Do you have to disclose the beneficial owner of your company?

Following amendments to the law, the Enterprise Register now requires disclosure of company beneficial owners.

Under the Law on the Prevention of Money Laundering and Terrorism Financing, corporate clients of banks regularly have to disclose their actual beneficial owner in order to open a bank account.

In light of recent amendments to the law, this now also applies to both existing and newly established companies on the Enterprise Register. Failure to comply with this requirement may result in a warning or a fine of up to 430 EUR for initial failure and up to 700 EUR for a repeated failure to comply.

By 1 March 2018, companies must disclose their beneficial owners. These are natural persons who:

  • own at least 25 % of their fixed capital or the total amount of voting shares, or exercise direct or indirect control over the company, or
  • own a company or have had one established for their benefit, or who exercise direct or indirect control over it.

The information provided will be publicly available starting as of 1 April 2018, i. a. allowing businesses to evaluate partners’ credibility. For companies that have already provided similar information, the information must be updated by 1 February 2018 to meet the current requirements. In cases where the beneficial owner cannot be determined, mere affirmation by the legal entity is sufficient.

In order to reduce the burden upon affected companies, information about the beneficial owner need not be submitted if:

  • sufficient information has already been filed with the Enterprise Register, or
  • the beneficial owner is a shareholder in a joint stock company whose shares are included in a regulated market and control over the company arises solely from shareholder status.

If you suddenly realize that you are in fact the beneficial owner of a company, you should inform the company immediately. The company will then have up to 14 days to provide the information. The 14-day period also applies to changes in the status of beneficial owners. If the Enterprise Register is not notified within 14 days, the fines noted above are triggered.

Due to the broad scope of the changes, the amendments affect almost all legal entities, from limited liability companies to joint stock companies and others. 

Source: Amendments to the Law on Prevention of Money Laundering and Terrorism Financing, Latvijas Vēstnesis, 222, 8 November 2017.

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