Beneficial owners: Which changes need to be reported to the central register
The Central Register of Beneficial Owners went into operation in Poland at the end of 2019. Since then, obligated entities defined in Art. 58 of the Anti-Money Laundering (AML) Act have had to verify whether there is an individual in their structure who can be considered an ultimate beneficial owner, and report this information to the Central Register of Beneficial Owners.
A company’s entry to the Central Register of Beneficial Owners should be updated if there has been a change in the beneficial owner or an existing entry is incorrect.
Failure to comply with obligations under the AML Act can result in imposition of an administrative fine by the General Inspector of Financial Information, which can be as high as PLN 1 million.
Therefore, we would like to remind readers of the most important issues related to determination of beneficial owners.
As a first step, obligated entities should verify whether they or their group has an individual who meets the prerequisites to be considered a beneficial owner under Art. 2(2)(1) of the AML Act.
In this analysis, entities should not limit themselves to verifying that an individual exceeds the threshold of 25% shareholding in the entity. Each time, it is necessary to make an in-depth analysis and verify whether a given person
directly or indirectly exercises control over the obligated entity through the powers held by the person, arising from legal or factual circumstances, enabling exercise of a decisive influence over operations or activities undertaken by the customer, or any individual on whose behalf business relations are established or an occasional transaction is carried out.
As expressly provided in the AML Act, it is necessary to verify whether the beneficial owner has direct or indirect control over the obligated entity—whether pursuant to statutes, contracts, arrangements, or actual activities to which the beneficial owner is a party.
Only if no such person exists can an individual holding a senior management position (as a rule, a member of the management board) in the obligated entity be designated as a beneficial owner. However, especially if the obligated entity is part of a corporate group, such finding should be confirmed in a statement from the entity (preferably the highest one in the group) or by documents showing that there is no individual in the group structure who meets the criteria of a beneficial owner. This follows from the rule that the person signing the statement submitted to the Central Register of Beneficial Owners does so pursuant to a clause imposing criminal liability for making a false statement.
Entries in the Central Register of Beneficial Owners must be made within 14 business days after the event triggering the need to update the data in the register. From a practical point of view, this will be any event in which the beneficial owner has changed, whether as a result of a sale of the obligated entity or its shares, or as a result of amendment or termination of the contract or arrangement entered into by an individual which caused that individual to be regarded as a beneficial owner. If members of the management board of the obligated entity were entered as beneficial owners, any change in the composition of the management board will involve the need to update the data in the Central Register of Beneficial Owners.
It must also be remembered that any changes to the name of the obligated entity or the address of its registered office must also be updated in the Central Register of Beneficial Owners. The deadline for changing the data in the Central Register of Beneficial Owners is calculated depending on the event triggering the need for a change. If, for example, a member of the management board registered as a beneficial owner has been recalled from the board, then the period for reporting this change runs from the effective date of the resolution recalling the board member. On the other hand, the deadline for notifying a change in the company’s name, which is constitutive in nature, runs only from the date of the entry in the National Court Register.
Grzegorz Wojnar, Capital Markets & Financial Institutions practice, Wardyński & Partners
