Two months have passed since Saeima has adopted amendments to the Law on the Prevention of Money Laundering and Terrorism Financing (hereinafter – Law), which require legal entities to submit information on the true beneficiary to the Register of Enterprises of the Republic of Latvia. Nevertheless, until now representatives of legal entities do not have full clearness to whom exactly and to what date it is necessary to submit this information, what to guide when submitting this information, how to draw it up.
The purpose of the above-mentioned amendments to the Law is to ensure the availability of information on each physical person who actually (and not on paper) exercises control over a legal entity in the interests or in favour of which a legal entity was established and carries out certain transactions. Control over a legal entity can be exercised through participation in the management board, by owning capital shares or stocks (more than 25%), directly or through other legal entities, or by concluding a contract of authority, etc. That is, the true beneficiary in the understanding of the Law is a physical person who actually (and not on paper) uses the capital or assets of a legal entity, actually controls this legal entity, even if this beneficiary does not occupy any official position in this legal entity and has no other official status.
The beneficiary is not necessarily one, they may be several. If a physical person owns or otherwise controls more than 25% of the shares or stocks of a legal entity, it is considered to be a true beneficiary under the Law.
Of course, there are such legal entities where it is impossible to determine the true beneficiary:
- open joint-stock companies whose stocks are traded on the market/exchange,
- cooperative partnerships,
- capital companies, where 100% of the shares of capital or stocks are owned by the state or local government,
- partnerships, trade unions, political parties, in which 4 or more members.
This does not mean that these legal entities do not need to submit to the Register of Enterprises information about the true beneficiary. In this case, they need to file with the Register of Enterprises information that it is impossible to determine the true beneficiary.
That is, the legislator believes that there are no cases when the actual beneficiary does not physically exist – there are cases when the true beneficiary cannot be determined.
The same applies to personal companies or capital companies, in which 4 or more participants (that is, each participant owns 25 percent or less of the shares of capital or stocks). In this case, the board of the company must consider and evaluate all the criteria for determining the true beneficiary – Who actually controls the company? In whose interests are the decisions made? If such a person exists, it is necessary to file information about him, indicating him as a true beneficiary. If such a person could not be determined, it is necessary to file information with the Register of Enterprises that it is impossible to determine the true beneficiary.
The Register of Enterprises does not verify the truth of the submitted information, it only records the information, and for a fee. For registration of the true beneficiary, merchants must pay a state fee of 18 euros, family enterprises – 10 euros, political parties – 11.38 euros, partnerships and funds – 5.69 euros.
A lot of confusion arises among representatives of legal entities in connection with the registration deadline for the true beneficiary: Who should have submitted information before February 1? Who before March 1? Who should not file information?
We will answer at once to the last question – all legal entities should submit information, except for joint-stock companies, whose stocks are traded on the regulated market. All the rest should submit information, just at different times.
Until February 1, the information had to be submitted for those legal entities that had previously been required to indicate the true beneficiary on the basis of paragraph 171 of the Commercial Law of Latvia. To all these legal entities, the Register of Enterprises sent out in January 2018 a notification that they should update the information on the true beneficiary before February 1. Therefore, if you did not receive the indicated notice from the Register of Enterprises, then this term does not apply to you.
Until March 1, you need to have time to submit information to the following legal entities:
- capital companies with 4 or more participants,
- capital companies in which participants holding more than 25% of the shares of capital or stocks are other legal entities,
- family enterprises,
- trade unions, political and religious parties, funds – either submit information about the true beneficiary, or submit information that it is impossible to determine the true beneficiary.
There is no need to rush to submit before March 1 information about the true beneficiary to those legal entities that meet all of the following parameters:
- a legal entity is registered until 01.12.2017;
- participants of the legal entity – physical persons in the number of not more than 3 persons, and these persons are in fact the true beneficiaries;
- the Register of Enterprises has information on identity documents for these participants, information about their citizenship, and the state in which they permanently reside is the same state that issued them an identity document that is registered in the Register of Enterprises (in short: they live permanently in the state that issued them a passport, information about which is in the Register of Enterprises of Latvia).
These legal entities will file information about the true beneficiary when changing the board and/or participants.
In case of changes in the group of the true beneficiaries or the way in which they exercise the control, the information to the Register of Enterprises shall be submitted no later than 14 days from the date of receipt of information about this event, i.e. no later than 14 days from the date of the new section of the register of participants, and no later than 3 days from the moment the board signs the register of participants.
For all other issues related to the submission of information on the true beneficiary, the Law Office INLAT PLUS can provide quality legal assistance.
Recent News
