Beneficial Owner Disclosure

Starting from 1st September 2018, all legal entities registered in the Estonian Business Register are required to submit information on their Ultimate Beneficial Owners (Actual Beneficiaries) as per the Money Laundering and Terrorist Financing Prevention Act 2017.

Full text in English here: https://www.riigiteataja.ee/en/eli/517112017003/consolide

The obligation to disclose beneficial ownership applies to all types of legal entity: general partnerships, limited partnerships, private limited companies, public limited companies and commercial associations.

Beneficial owner

In order to determine the Ultimate Beneficial Owner (Actual Beneficiary), section 9 of the aforementioned Act should be referred to.

According to the Act:

  • ‘Beneficial Owner’ means a natural person who, taking advantage of their influence, makes a transaction, act, action, operation or step or otherwise exercises control over a transaction, act, action, operation or step or over another person and in whose interests or favour or on whose account a transaction or act, action, operation or step is made.
  • In the case of companies, a Beneficial Owner is the natural person who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means.
  • Direct ownership is a manner of exercising control whereby a natural person holds a shareholding of 25 per cent plus one share or an ownership interest of more than 25 per cent in a company. Indirect ownership is a manner of exercising control whereby a company, which is under the control of a natural person holds (or multiple companies which are under the control of the same natural person hold) a shareholding of 25 per cent plus one share or an ownership interest of more than 25 per cent in a company.

Beneficial owner in complex legal arrangements

If it is not possible to ascertain the Beneficiary, the Act stipulates the following:

  • Where, after all possible means of identification have been exhausted, the person specified in subsection 2 of this Section cannot be identified and there is no doubt that such person exists or where there are doubts as to whether the identified person is a beneficial owner, the natural person who holds the position of a senior managing official is deemed as a beneficial owner.

In the case of complex legal arrangements, the Act states the following:

In the case of a trust, civil law partnership, community or legal arrangement, the beneficial owner is the natural person who ultimately controls the association via direct or indirect ownership or otherwise and is such associations’:

  • settlor or person who has handed over property to the asset pool;
  • trustee or manager or possessor of the property;
  • person ensuring and controlling the preservation of property, where such person has been appointed, orthe beneficiary, or where the beneficiary or beneficiaries have yet to be determined, the class of persons in whose main interest such association is set up or operates.

Data submission

The data on the Beneficial Owner can be submitted to the E-Business Register by a person with access rights and Section 77 of the Act requires the submission of the following data in respect of the Beneficial Owner(s):

  • 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;
  • the nature of the beneficial interest held.

Based on subsection 7 of Section 9 of this Act, a non-profit association submits via the commercial register information system the following data on its beneficial owner:

  • 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;
  • the nature of the beneficial interest held.

Based on subsection 7 of Section 9 of this Act, a foundation submits via the commercial register information system the following data on its beneficial owner:

  • 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;
  • the nature of the beneficial interest held;
  • 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.

Fines

Section 95 of the Act, regarding failure to submit the data of the Beneficial Owner or the submission of false data, states that a legal entity can be fined up to 32,000 EUR and a company employee or director responsible for the submission up to 1,200 EUR in the case of a breach of duty in disclosure of the Beneficiary or presentation of a false statement.

The information about Ultimate Beneficial Owners will be public and available for all for a fee of 1 EUR. Contractual customers of the E-Business Register will be able to access the information for free.

The Act also stipulates the obligations of declaration and disclosure of the Ultimate Beneficial Owner upon registration for all legal entities registered after 1st September 2018.

For more information regarding Ultimate Beneficial Owner disclosure in Estonia, please also read https://hshaus.com/the-ultimate-beneficial-owners-of-a-company-in-estonia/

Lauri Kurs

[email protected]

© 2019 HsHaus

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