KR Group: Obligatory Ultimate Beneficial Owner Registration – why it is especially important for the Board members?

As a direct result of the 4th Anti Money Laundering Directive, each member state of European Union must establish an Ultimate Beneficial Owner (“UBO”) Register. As a result of the respective Polish law all entities incorporated in Poland before 13th October 2019 must be entered in the Polish UBO Register by 13 July 2020 (more precisely – 12th July 2020 until midnight).

Entities subject to entry in the UBO Register but incorporated after 13th October 2019, must complete the UBO registration process within 7 days since the company has completed the registration with the Polish National Court Register.

What sort of companies is subject to the UBO register obligation?
•    Registered Partnerships
•    Partnership Limited by Shares
•    Limited Partnerships
•    Limited Liability Companies
•    Joint Stocks Companies, with the exception of the public -companies

How to establish who is the beneficial owner?

In accordance with the legal definition, the beneficial owner is:
•    A natural person (or persons) who exercises direct or indirect control over the company through the powers resulting from legal or factual circumstances enabling to exercise a decisive influence over the company’s activities;
•    A natural person (or persons) on whose behalf business relationships are established, or an occasional transaction is carried out.

In case of a limited-liability company, the beneficial owner is a natural person who meets at least one of the following criteria:
•    Directly or indirectly owns more than 25% of the shares/ stocks;
•    Directly or indirectly holds more than 25% of voting rights in the company’s constitutive body;
•    Exercises control over legal person(s) jointly entitled to more than 25% of the shares or voting rights in the company (including based on a pledge, usufruct or other agreement with persons entitled to voting rights in the company);
•    Exercises such control over the company as a parent entity (in accordance with the legal definition indicated in the Polish Accounting Act).

Why is UBO registration important for the board members, in particular?

There are two aspects of UBO registration, which members of the management board of the Polish limited liability companies should especially consider:
1.    Members of the management board registering the company in UBO Register incur the personal liability for making the false statement in UBO registration and can be held accountable in the future.
2.    As the persons holding senior management position in the company, members of the management board might be registered as the company’s beneficial owners. In such case the company must collect the documents confirming that, it is not possible to indicate the beneficial owners by other criteria. In such situation, the data of the registered members of the management board will be disclosed as data of the company’s beneficial owners in the UBO Register, which is widely available for anyone through internet.

Only professional, complete, and well-documented process of identification of the UBO can ensure compliance with regulations and avoidance of the above risks for members of the management board in Polish limited liability companies.

What is the consequence of not complying with the UBO Register requirement?

The maximum penalty that may be imposed as a result of failure to file with the UBO Register by the prescribed deadline is PLN 1,000,000.

How can we support you in identification and verification of ultimate beneficial owners?

We will be happy to provide you with comprehensive support connected with entry in the UBO Register.

With regard to proper identification of the ultimate beneficial owner, we offer two way of support:
•    Simplified analysis, in which we identify the company’s UBO based on the corporate structure chart and the client’s information;
•    In-depth identification and verification, in which we identify the company’s UBO by performing a comprehensive analysis of the client’s corporate documents.

With regard to the process of entry in the Polish UBO Register, we can offer:
•    Obtaining the proper electronic signature necessary to register the company in the Polish UBO Register
•    Comprehensive support in UBO registration, covering preparation of the application to be uploaded to the UBO Register.

KR Group-Polish UBO Register - more information >>>

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