Ultimate Beneficial Owners Must Be Entered Into Commercial Register From September
From 1 September 2018, all companies registered in Estonia must disclose data at the Commercial Register on their ultimate beneficial owners. In case of companies, the ultimate beneficial owners are natural persons who own the company directly or indirectly.
Direct ownership preconditions that the natural person holds more than 25 percent share or right of ownership in the company. Indirect ownership is when another company under the control of the natural person holds more than 25 percent share or right of ownership in the company.
In case of simple and clear circle of owners, a company has no problems with fulfilling their obligations. In case of a more complicated ownership structure, establishing the data of the ultimate beneficial owners may prove to be complicated, especially if the chain of owners leads to foreign countries.
The law provides clearly the obligation of a company to submit to the Commercial Register the data on ultimate beneficial owners and sets out liability for failure to submit data or submitting false data. If the ultimate beneficial owner cannot be identified and all options have been used, the company must set the member of the highest management body as the ultimate beneficial owner. Additionally, companies are required to document and store data on all activities that they have undertaken to identify the ultimate beneficial owners. Unfortunately, it is not quite clear how much of an effort do companies with a complicated ownership structure have to undertake in order to establish the data before they may say that they are unable to identify the ultimate beneficial owners.
The ultimate beneficial owners are not identified in case of stock companies, apartment associations, building associations and certain foundations.
The following data must be submitted to the Commercial Register on ultimate beneficial owners:
• Person’s name, personal identification code and country of the personal identification code, if the personal identification code does not exist, the date and place of birth as well as place of residence.
• Data on the manner of carrying out the check of the person.
In case of a new company, the data on ultimate beneficial owners must be submitted to the Commercial Register upon incorporating a company with the application for entering the company into the Commercial Register. If the ultimate beneficial owners change or if the data on the ultimate beneficial owners are incorrect, new data must be notified to the register within 30 days from the moment the Board found out about the change in the data.
Pursuant to the law, the sanction for the failure to submit data on ultimate beneficial owners or submitting false data is up to 300 fine units for natural persons (at the moment, up to 1200 euros) or up to 32 000 euros for legal entities. For the violation of the obligation to identify the ultimate beneficial owner the law provides a penalty of up to 300 fine units or arrest for natural persons and up to 400 000 euros for legal entities.
Submitting the data on ultimate beneficial owners is possible from September 2018.
Should you have questions regarding this topic, please let us know by writing to merike[at]koda.ee.