Ladies and Gentlemen!
We inform you about the latest changes in the legislation regarding the disclosure of the ownership structure of legal entities.
In particular, in pursuance of the Law of Ukraine “On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction” as of December 6, 2019 № 361-IX (hereinafter – the Law) on March 19, 2021 the Ministry of Finance of Ukraine issued an Order of the Ministry of Finance of Ukraine № 163 (hereinafter – the Order), which approved the Regulations on the form and content of the ownership structure (hereinafter – the Regulations).
You can get acquainted with the text of the Order and Regulations at the link – https://ips.ligazakon.net/document/re36390?an=1.
The Order and Regulations were published in the newspaper “Governmental Courier” on June 11, 2021 and come into force one month after their publication, i.e. on July 11, 2021.
Therefore, we draw your attention to the fact that the Law obliged all previously registered legal entities to submit to the state registrar information on the ultimate beneficial owner and ownership structure within 3 months from the date of entry into force of the legal act, i.e. the Regulation which will approve the form and content of ownership structure.
Given the above, all legal entities registered in Ukraine must in the period from 11.07.2021 to October 10, 2021 (inclusive) submit the relevant documents to the state registrar in order to enter ) information on the ultimate beneficial owner and ownership structure in the Unified State Register of Legal Entities, Individuals – Entrepreneurs and Public Associations (hereinafter – the USR.
To update the information on the ultimate beneficial owner in the USR, the state registrar should get:
- application for state registration of a legal entity (except for public formations and authorities) – form 2 or application for state registration of a legal entity – public formation – form 4;
- ownership structure in form and content in accordance with the Order on ownership structure;
- extract or other document from the commercial, banking, court register, etc., confirming the registration of a non-resident legal entity in the country of its location – if the founder of the legal entity is a non-resident legal entity;
- a notarized copy of the document certifying the person who is the ultimate beneficial owner of the legal entity – for a non-resident natural person and, if such a document is issued without the use of the Unified State Demographic Register – for a resident natural person.
According to the Law, the Ownership Structure is a documented system of relations between natural persons and legal entities, trusts, and other similar legal entities, which makes it possible to establish all ultimate beneficial owners, including the relationship of control between them, or the absence of ultimate beneficial owners.
According to the Regulation, the ownership structure by form is an official document that is a schematic representation of the ownership structure of a legal entity, which reflects all persons who directly or indirectly own this entity alone or jointly with other persons or regardless of formal ownership have the ability to significantly influence management or activity of a legal entity.
The schematic representation of the ownership structure indicates:
- All persons who directly or indirectly own one legal entity independently or jointly with other persons (all participants of a legal entity and each person in each chain of ownership of corporate rights of a legal entity);
- All persons who, regardless of formal ownership, have the opportunity to significantly influence the management or activities of a legal entity;
- The amount of participation (percentage of corporate rights), which belongs to each natural person and/or legal entity, each trust and/or other similar entity in another legal entity, trust or other similar legal entity;
- Description of the implementation of the decisive influence of the ultimate beneficial owner on the activities of the legal entity (direct and/or indirect):
- in case of direct decisive influence, the percentage of the share in the authorized (composed) capital of the legal entity or the percentage of the right to vote in the legal entity shall be indicated (data are provided as a percentage).
- in case of indirect decisive influence, the nature of the beneficial ownership (benefit, interest, influence) is indicated.
If the information on the ultimate beneficial owner of the legal entity is not clearly traced according to the USR, official documents confirming the possibility of such a decisive influence should also be attached to the schematic image.
Samples of drawing up a schematic representation of the ownership structure are published on the official website of the Ministry of Finance at the link: https://mof.gov.ua/uk/samples_of_drawing_up_a_schematic_representation_of_the_ownership_structure-517
In addition, we would like to inform you that, in accordance with the Law of Ukraine “On State Registration of Legal Entities, Natural persons – Entrepreneurs and Public Associations” № 755-IV as of 15.05.2003 (as subsequently amended by the Law), legal entities must have information on the final beneficiary owner and ownership structure.
Legal entities are obliged to keep the information on the ultimate beneficial owner and ownership structure up to date, update it and notify the state registrar of changes within 30 working days from the date of their occurrence, and submit documents confirming these changes to the state registrar.
We also emphasize that, in accordance with the Resolution of the Cabinet of Ministers of Ukraine “On approval of the Procedure for control by the Ministry of Justice over activities in the field of state registration of real property rights and their encumbrances and state registration of legal entities, natural persons – entrepreneurs and public entities” as of 21.12. 2016 № 990, in case of detection during the control over the activities in the field of state registration of facts of non-submission by the legal entity to the state registrar of information about the ultimate beneficial owner of the legal entity The Ministry of Justice informs the head of the legal entity or the person authorized to act on behalf of such legal entity (executive body), with the requirement to get application from such a person within a month to the Ministry of Justice to draw up in accordance with the law a protocol on administrative offenses under part six of Article 166-11 of the Code of Administrative Offenses of Ukraine (hereinafter – CAOU).
This article of the Code of Administrative Offenses provides for the imposition of a fine in the amount of 17,000 to 51,000 hryvnias both for (i) failure to submit or late submission of information about the ultimate beneficial owner or documents to confirm information about the ultimate beneficial owner, and for (ii) failure to submit or late submission of information about the absence of the ultimate beneficial owner.
Please note that the information contained in this information letter is for general use only and cannot be considered as legal advice. We hope you found this information useful. We continue to monitor the latest changes in the legislation of Ukraine and the practice of its application.
If you need a more detailed explanation of the provisions of the law, please contact us any time.
Contact persons:
Andriy Martyniuk, Director of Business Development of the Law offices of OMP
+38 098 244 6262; +380 44 391 30 01 a.martyniuk@omp.ua
Halyna Brun, Marketing Director of the Law offices of OMP
+380 95 497 66 05; +380 44 391 30 01 g.brun@omp.ua
Regards,
Law offices of OMP