Obligatory disclosure of the beneficial owner

On 23/09/2019 by admin in Uncategorized @en

After 13th of October, 2019 Polish companies and partnerships will be obligated to disclose beneficial owners in the newly established Central Register of Beneficial Owners (Centralny Rejestr Beneficjentów Rzeczywistych). Companies that fail to do so may be subject to rather severe penalties.
New anti-money laundering regulations have been in force for more than a year. However, come into force in October. They obligate companies entered into register of entrepreneurs of Polish National Court Register (KRS) to disclose beneficial owners in a newly created register.

Those that will not fulfil this obligation may be subject to penalty up to PLN 1,000,000.00. It is a rather high amount, comparing it to e.g. penalties for failure to register information in the court register (KRS) or to provide information to statistical administration, which are typically up to several thousand PLN.

Beneficial Owner – not necessarily the shareholder

Beneficial owner is defined as any natural person that has direct or indirect control over the company, through both legal and factual arrangements, that allow to make significant impact on the activity of the company.

In particular, any person that has more than 25% of shares of the company or has more than 25% of votes in a body that governs the company or a natural person that control companies that together have the abovementioned control, and, in some situation, a person that has management position in the company.
Therefore beneficial owner may be either the shareholder, or person that is “above” the shareholder.
What is important, even if all beneficial owners are featured in KRS as shareholders or partners, they still need to be registered in the new register.

On the other hand, management of e.g. Polish limited liability company will be obligated not only to verify and disclose who is the shareholder of the company, but the capital structure that is above the shareholder.

Registration

Registration will be made on-line, using special system provided by Ministry of Finance. Application will have to be signed by either qualified digital signature or with ePUAP account by a person authorised to represent the company or partnership.
This means that in company (partnership) at least one person authorised to represent the company must have either ePUAP account or qualified digital signature – otherwise the company will not be able to fulfil this obligation.

Deadline

Deadline for registration is 7 days after company (partnership) is registered in KRS. This means that founders of the company have to verify status of the registration constantly, as official information from the court is usually delivered much later thant 7 days after registration (unless the company is registered using the on-line registration).

If company has been registered before 13th October 2019, information must be provided within 6 months after the law comes into force.

In particular those companies that are part of more complicated capital structures should proceed with verification of the beneficial owner as soon as possible.

Penalties

The penalty mentioned above would be given to the company (partnership). However, according to Polish law, it is possible for the management to be obligated to pay company’s debts – including debts that are result of penalties.

Polish Code of administrative procedure regulates guidelines of determining the amount of the penalty. Authorities should take into consideration actors such as circumstances of the infringement of law, importance of the situation, how long it occurred, frequency of previous infringements and other.

We can hope that, in particular when the beneficial owner is a person featured in KRS (shareholder or partner), penalties will not be significant. Still, providing the information to the authorities will be obligatory and you must remember about it, both iffi you’re planning to register a company and if you already have one.

Main issues

To sum up the main issue that may be related to new obligations:

1) verification of the beneficial owner by the management – the management may have problem with verifying capital structure of companies, especially if foreign entities are involved,
2) short deadline – management may be even unaware of the fact that the company has been registered, or, even more probable, that transaction resulting in change of the beneficial owner occurred within 7 days after it happens and be unable to make required registration.

In particular those members of the management board that are not shareholders of the company and therefore have may have less direct contact with owners of the company may have problem with forcing the shareholders to disclose true beneficial owners of the company.
Author: Jan Marczyński,
contact: + 48 608 528 772, j.marczynski[at]jwms.pl.