UBO Update: Lithuanian transparency register starts work after a two-year delay. What needs to be known?

On 1 January 2022, after a 2-year delay, the first part of the Lithuanian transparency register was activated. Initially, Lithuanian companies that only have natural persons as shareholders can and must report their beneficial owners to the register. It is expected that in May 2022, Lithuanian companies with legal entities as shareholders will also be able – and required – to report their beneficial owners.

Following this, all legal entities established in Lithuania, whose beneficiaries are natural persons who directly control them, must now not only obtain, update and store accurate information on their beneficial owners, but also submit it to the Transparency Register. The heads of legal entities are responsible for implementing or enforcing this obligation. However, in addition to the obligation to report and the associated severe sanctions for non-reporting, registration in the Transparency Register also has some advantages for companies.

For some time now, Lithuanian commercial banks have increasingly been carrying out money laundering checks without reason. In doing so, they usually demand extremely extensive – and not always uniform – documents to prove who the beneficial owner is. The procedures are costly and lengthy – not infrequently they lead to temporary blocking of accounts. Once a company has been entered in the transparency register, the risk of such checks would be greatly reduced because banks would then only have to rely on the transparency register.

Who are considered to be beneficial owners?

  • A natural person who holds 25 % plus one share or an ownership interest of more than 25 % in the company (direct ownership).
  • Natural person(s) who control(s) one or more companies which hold(s) 25 % plus one share or an ownership interest of more than 25 % in the company (indirect ownership).
  • A natural person who owns or manages a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights in that legal entity, including through bearer shareholdings ‒ other than public limited liability companies whose securities are traded on regulated markets that are subject to disclosure requirements consistent with European Union legislation or subject to equivalent international standards ‒ or controls the legal entity via other means, e.g.:
    • holds the majority of the voting rights in the company;
    • has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of the company and is at the same time a shareholder in that company;
    • has the right to exercise a dominant influence over the company under a contract entered into with the company or under a provision in the company’s memorandum or articles of association.
  • A natural person who holds the position of a senior managing official is considered a beneficial owner if the beneficial owner is not identified on the basis of these criteria, or if there is any doubt that the person identified is the real beneficial owner.

What information should be collected?

  • name, surname;
  • date of birth;
  • personal number;
  • the state that issued the identity document;
  • place of residence;
  • ownership rights held and their scope (the number of shares expressed as a percentage and the number of voting rights expressed as a percentage) or other rights of control (for example, the person concerned is the chair of the board, a board member, director, senior manager, holds other positions, plus the number of transferred voting rights expressed as a percentage).

To whom and when should information on beneficial owners be reported?

Information collected on beneficial owners must be stored in the company and reported to the administrator of the Information System of Participants of Legal Entities (JADIS). A new section has been set up in the system for this purpose. We will be happy to assist you with registration and submission of the required documents.

What sanctions will be applied?

  • Non-compliance with these obligations will result in a fine of from EUR 500 up to EUR 1,800 for responsible persons and from EUR 2,000 up to EUR 3,500 for heads of legal entities.
  • Repeat offences will result in a fine of from EUR 1,500 up to EUR 5,200 for responsible persons and from EUR 3,500 up to EUR 5,800 for heads of legal entities.
  • Although no direct liability is imposed on legal entities, note that if the head of a legal entity or other responsible person is fined at least EUR 1 500 for these offences, the legal person concerned will be placed on a public list of unreliable taxpayers for a period of one year. Inclusion in the list is a ground for removing a supplier from a public procurement procedure.

For more information, please always feel welcome to contact us.

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