The right to property is a fundamentally important one, representing one of the cornerstones of any kind of economic relationship, attracting investments, and guaranteeing the further development of the economy in general. However, the right to property is not an absolute right. On the one hand, it is a bearer of broad public social responsibility, and on the other hand, the legal regime of property rights also equips the bearer of such a right with corresponding obligations. In particular, the latter must be governed by domestic as well as international law and fulfill its obligations to other economic entities, organizations, individuals, and the state.
A particularly important aspect of the legal regime of property rights is openness. Third parties and investors should have access to complete and accurate data on property, on the basis of which it would become possible to conclude transactions and take legal and economic action. One of the practical manifestations of the openness of property rights is the real estate register and the register of entrepreneurs and non-entrepreneurial legal entities, which are presumed to be complete and truthful, meaning the following for third parties: that the information in the registers is not only fully represented, but also reliable.
The right to property is closely linked with its origin. Purchases of real estate and movable property are often made with financial resources accumulated as a result of corruption and other criminal activities. It is important to have complete, accurate, and verifiable information about the origin of the property and the owner of the financial resources necessary to acquire ownership of the property.
In the 21st century, it has become a common practice to invest the money earned as a result of illegal activities in offshore companies, and subsequently to conduct financial activities through such companies. Information about the beneficial (final) owners of offshore companies is usually not available, which makes it impossible to verify the origin of both the actual owners of a company and the financial resources available to a specific company.
International organizations and various states are taking active steps to legally regulate the beneficial owners’ openness standard; Develop practical guidelines to help stakeholders obtain information in an understandable language to identify beneficial owners; and create electronic solutions to address this challenge in the form of a register of beneficial owners.
The issue of the opacity of final ownership is particularly problematic in developing countries, where the rule of law is fragile and corruption is rampant. Georgia is no exception in this regard. In Georgia, transactions often involve companies registered in offshore zones and their Georgian-based branches and subsidiaries. This increases the likelihood of suspicious transactions that may be carried out using financial resources obtained as a result of corruption with the aim of laundering money, promoting terrorism, or other illegal activities.
Given the importance of the transparency for beneficial owners, the purpose of this study is to review the legal framework for accessing data on beneficial owners of companies in four countries: In Georgia and Central Europe - Poland, Slovakia, Hungary, and the Czech Republic. The legislation sets out the practice of accessing data on beneficial owners, the extent to which there is a common registry practice in these countries, and how often local activists and the private sector utilize such registries in their day-to-day operations. In each country, recommendations are made for the implementation and improvement of transparency standards for beneficial owners.
IDFI prepared this study together with partner organizations. From each country, representatives of the following NGOs were involved in writing a sub-chapter about their country: KohoVolit.eu (Czech Republic and Slovakia), K-Monitor Public Benefit Association (Hungary) and ePanstwo Foundation (Poland).
The Project is co-financed by the Governments of Czechia, Hungary, Poland and Slovakia through Visegrad Grants from International Visegrad Fund. The mission of the fund is to advance ideas for sustainable regional cooperation in Central Europe.
The responsibility of the content of the article lies with the Institute for Development of Freedom of Information (IDFI) and its partner organizations. It does not necessarily reflect the opinions of International Visegrad Fund.
Promoting Entrepreneurs Living Next to the Occupied Territories in Shida Kartli Region through Branding23.06.2022
Panel Discussions: Enhancing Legislative Framework and practices for access to public information in Georgia16.06.2022
Regional Event: Consequences of the Ukraine invasion on the AML/CFT regime for NPOs in the Eastern Partnership11.06.2022
Statement of Civil Society Organizations on the possible involvement of State Security Service in the events of July 5-614.06.2022
We call on the government to take concrete steps in order to gain candidate status gain EU Candidate Status10.06.2022
Celebrating May 9 in Russia02.05.2022