The obligation to disclose beneficial owners in the ESM is coming to an end. What is changing?

In its ruling at the end of August 2025, the Supreme Court fundamentally changed the interpretation of obligations relating to the Register of Beneficial Owners (ESM). In its opinion, legal entities and trust funds cannot be forced to register beneficial owners, as this is contrary to fundamental EU rights. What does the new interpretation mean, what should you prepare for, and what will be the practical consequences?

What is the register of beneficial owners and how does it work?

The register of beneficial owners is a public register administered by the Czech Ministry of Justice. It records beneficial owners, i.e. , natural persons who are the ultimate owners of legal entities or trust funds.

The register of beneficial owners is based on anti-money laundering (AML) regulations and is intended to ensure transparency of ownership structures in legal entities and trust funds.

According to these rules, companies and trust funds must:

• Identify their beneficial owners.
• Register them in the ESM.
• Regularly update the data.

Failure to comply with this obligation has always been subject to sanctions – from financial penalties and blocking of voting rights to a ban on the payment of profit shares.

What does the Supreme Court's decision change in the ESM?

On August 25, 2025, however, the Supreme Court issued a ruling stating that the mandatory registration of beneficial owners is contrary to fundamental EU rights, in particular the right of owners to protection of private and family life and the right to protection of personal data. In other words, the state cannot force legal entities or trust funds to disclose their beneficial owners.

What does this mean in practice? Incorrect or missing data in the ESM can no longer be sanctioned:

• The voting rights of shareholders cannot be restricted.
• Companies will not be prevented from paying out profits.
• Financial penalties for not registering the actual owner are abolished.

From an AML perspective, such structures are often used to hide the beneficial owner, who is either subject to sanctions or unable to sufficiently prove the origin of their funds.

How are the Ministry of Justice and legislators responding?

Until now, the ESM has been publicly available. However, following the Supreme Court's decision, the Ministry of Justice announced that it plans to restrict access. The database would now only be fully accessible to selected institutions, such as banks or law enforcement agencies.

A change in legislation can therefore be expected, as the current law no longer reflects the situation.

What are the practical consequences for companies?

The current situation is transitional. We are at a point where the transparent disclosure of the actual owners of a company is no longer enforceable, but the law remains formally in force without change.

Given the current developments, it is advisable to:

• monitor developments in legislation affecting ESM in the coming months,
• continue internal reporting of ownership structure (banks and other institutions will continue to require this as part of their AML processes),
• wait for changes in ESM until the amendment to the law or more precise methodologies are issued.

If you are currently planning to change the structure of your company or are establishing a new limited liability company, it is advisable to verify the current interpretation of the obligations.

We will be happy to advise you on the changes

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