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What does the failure to submit or untimely submission of information about the ultimate beneficial owner lead to?

What does the failure to submit or untimely submission of information about the ultimate beneficial owner lead to?

The Ministry of Justice has approved a procedure for prosecuting for non-submission or late submission of information on the ultimate beneficial owner

With the adoption of the Law № 361 of 16.09.2019 (hereinafter – the Law), legal entities have an obligation to submit to the state registrar updated information on the ultimate beneficial owners (CBV) and the ownership structure of the company, the Law entered into force on April 28, 2020 .

The law stipulates the obligation to disclose information about the CBC during the state registration of a legal entity and during the state registration of changes to the information about a legal entity by submitting additional documents to the state registrar, namely:

  • ownership structure according to the form and content determined in accordance with the law;
  • extract, extract or other document from the trade, banking, court register confirming the registration of a non-resident legal entity in the country of its location;
  • a notarized copy of the identity document of the person who is KBV.

In addition, after the entry into force of the Law on 28.04.2020, legal entities will have to annually, within 14 calendar days from the next year from the date of state registration of the legal entity, submit the above package of documents and a corresponding application to confirm the CBV.

According to the Law, legal entities are obliged to keep the information on KBV 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.
Also, companies registered at the time of entry into force of the Law are required to submit updated data on their CBV and ownership structure within three months from the date of approval of the relevant form and content of the ownership structure by the authorized state body.

However, the updated application forms are currently being agreed and are only planned to be implemented. These forms will contain fields for entering information on the CBV in accordance with the adopted amendments to the Law on Registration. This will include fields to indicate that the information on CBV contained in the Unified State Register is relevant or needs to be changed.

There is currently no statement as such that provides for changes to the CBD or action aimed at it. Therefore, although the above changes have come into force, but there is no technical possibility to implement them.

Regarding liability:
By order of 12.05.2020 № 1626/5 the Ministry of Justice approved the following procedure:

If the state registrar discovers the fact of non-submission or late submission of information on the CBD of a legal entity or its absence, or documents to confirm the information, such registrar shall notify the territorial body of the Ministry of Justice of Ukraine at the location of the legal entity by sending a letter.

The letter will contain a request for such a person to apply to the Ministry of Justice or the relevant territorial body within a month to draw up a report on an administrative offense, the responsibility for which is provided for in Part 6 of Art. 166-11 КУпАП, the sanction of article provides responsibility for the head (or other person authorized to submit this information), in the form of a penalty from one thousand to three thousand non-taxable minimum incomes of citizens. Also, the end of the one-month period is the basis for the transfer of relevant information to the State Financial Monitoring Service of Ukraine, which in turn may stop the company’s financial activities.

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