New rules stemming from the implementation of the anti-money laundering directive in Slovakia have introduced an obligation to all legal entities incorporated in Slovakia to identify their ultimate beneficial owner (UBO) and to keep respective files concerning UBOs.
The new obligation of the legal entities is effective from 15 March 2018. Starting 1 November 2018, newly established companies have to make an entry of the UBO into the Commercial Register at the moment of their incorporation.
For existing companies, the deadline for the entry of their UBO into the Commercial Register is 31 December 2019. However, for the failure to identify the UBO and keep records the legal entity can be fined up to €200,000 by the financial police already now.
Slovak companies have to identify their UBO(s)
Starting from 15 March 2018, basically all legal entities must identify their UBO(s) and keep respective records in paper or electronic form. The records must be ongoingly updated. If you are already registered with the Registry of Partners of the Public Sector, you are exempt from the duty to keep records under this law.
Who is a UBO?
An ultimate beneficial owner (“UBO”) means, put simply, every natural person effectively holding or controlling a company, regardless whether directly or indirectly. The law mentions the following examples of such effective holding or controlling:
- exercising at least 25% of voting rights or holding such shares;
- decision-making rights with regard to company managers, directors, etc.;
- 25% profit share rights; or
- other exercise of control over a legal entity.
What kind of documents do you need to check and keep to identify the UBO(s)?
The law specifies that the records must include data showing the standing of the UBO and data proving that standing. Such documents typically include:
- the entire Group corporate structure up to the UBO and relevant documentation based on which such structure can be verified, e.g.
- Excerpts from the Company Register, the list of shareholders including their respective shareholdings, the Articles of Association or other corporate documentation (Shareholders Agreements) or Annual Statements or Reports.
What kind of information do you need to keep about the UBO(s)?
- name and surname;
- birth registration number or date of birth (if the birth registration number does not exist);
- address of permanent residency or other address;
- type and number of identification document.
By the end of 2019, all existing companies will have to register their UBOs with the Companies Register. Based on our experience, the identification procedure of the UBO is highly complex and sometimes almost impossible. The complexity of this matter should not be underestimated, noting that your company might find itself in situation towards the end of the year 2019, when you perform other corporate changes subject to registration in the Companies Registry such as rapid removal of a managing director or a merger which might be hampered due to the lack of UBO entry.