NEW RULES FOR DISCLOSURE OF FINAL BENEFICIARIES OWNERS
The Law of Ukraine “On Prevention and Counteraction to the Legalization (Laundering) of Proceeds from Crime, Financing Terrorism and Financing the Proliferation of Weapons of Mass Destruction” entered into force on 28.04.2020. -IX).
After Law No. 361-IX enters into force, the process of legal relations in the field of state registration will partially change, since the new law, among other things, changes the provisions of the Law of Ukraine “On State Registration of Legal Entities, Individuals – Entrepreneurs and Public Formations”.
What changes do entrepreneurs expect?
Law No. 361-IX introduces new rules for disclosure of information about the ultimate beneficial owners of companies and the ownership structure of a legal entity. From now on, in accordance with the provisions of Law No. 361-IX, all legal entities registered in Ukraine must report to the State Registrar of legal entities, natural persons-entrepreneurs about the change of final beneficial owners within 30 working days from the day when such changes occurred. Within the specified period, legal entities must submit documents to the state registrar for carrying out appropriate changes in the Unified State Register of legal entities, entrepreneurs and public entities.
However, it is not so simple. In the absence of such changes, Law No. 361-IX also obliges companies, every 14 calendar days from the date of registration of a legal entity, to report to the state registrar about the absence of such changes. Therefore, an annual “data update” is now in place.
And if not to report? Law No. 361-IX establishes responsibility for the late notification of the state registrar about the change of the final beneficiary or the non-notification in general of such changes. Failure to notify or miss a missed deadline entails imposing a fine on the head (director) of a legal entity or on a person authorized to act on behalf of a legal entity in the amount of from 1 thousand to 3 thousand non-taxable minimum incomes of citizens.
The retroactive effect of the Law. Not in this case! Among other things, the full ownership structure of the company will also be required by those legal entities that were registered before the entry into force of Law No. 361-IX. However, the ownership structure itself has not been approved by any normative act, its form and content must be approved by the State Financial Monitoring Service of Ukraine in agreement with the Ministry of Justice of Ukraine. Therefore, it is not yet clear in what form it will be necessary to present the ownership structure of the enterprise to the state registrar.
* Apparently, changes will also be made to the Procedure for conducting the EDR. Because it is obvious that the structure will be changed. In our opinion, free access to the EDR should be restricted to the part of displaying beneficiary data, to disclose such information or payment, or at the request of the relevant authorities and on the basis of court decisions to avoid manipulation.
It should be recalled that the applicant pays an administrative fee of UAH 630 for the introduction of changes to the information on the legal entity in the EDR, in particular about the change (disclosure) of information about the beneficiaries. The new law does not provide for exemption from payment of legal entities registered before the new law enters into force.
The most problematic data for this change are for large holdings with foreign investments, in which the system of ownership of the company reaches more than 100 founding legal entities. Only one company that owns our client owns 34 foreign legal entities, which in turn are owned by others, and we are currently preparing the appropriate documents to disclose the complete ownership structure.
Our law firm will assist in the state registration of changes of information about the legal entity. We will undertake the preparation of all necessary documents to make the necessary changes and to disclose information about the beneficiaries.
Author: Anatoliy Perepelchenko