Corporate Advisory Partner at RSM Poland
Corporate Advisory Assistant at RSM Poland
On 13 July 2018, the Act of 1 March 2018 on Countering Money Laundering and Terrorist Financing (Journal of Laws of 2018, item. 723, hereinafter referred to as “the Act”) entered into force in Poland. The goal behind this regulation was the complete and correct transposition of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. However, certain provisions of the Act will enter into force only after 18 months after the date of its announcement, i.e. 13 October 2019, and will materially affect the operation of many businesses.
From the entrepreneur’s point of view, changes that enter into force this month are very significant and involve both benefits and certain burdens. It is about the roll-out of the Central Register of Ultimate Beneficial Owners (hereinafter “CRUBO” or “Register”). As of 13 October 2019, any commercial law company, with the exception of partnerships and public joint stock companies, will be obliged to disclose information on the ultimate beneficial owner in this Register within the statutory deadline.
We encourage you to read the text below, presenting the key aspects of the Register.
Central Register of Ultimate Beneficial Owners: practical applications
The goal behind establishing the Central Register of Ultimate Beneficial Owners is to boost the security of economic transactions, offer the option of contractor checking, facilitate the verification of structures of legal persons and collect and process information about ultimate beneficial owners of commercial law companies. As of 13 October, any entrepreneur may, free of charge, request the Register to retrieve the identity of ultimate beneficial owners of their contractors, i.e. check who is really behind a given entity.
Ultimate Beneficial Owner: who is it?
In accordance with the definition provided for in Article 2 par. 2 item 1 of the Act, an ultimate beneficial owner is a natural person or natural persons who either directly or indirectly control(s) the customer through their powers resulting from legal or factual circumstances that allow them to exercise effective control over actions or activities undertaken by the customer, or a natural person or natural persons, on behalf of whom a business relationship is established or an occasional transaction is concluded.
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Thus, when seeking to identify the ultimate beneficial owner, we are always looking for a natural person who is at the very top of the capital structure of the group concerned, and who directly or indirectly exercises control over the company. This is often a difficult task, in particular in multinational entities with complex capital structure. The legislator offers more detailed definitions that, by and large, are supposed to help us look until we find what we are looking for (i.e. the right natural person).
In the case of a customer being a legal person other than a company whose securities are admitted to trading on a regulated market subject to disclosure requirements under the European Union legislation or equivalent regulations of a third country, the ultimate beneficial owner is:
- a natural person being a customer’s stockholder or shareholder who owns more than 25% of the total number of stocks or shares of that legal person;
- a natural person who has more than 25% of the total number of voting rights in the customer’s decision-making body, also as a pledgee or user, or pursuant to agreements with other persons entitled to vote;
- a natural person who exercises control over the legal person or legal persons, who jointly own more than 25% of the total number of customer’s stocks or shares, or have more than 25% of the total number of voting rights in the customer’s decision-making body, also as a pledgee or user, or pursuant to agreements with other persons entitled to vote;
- a natural person who controls the customer by way of having, in relation to that legal person, the rights referred to in Article 3 par. 1 item 37 of the Act of 29 September 1994 on Accounting (Journal of Laws of 2019, item 351) [this is about the parent company’s power to control its subsidiary] or
- a natural person holding a senior management position, in the case in which it is proven impossible to determine the identity of natural persons referred to in the first, second, third and fourth indent or there are doubts as to this identity, and in the case where there are no suspicions of money laundering or terrorist financing.
We have rights, but we also have obligations
If every entrepreneur can check their contractor’s data in the Register, every contractor (hence every entrepreneur) must submit this information to the CRUBO first.
Pursuant to Article 58 of the Act, the following entities shall be obliged to report the information about ultimate beneficial owners and update any data included in the Register:
- general partnerships;
- limited partnerships;
- limited joint-stock partnerships;
- limited liability companies;
- simple joint-stock companies, and
- joint-stock companies, except for public companies within the meaning of the Act on Trading in Financial Instruments and the Act on Public Offering and Conditions Governing the Introduction of Financial Instruments to Organised Trading and Public Companies (Journal of Laws of 2019, item 623).
Reported information shall include:
1. identification data of companies according to Article 58 of the Act, namely:
- (company) name,
- organisational form,
- number in the National Court Register,
- VAT number;
2. identification data of the ultimate beneficial owner and a member of the decision-making body or a partner authorised to represent companies listed above, namely:
- name and surname,
- country of residence,
- PESEL [personal identification number] or the date of birth (in the case of persons who do not have a PESEL number),
- Information about the size and nature of shares or rights held by the ultimate beneficial owner.
Who is responsible?
The person authorised to report the information shall be the person authorised to represent the company. Applications shall be submitted in the form of an electronic document in accordance with the template provided by the Ministry of Finance, and accompanied by a qualified electronic signature or ePUAP trusted profile, and submitted via website published by the Ministry of Finance.
Deadlines are not the same for everyone
Entities already entered into the National Court Register are in a privileged position as regards deadlines for submitting applications to the CRUBO. The deadline for submitting the identification data of companies and data of the ultimate beneficial owner for commercial law companies registered in the National Court Register before the entry into force of the Act, i.e. before 13 October 2019, is 6 months after that day, i.e. the notification should be submitted to the Register by 13 April 2020.
When it comes to companies registered in the National Court Register after 13 October 2019, they will have a 7-day deadline to submit their application to the CRUBO. This deadline shall run from the date of entry into the National Court Register.
Pursuant to the Act, companies that have already reported the information to the Register will also be obliged to update their data in the event of any change within a period of 7 days of the date of the change.
Carrot and stick
Both filing an application for entry into the Register and obtaining any data from it is free of charge. However, apart from the “carrot” in the form of benefits resulting from the transparency of corporate structures of contractors, there is also a “stick” hanging in the air over the management boards of companies. There is a penalty for a failure to meet the deadline provided for in the Act for companies submitting the required information to the CRUBO; it is a fine of up to PLN 1 million.
Ready (?), steady, go!
Unfortunately, there are no detailed guidelines at the moment about the form of preparing and submitting applications to the Central Register of Ultimate Beneficial Owners. The option of submitting applications through a proxy also remains unclear. According to the information provided by the Ministry of Finance, the ICT portal for submitting applications will be published on 13 October 2019, i.e. after the date of entry into force of the discussed Act. Any technical and supplementary information about the system is to be published on the website of the Ministry of Finance in the coming days.
Should you have any questions or wish to discuss the topic further, we encourage you to contact us.
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