisory body or from health insurance, and other persons referred to in the Law (e.g. subcontractors of entities listed above), amounting to more than 100 000 euros or in aggregate 250 000 euros per calendar year in the case of repetitive performance.

What are the obligations of a public sector partner?
The basic responsibilities of the public sector partner (PSP) is the requirement to be registered in the RPSP, for the duration of a legal relationship from which the PSP draws public resources. Failure to do this means prevention of access to public funds.

The proposal for registration may be submitted by the PSP only through an authorized person.

Who is an authorized person?
The authorized person is a body established by law, which carries out activities for the PSP in the registration proceedings and is jointly responsible for the correctness of entries in the register and their regular updating. A public sector partner may have always only one authorized person registered in the register.

Only an authorized person is actively authorized to communicate with the registering authority. The authorized person acts for the public sector partner. The authorized person may be a lawyer, notary, bank, foreign bank branch, auditor or tax advisor with a place of business or registered office in the Slovak Republic and who under a written agreement have undertaken to perform the duties of an authorized person for the public sector partner.

As is the relationship between the PSP and the authorized person governed?
Between the PSP and the authorized person there must be a contractual relationship established by a written agreement in which the authorized person undertakes to fulfil the obligations of an authorized person for the PSP.

Who is the end-user of benefits?
The person stated in Law no. 297/2008 on the Protection against Legalization of Proceeds of Crime and on Terrorist Financing and on the amendment of certain laws, as amended. The end user of benefits means any natural person who actually runs or controls a legal entity, individual – sole trader or association of property, and any natural person for whose benefit these entities perform activities or trade.

Identification of the end user of benefits and verification of the identification of the end user of benefits is performed using a verification documents drawn up by an authorized person. The verification document is publicly available in the register – the publication of a verification document is not a breach of commercial confidentiality or banking secrecy.

What sanctions does the law allow to be applied?
Depending on the nature of the breach, sanctions obligations under the Act primarily affect the PSP, its statutory authorities, the authorized person and the end user of benefits.

Providing false information about the end user of benefits results in the imposition of fines:
a) a public sector partner is fined the amount of economic benefit that partner public sector has gained; if economic benefits can not be determined, the registering authority shall impose a fine of 10 000 euros to 1 million euros,
b) a person who is the statutory body or each member of the statutory body of the public sector partner at the time of breach of duty can be fined 10 000 to 100 000 euros – the authorized person guarantees this payment.

Furthermore, a decision on imposing fines is also a decision to exclude under § 13a of the Commercial Code, i.e. the statutory representative of the legal person is, for three years, automatically deleted from all the companies and at the same time during those three years cannot be registered as a statutory body in the Commercial Register.

Providing false data on the end user of benefits is also the basis for the entitlement of the state to withdraw from the contract and under certain circumstances there may also be criminal liability.

Please contact us if you are interested in finding out more about this issue. We would be pleased to offer you legal services in this area.

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