August 3, 2021 · 5 min read
New Obligation for Legal Entities: Provision of Information on Ultimate Beneficial Owners and Disclosure of Ownership Structure
Paragraph 4 of the Transitional Provisions of the Law of Ukraine "On Preventing and Counteracting Legalization (Laundering) of Criminal Proceeds, Financing of Terrorism, and Financing of Proliferation of Weapons of Mass Destruction" dated 06.12.2019 No. 361-IX (Law No. 361) established the obligation for legal entities to submit information on the ultimate beneficial owner and ownership structure to the state registrar within three months from the date of entry into force of the regulatory legal act, which will approve the form and content of the ownership structure.
Such a regulatory legal act is the Order on the Approval of the Regulation on the Form and Content of the Ownership Structure, approved by the Ministry of Finance on 19.03.2021 No. 163 (Order No. 163), which was adopted only in March 2021. And since July 11, 2021, Order No. 163 entered into force – from this moment, all legal entities have an obligation to submit information on ultimate beneficial owners to the state registrar.
How and When to Submit Information
The Ministry of Justice of Ukraine in its letter dated 13.01.2021 No. 245/8.4.4/32-21 informed that all legal entities for which information on UBOs must be contained in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations (hereinafter – State Register) and which were registered before the Order on Ownership Structure came into force, must submit relevant documents to the state registrar for updating UBO information in the Unified State Register within three months, starting from July 11, 2021, and until October 10, 2021.
What Documents Must Be Submitted
- Application. Form 2 – for a legal entity (excluding public formations and government bodies). Form 4 – for a legal entity – public formation.
- Ownership Structure. According to Order No. 163, the Ownership Structure, in its form, is an official document that represents a schematic depiction of the legal entity's ownership structure, reflecting all persons who directly or indirectly own this entity independently or jointly with other persons, or who, regardless of formal ownership, have the ability to significantly influence the management or activities of the legal entity, the size of participation of each natural or legal person, as well as detailed information regarding each such person. Samples of drawing up a schematic representation of the ownership structure are published on the official website of the Ministry of Finance of Ukraine in the "Financial Monitoring" section and are available via the link.
- Extract, statement, or other document from a trade, banking, court register, etc., confirming the registration of a non-resident legal entity in its country of location – in case the founder of the legal entity is a non-resident legal entity.
- Notarized copy of the document identifying the person who is the UBO of the legal entity – for a non-resident individual and, if such document is issued without the use of the Unified State Demographic Register, – for a resident individual (passport of a citizen of Ukraine in booklet form). The Ministry of Justice in its letter dated 19.05.2020 No. 107/8.4.4/32-20 notes that a resident individual who is a UBO submits a notarized copy of the passport of a citizen of Ukraine if it is issued in booklet form (pages indicating the document details and the surname, first name, patronymic (if any) of the person to whom it was issued).
Is Payment Required for Submitting Information
When submitting information on UBOs to the state registrar within three months from the date Order No. 163 came into force, no administrative fee will be charged, as provided by the provisions of Article 36 of the Law "On State Registration of Legal Entities, Individual Entrepreneurs and Public Formations" of Law No. 755-IV dated 15.05.2003 (Law No. 775-IV).
The Ministry of Justice also emphasized this in its letter, adding that in case of simultaneous introduction of other changes to the information in the Unified State Register regarding a legal entity or the expiration of the three-month period from the date the Order on Ownership Structure came into force, an administrative fee will be charged in the amount established by Article 36 of Law No. 755-IV.
Annual Information Update
When to Update UBO Information
Article 17-1 of Law No. 755-IV stipulates that information is submitted annually, starting from the year following the date of state registration of the legal entity, within 14 calendar days. That is, if the date of registration of the legal entity is February 10, for example, then the obligation to update the information arises for it from February 10 to February 24, 2022.
What Documents Will Need to Be Submitted to Update UBO Information
Article 17-1 of Law No. 755-IV stipulates that for annual information updates, the following must be submitted:
- application for confirmation of information about the ultimate beneficial owner (Form 6)
- ownership structure
- document confirming the registration of a non-resident legal entity in its country of location, if the founder of the legal entity is a non-resident legal entity
- notarized copy of the document identifying the person who is the UBO of the legal entity (for non-resident individuals) or a passport of a citizen of Ukraine in booklet form - for resident individuals.
What Liability is Provided for Non-Submission or Untimely Submission of Information
For non-submission or untimely submission of information on ultimate beneficial owners to the state registrar, the head (authorized person) of the legal entity faces an administrative fine of one thousand to three thousand non-taxable minimum incomes of citizens (from UAH 17,000 to UAH 51,000), as provided by Part 6 of Article 16611 of the Code of Administrative Offenses.
Lawyers of Olga Petrukhina Law Firm will provide qualified assistance in preparing the necessary documents for submission, and, directly, in submitting UBO information to the state registrar.
