Registration of ultimate beneficial owners in the commercial register
The obligation to register data pertaining to an ultimate beneficial owner in the Commercial Register of the Slovak Republic came into force on 1 November 2018. This obligation applies to almost all legal entities. Who is considered an ultimate beneficial owner according to the current legislation? What data need to be registered? What are statutory time limits and what happens if an entity fails to meet them? We bring you answers in the following article and thus shed more light on the issue of the registration of an ultimate beneficial owner (the “UBO”) in the Commercial Register itself.
What the law provides for?
After registration in the Register of Public Sector Partners (the “RPSP”), there is a new obligation for legal entities effective as of 1 November 2018, which is to register data about the UBO. It has been brought by Act No. 52/2018 Coll. amending Act No. 297/2008 Coll. on Prevention of Legalization of Proceeds of Criminal Activity and Terrorist Financing and on amendments and supplements to certain acts as amended.
Provision of Section 2(3) of Act No. 530/2003 Coll. on Commercial Register and on amendments and supplements to certain acts as amended (the “Commercial Register Act”) states: “In case of a legal entity that is not an entity of public administration nor an issuer of securities admitted for trading on a regulated market subject to requirements for disclosure of information under a specific regulation, equal regulation of a Member State of the European Union or equal international standards, nor an entity registered in the Register of Public Sector Partners, data about an ultimate beneficial owner are also entered in the Register of Public Sector Partners, i.e. a first name, surname, personal identification number or date of birth, if the personal identification number was not assigned, permanent residence address or other residence, nationality and type and number of an identity document and data establishing the status of an ultimate beneficial owner under a specific regulation. Registration under the first sentence does not replace the obligation to register an ultimate beneficial owner of a public sector partner in the Register under the specific regulation.”
The said amendment thus creates conditions for a legal bridge between source registers and the register of legal entities, entrepreneurs and public authorities, aimed at bringing transparency into ownership of legal entities and storage of information about the ultimate beneficial owner, as required by IV. AML Directive. The adopted change ensures transposition of selected articles of the directive, that, among other things, provides that the Member States undertake to ensure that business entities and other legal entities registered in their territory are obliged to record appropriate, accurate and current information about their ultimate beneficial owner, i.e. to inform about their actual owner, as well as to store this information in any of the central registers of the Member State. Registers where this information is entered serve as source registers for the register of legal entities, entrepreneurs and public authorities maintained under a specific legal regulation.
The entities concerned are therefore obliged to identify their UBO and, subsequently, to enter the data thereon in the Commercial Register.
Entities obliged to register their UBO in the Commercial Register and statutory time limits
The UBO must be registered in the Commercial Register by 31.12.2019. The entities are also obliged to update their data in case of a change. This condition applies to almost all legal entities that registered in the Commercial Register of the Slovak Republic by the end of October 2018, i.e. by 31.10.2018.
These are mainly:
- limited liability companies,
- joint stock companies,
- limited partnerships,
- public companies,
- natural persons – entrepreneurs registered in the Commercial Register.
The foregoing also applies to newly established legal entities, that are being registered in the Commercial for the first time. The Commercial Register will not carry out the registration without the data about the UBO being provided.
The following entities do not have the obligation to register the UBO:
- public authorities,
- issuers of securities admitted for trading on a regulated market subject to requirements for disclosure of information under a specific regulation, equal regulation of a Member State of the European Union or equal international standards,
- entities registered in the Register of Public Sector Partners.
Sanctions for failure to meet the time limit or disclosure of false data
Failure to comply with the obligation to file an application for registration of the UBO within the statutory time limit is subject to sanctions. In case such failure is detected, the registered court may impose a fine of up to EUR 3.310 on the person authorised to act on behalf of the registered legal entity (on the authorised governing body). Such fine may also be imposed if the registered court finds out that the data concerning the ultimate beneficial owner are false.
Scope of the data entered in the Commercial Register
The data concerning the UBO are not publicly available in the Commercial Register; they are not visible on the Commercial Register web page nor in a written form on the extract from the Commercial Register, which is available to the public. These data are entered in a non-public part of the Commercial Register only accessible by selected entities (e.g. courts, Financial Police, Tax Office, etc.).
The following data concerning the UBO are entered in the Commercial Register:
- first name and surname,
- personal identification number and date of birth, if personal identification number was not assigned,
- address of permanent residence or other residence,
- type and number of an identity document,
- data substantiating the status of the UBO.
Who is considered UBO?
General definition of the UBO is provided in Section 6a of the Act on Prevention of Legalization of Proceeds of Criminal Activity, which is further specified according to the legal form of the entity whose UBO is being identified.
In general, an ultimate beneficial owner is every natural person authorised to perform control activities or really controlling a legal entity, natural person – entrepreneur or pooling of property and every natural person to whose benefit these entities carry out their activities or business.
When identifying an ultimate beneficial owner in case of a legal entity, depending on the ownership structure and overall position of the natural person within the company, the UBO is a natural person that:
1. is entitled to the economic benefit of at least 25% from business activities of the legal entity or its other activities,
2. is authorised to appoint, otherwise designate or remove an authorised governing body, managing body, supervisory body or control body of the legal entity or any member thereof,
3. has direct or indirect share or their sum of at least 25% in voting rights in the legal entity or in its registered capital including bearer shares,
4. controls the legal entity in any way other that those specified in second and third subparagraphs.
Documents necessary for identification of UBO and subsequent entry in the Commercial Register
For proper identification of the UBO, it is necessary to submit documents proving ownership and management structure of the company and to analyse the following:
- ownership and management structure of the registered legal entity,
- corporate documents of the registered legal entity,
- corporate documents of a legal entity in the ownership structure of the registered entity,
- relations within the ownership and management structure of the registered legal entity (e.g. family relationships between shareholders/partners, silent partnership, etc.).
Our law firm requires the following for the purposes of identification of the UBO:
- completing a questionnaire compiled for the purposes of identification of the UBO,
- current extract from the Commercial Register of the registered entity as well as entities in the ownership structure (founding documents, articles of association...),
- current list of members/shareholders of the registered entity as well as entities in the ownership structure,
- current organisational structure of the registered entity,
- other documents demonstrating ownership and management structure of the registered entity.
Should you have any questions or be interested in a personal consultation or a price offer for the provided services concerning the registration of the UBO in the Commercial Register, please, do not hesitate to contact our law firm.