Newly introduced obligation to declare the ultimate beneficial owners of legal entities in particular cases

The new Measures Against Money Laundering Act (MAMLA) adopted in accordance with EU Directive 2015/849, introduces obligations and practical measures aimed at transparency and publicity regarding the ownership of companies, non-profit legal entities and legal entities, for the purpose  of tackling money laundering. Pursuant to the Act, all legal persons and other establishments registered in Bulgaria must announce information about their ultimate beneficial owners – physical persons (UBOs) and the legal persons and other establishments that directly or indirectly control them.

 

What does “ultimate beneficial owner” mean?

In accordance with the legal provisions, “ultimate beneficial owner” is a natural person that directly or indirectly owns more than 25 % of the capital of a legal entity, on whose behalf transaction or activity is being conducted. Further, beneficial owner is a natural person who is exercising control over a legal entity on whose behalf transaction or activity is being conducted. “Control” within the meaning of the law presumes the possibility of exercising a decisive influence over another legal entity in decision-making procedure regarding appointment of the management and the supervision bodies, transformation, termination of activity and other matters of fundamental importance to the activity.

Apart from that, each legal entity not having at least one legal representative – individual, permanently residing in Bulgaria, must appoint and register a so called “contact person”. This person is responsible for obtaining, holding and providing adequate, accurate and up-to-date information regarding the ultimate beneficial owner of the respective entity.

 

Are all the legal entities obliged to declare their beneficial owners?

The answer is no. Entities that do not have the obligation to submit such declarations are following:

  • Sole proprietorship;
  • Sole owned companies with sole owner of the capital – natural person;
  • Limited liability companies with shareholders – natural persons who owns up to 25% of the capital;
  • Collective partnership with shareholders – natural persons;

The abovementioned entities submit this declaration only if their beneficial owners are other than those who are already registered.

 

How to announce?

The declaration for the announcement of the beneficial owners must be registered in the Commercial Register, the Register of Non-Profit Legal Entities and BULSTAT -Register.

 

What is the deadline for the announcement?

The deadline for submitting these declarations is 31 May 2019. Non-profit legal entities that have not undergone re-registration before 31 January 2019 have to declare their beneficial owners within four months from the date of re-registration.

 

What are the consequences of late  declaring ?

The legislator envisaged severe penalties for not complying with with the new legal obligations. The fines range from BGN 500 to BGN 5,000 for individuals, and from BGN 1,000 to BGN 20,000 for legal entities, on a monthly basis until the disclosure requirement is complied with. Systematic violations would render individuals liable to a fine of up to BGN 20,000 and legal entities may face sanctions of up to BGN 100,000, depending on the type of legal entity.

 

Need help on the topic?

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