Amendments to the guidelines for defining the ultimate beneficiaries

We would like to draw attention to the fact that the Ministry of Finance has amended the guidelines for defining the ultimate beneficiaries. This applies to the cases where the owners of a business all hold less than 25% of the company.

According to the law, legal persons governed by private law are obliged to keep and collect relevant, accurate and updated data on the ultimate beneficiaries as well as information on the right of ownership or other manners of carrying out control. In order to facilitate performance of that obligation, the Ministry of Finance has prepared guidelines for defining the ultimate beneficiaries. The guidelines are amended and updated based on practical needs.

Defining ultimate beneficiaries if there is no natural person who would own over 25% of the company or control the company in any other manner

To put it as simply as possible, the ultimate beneficiary is a “natural person who ultimately owns or controls a legal person”.

Anyone with a larger direct or indirect holding that exceeds 25% is also always considered an actual beneficiary – even if they have no control over the company (such situation is described in example 3 of the guidelines).

There may also be a situation where a natural person who owns over 25% of the company or controls it in any other manner, does not exist and there are no grounds to think that they could exist (such situation is described in example 4 of the guidelines).

If a company has, for example, four or more shareholders who are natural persons, whose holding remains under the limit and individually none of them can control the company, the members of the managing body should be indicated in the register as the ultimate beneficiaries.

Listing persons who own less than 25% of the company in addition to the above persons is not prohibited – especially if they themselves wish to do so. However, if any of the small shareholders disagrees with it, they have the right to request changing of data based on section 79 of the Money Laundering and Terrorist Financing Prevention Act.

A legal person under the private law is governed by the management board. If the requirement for a council is set out in the law, the council is also considered as the governing body.

Indicating the ultimate beneficiaries for non-profit organisations has also been updated for cases where the founders or members of the non-profit organisation are legal entities

The ultimate beneficiary must also be indicated for non-profit organisations, although earning profit is not the aim of such organisations. In such cases, according to the definition of the ultimate beneficiary, person(s) who control the activities of the organisation must be indicated. Under normal circumstances these are members of the management board. 

Exceptions are possible only if the founders or members of the non-profit organisation are legal persons. In such case, the ultimate beneficiary is identified in the same manner as in the case of companies. This is also conducted under the principle that in case of a management board consisting of more than four members, setting out the chairman of the management board is sufficient. If a person is indicated as the ultimate beneficiary due to his or her position as a member of a managing body, it does not mean that he or she receives financial benefits from the organisation or that the organisation is operating in his or her interests.

The guidelines prepared by the Ministry of Finance are available here.