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Article:

Compulsory to all: disclosure of beneficial owners

31 August 2018

Tiiu Mõttus , Partner, Head of Advisory Services , Head of Tax & Legal Services |

On September 1st, 2018, an amendment in Estonian Money Laundering and Terrorist Financing Prevention Act will come into force stating that all legal persons must publish information of their beneficial owners, at Estonian Commercial Registry.

A beneficial owner is the natural person who ultimately owns or controls a legal person through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that person, including through bearer shareholdings, or through control via other means.

Direct ownership implies that a natural person holds more than 25 percent of shareholding or ownership in the legal person.

In the case of indirect ownership, legal person owns more than 25 percent of shareholding or ownership of another legal person, which is under the control of a natural person.

A legal person has to gather and retain data on its beneficial owner, including information on its right of ownership or manners of exercising control. The data of the beneficial owner is kept in Estonian Commercial Register by the Management Board of the private legal person. In case of a change in the information of the beneficial owner, the legal person is obliged to notify the Registrar within 30 days of the changes, providing accurate information. The Management Board has an obligation to verify the rightfulness of the provided information, in the annual report.

This obligation applies to a general partnership, limited partnership, private limited company, public limited company or commercial association, a non-profit association and a foundation.

The data on its beneficial owner that must be submitted is:

  1. the person’s name, personal identification code and the country of the personal identification code (upon absence of a personal identification code, the date and place of birth), and the country of residence;
  2. nature of the beneficial interest held.

A foundation, in addition the before-mentioned, has to submits the list of beneficiaries within the meaning of Section 9 of the Foundations Act, which contains each beneficiary’s name, personal identification code and the country of the personal identification code (upon absence of a personal identification code, the date and place of birth), and the country of residence, where such persons have been specified in the articles of association of the foundation.

The legislation also introduces penalties in case the legal person fails to fulfil its duty to gather, retain and to provide the information on the beneficial owners through the Commercial Registry. The penalties imposed in such case can be up to 400.000 EUR.

Should you need any additional information or assistance in communication with Estonian Commercial Registry, please contact our Tax & Legal team at BDO Estonia ([email protected]).