Do you know your beneficial owner? You better do

Legal entity structures, including corporations, trusts, partnerships and others have long been recognized in law as an effective means for individuals or groups of people to establish businesses and engage in lawful activities including for commercial, financial, philanthropic and estate planning purposes. Legal entity structures may own property, execute contracts, pursue judicial action and survive their individual owners’ lifetimes. Such structures also facilitate financial privacy, widely recognized historically as a legitimate interest.
Unlawful use of such structures and the need to regulate the area of beneficial ownership have been repeatedly highlighted over the last several years in the EU. Now, the time has come to deal with it.
In Poland, on 13 October 2019, the Central Register of Beneficial Owners was created and the relevant legislation came into force. From that date almost all companies and partnerships in Poland are required to file with the register up-to-date details of their beneficial owners.
Creation of the Central Register of Beneficial Owners is an implementation of the Directive (EU) 2015/849 dated 20 May 2015 on the prevention of the use of the financial systems for the purposes of money laundering or terrorist financing. The European Union’s laws obliged the Member State to keep the information of beneficial owners in the central register and to share this information with authorities and other authorised entities.
The Central Register of Beneficial Owners was introduced into Polish legal system by the Law on Combating Money-Laundering and the Financing of Terrorism dated 1 March 2018 (the AML Law).
 
Who is a beneficial owner?

Beneficial owner is defined in the AML Law as a natural person who exercises (directly or indirectly) control over a company through powers  arising from legal or factual circumstances which enable this person to have a decisive impact on activities or actions undertaken by this company, on whose behalf a business relationship is established or an occasional transaction is conducted.
This includes, in case of a company (which is not trading on a regulated market and is not subject to information disclosure requirements arising from the European Union or third country’s laws), in particular:

• a natural person being a company’s shareholder holding the ownership title of more than 25% of the total number of shares;
• a natural person holding more than 25% of the total number of votes in a company’s governing body, also as a pledgee or an user or under agreements with other persons authorised to vote;
• a natural person exercising control over a legal person(s) holding the ownership title of more than 25% of the total number of shares of the customer or jointly holding more than 25% of the total number of votes in the customer’s governing body, also as a pledgee or an user, or user agreements with other persons authorised to vote;
• a natural person holding a senior management position, in the case of documented lack of possibility to determine the identity, or doubts regarding the identity of natural persons defined above, and in the case of failure to confirm the suspicion of money laundering or terrorist financing.

Under the criteria listed above, it is possible that a company will have more than one beneficial owner.
Even though the criteria seem to be quite clear, identifying the beneficial owner, especially in case of a complicated corporate structure, is not an easy task. Without the help of an experienced lawyer a company risks indicating beneficial owner incorrectly and as a result being fined up to PLN 1,000,000.
 
Requirement to indicate beneficial owners

General partnerships, limited partnerships, limited joint-stock partnerships, limited liability companies and joint-stock companies (excluding public companies) will be required to submit information on their beneficial owners.
A company established after 13 October, 2019  has to file this information within seven days following the day of entry of companies in the Polish National Court Register.
A company established before 13 October, 2019 is obliged to file information on its beneficial owner by 13 April, 2020 at the latest.
Any change of the beneficial owner in a company after 13 October, 2019 should be notified within seven days following the change.
Following information data of the beneficial owner has to be submitted to the register:

• name and surname,
• citizenship,
• state of residence,
• PESEL number (Polish ID number) or the date of birth – in the case of persons not holding the PESEL number,
• information on the level and character of the share or on powers conferred on the beneficial owner.

Declarations may be submitted only by persons authorised to represent the entity (members of the management board or commercial proxies) through the online system, available at https://www.podatki.gov.pl/crbr/.
 
Access to the Central Register of Beneficial Owners

The Polish lawmaker made the Central Register of Beneficial Owners open to the public and free of charge. Moreover, excerpts from the Register may be downloaded free of charge and a person taking an excerpt from the register is not obliged to demonstrate any interest. The register also enables historical changes of the beneficial owners of a relevant company to be checked.
 
Failure to comply with the obligations

If a company fails to submit the required information within the statutory time limit indicated above, it will be subject to the financial penalty up to PLN 1,000,000.
The information contained in the register is deemed authentic and thus a person submitting information on beneficial owners, including its updates, shall be liable for any damage caused by the submission of false data to the register as well as by the failure to report data and changes in the data covered by the entry in the register within the statutory time limit.