The deadline for listing in the Central Register of Beneficial Owners to expire soon

by Damian Dobosz and Karol Jakubas

6 July 2020

 
The deadline for registration with the Central Register of Beneficial Owners (Polish: CRBR) expires on 13 July 2020. Enterprises are still in doubt as to their obligations related to the registration. Many enterprises have still not identified their beneficial owners or have still not reported them to the register.

Obligations to get listed in the Central Register of Beneficial Owners are governed by the Act on Counteracting Money Laundering and Terrorist Financing.

Objectives of the CRBR

CRBR is expected to ensure financial transparency of business entities in terms of their associations with individuals, and the regulations are introduced to detect and prevent money laundering and terrorist financing. The basic objective of the regulations adopted by the lawmakers is to force enterprises to identify and disclose in the register individuals specified in the act – so-called beneficial owners. According to the general rule, they are individuals who have direct or indirect control over the business entity by virtue of their rights therein.

Definition of a beneficial owner

Persons who should be disclosed in the register are specified in the act. They include, without limitation, individuals who:

• are shareholders in an entity and are entitled to hold as owners over 25% of the total shares in that entity;
• hold more than 25% of the total number of votes in the decision-making body of the entity;
• control the client by virtue of the holding rights referred to in Article 3(1)(37) of the Accounting Act;
• control a legal entity and who are entitled to hold jointly, as owners, over 25% of the total shares in the entity, or who hold jointly over 25% of the total voting rights in that entity’s decision-making body.

If the beneficial owner cannot be identified using the statutory criteria, the company’s senior executives should be named beneficial owners. The impossibility to identify the beneficial owner should not result from purely technical reasons (e.g. because the company does not have the necessary documents) but from the non-fulfilment of statutory criteria.

More often than not, the identification of the beneficial owner involves the need to recreate the full ownership structure of the company, which can be especially troublesome in the case of international holding companies or other companies which have foreign enterprises as their partners or shareholders. In such a case, determination of the above information will be possible only on the basis of extracts from foreign commercial registers or internal documents of a given enterprise.

List of obliged entities

The list of entities obliged to disclose the beneficial owner in the register is long. It includes, in particular, companies and partnerships:

• general partnerships;
• limited partnerships;
• partnerships limited by shares;
• limited liability companies;
• simple joint-stock companies;
• joint-stock companies (except for companies listed on the regulated market).

Beneficial owners should be disclosed in the register by persons authorised to represent the company. Beneficial owners themselves are not obliged to sign or otherwise authorise the disclosure, unless they are at the same time company’s representatives. In practice, such a disclosure should be signed according to the rules of representation adopted by the entity. It needs to be emphasised, however, that the disclosure cannot be made through an attorney.

Entities evading these statutory obligations may suffer serious consequences when they fail to fulfil them. According to the act, if a business entity does not make the disclosure on time, a fine of up to 1 million euro may be imposed on the company.

Disclosure form

A disclosure in the Central Register of Beneficial Owners can be made only in electronic form using a trusted profile or electronic signature. Persons who do not have a trusted profile may need to change their electronic signature settings so that the signature is placed in a manner compatible with the IT system of the register. So technical aspects may also stand in the way of timely fulfilment of the statutory obligations.

To duly fulfil the statutory obligations business entities must perform a number of tasks which include mainly determining whether the obligations apply to the entity, identifying the company’s beneficial owners, preparing a disclosure to the Central Register of Beneficial Owners and finally signing and submitting the disclosure form through the IT system.