A functioning transparency register is still not yet operational. An overview of what should nevertheless already be done.
Following implementation of EU Directive No. 2017/1371, since 1 January 2019 every legal entity established in Lithuania must “acquire, update and store” information about its UBO(s). It was actually planned that these data would be stored in a national transparency register from 1 July 2019.
However, unlike in many other European countries, this register is not yet functioning, although since 01.01.2019 all companies registered in Lithuania must formally obtain, keep and register information about their UBOs. In practice, however, we have observed that many companies are satisfied with it and are waiting inactively for the register to be implemented. However, they should note that they are already obliged to obtain information about their UBOs and keep it in company records.
What information should be kept available?
In order to meet requirements currently in force, information about the company’s UBOs should be stored in-company:
• personal code (if any)
• date of birth
• place of residence
• ID-card or passport no., and country of issue
• ownership rights held and their scope (the number of shares expressed as a % and the number of voting rights expressed as a %) or other rights of control (chair of the board, board member, director, senior manager, other position and the number of transferred voting rights expressed as a %)
How to store this information?
Lithuanian legislation does not regulate how this information must be kept. In order to meet the requirements currently in force (until the Lithuanian transparency register is operational and these rules are likely to be changed), information about the company’s UBOs can be stored by the managing director of the company by issuing a decision listing all UBOs including the above data.
In order to prove this data, copies of personal documents should be added as annexes.
Control chains are not always easy to describe. It is therefore possible to add an organisational chart as an annex to clarify particularly complicated control chains. Furthermore, any documents proving rights held by the UBO and their scope as well as other rights of control should be attached as further annexes (e.g. commercial register excerpts). So far there are no special formal requirements (e.g. apostillisation of foreign commercial register excerpts), i.e. simple copies of the documents mentioned are sufficient. However, this may change as soon as the transparency register is fully functional and the legal regulations may be changed at the same time.
Why should professional assistance be sought in identifying the UBO?
Internationally operating groups of companies often have complex structures that are difficult to grasp. It is often hard to determine the UBO of a Lithuanian subsidiary. The Lithuanian Anti-Money Laundering Law is essentially a literal implementation of the EU’s Anti-Money Laundering Directive. This results in a certain indeterminacy and becomes problematic to some extent when constellations arise that are not known under purely Lithuanian law. One of these is a UAB whose shareholder is a foundation under foreign law (e.g. German Stiftung or Austrian Privatstiftung). Another is a UAB being a subsidiary of one or even several German GmbH & Co. KGs (a limited partnership with a limited liability company as general partner). These are structures frequently encountered in cross-border company law, but to which purely Lithuanian law has few answers. Due to a lack of legal practice, it is therefore even more important to use the Directive and, to a certain extent, foreign law to identify the UBO(s) in individual cases.
- Law on the prevention of money laundering and terrorist financing of the Republic of Lithuania
- Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on prevention of use of the financial system for the purposes of money laundering or terrorist financing