New legislation can be quite tricky to apply
According to a recent amendment to the act on Prevention of Legalization of Proceeds of Criminal Activity and Terrorist Financing, legal entities must disclose their beneficial (actual) owner in the Commercial register. Existing companies are obliged to disclose their beneficial owners by 31 December 2019 the latest. Legal entities, founded after 31 October 2018, are obliged to provide this information upon their foundation.
Who is the beneficial owner?
A legal entity’s beneficial owner is any natural person, who effectively directs or controls this legal entity, an entrepreneur (natural person) or an association of assets, and any natural person for the benefit of whom those businesses are engaged in business or commerce.
In case of commercial companies, beneficial owner is a natural person, who:
- has a direct or indirect interest or owns 25 % in voting rights in the legal entity or in the equity capital including transferable shares,
- is entitled to appoint, otherwise constitute or recall a statutory body, executive body, supervisory body or auditing body of a commercial company or any of its members,
- in a manner other than those referred to in point a) and b) controls a legal entity,
- is entitled to the economic benefit of at least 25% of the business and other activities of a legal person.
Practical issues to identify the beneficial owner
If no natural person fulfills the above criteria, the beneficial owner of the entity are considered the members of its top management (statutory body, member of the statutory body, authorized officer and senior management directly in the governing body of the statutory body).
Beneficial owner is also a natural person, who does not meet the criteria above, but is acting in concord with another person or their common actions meet at least some of these criteria.
In most cases, it is quite evident, who the beneficial owner is, and therefore, it should be easy to fill in the appropriate forms into the Commercial register.
As our practical experience tell us, there is a number of cases, where there is quite tricky to identify the beneficial owner. Troublemakers are typically foreign foundations and/or trusts, cooperatives and cases, where only minor shareholders are owning the company. In such cases, it might turn out, that the local management or even senior employees must be registered as beneficial owners, which is an awkward result and probably does not meet the aim of the legislation.
If you have not fulfilled this obligation, please, do not hesitate to contact us.
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