Since 28 April, Ukraine has applied new rules on financial monitoring and combating money laundering under Law of Ukraine No. 361-IX «On Preventing and Counteracting the Legalisation (Laundering) of Proceeds of Crime, Terrorist Financing and Financing of the Proliferation of Weapons of Mass Destruction» (the Law). One of the key changes, and an important and urgent task for all legal entities, is the obligation to submit to the Unified State Register (the USR) updated information on the ultimate beneficial owners of companies (UBOs), as well as on the founders and the ownership structure of the company. Legal entities have to disclose their beneficiaries within a rather short period, ending on 10 October 2021.
Ihor Derevianko, Senior Partner and attorney at DEGA Partners, explains how companies can file their UBO registration applications in time and avoid fines of UAH 17,000 to 51,000.
The essence of the new Law
To identify the real owners of companies and counter the concealment of income, the Law obliges legal entities to update their data in the Unified State Register by disclosing the full ownership structure, including information on the founders (persons holding at least 10% of the authorised capital) and the ultimate beneficial owners (persons who, directly or through related individuals and legal entities, hold 25% or more of the authorised capital). This information is expected to help identify nominee owners and the ultimate beneficiaries of businesses.
Who has to submit information on beneficiaries
Order of the Ministry of Finance of Ukraine No. 163 of 19 March 2021 «On Approval of the Regulation on the Form and Content of the Ownership Structure» sets out the form and the ownership structure for ultimate beneficial owners, i.e. it defines the range of companies that have such a structure and must submit UBO information.
The list of legal entities that do not have to submit UBO information is given in item 9, part 2, Article 9 of Law of Ukraine No. 755-IV of 15.05.2003 «On State Registration of Legal Entities and Individual Entrepreneurs».
Important additions to the UBO filing procedure are also set out in letter of the Ministry of Justice No. 32032/8.4.4/32-21 of 09.07.2021: even if the USR already contains up-to-date information on the beneficiaries, legal entities must update it by 10 October 2021 by submitting all the required documents again. The Law also requires the information on UBOs and the company structure to be updated annually.
Which documents have to be submitted
- Form 2 of the application for state registration of a legal entity, or Form 4 of the application for state registration of a legal entity that is a civic organisation.
- The ownership structure under Order of the Ministry of Finance of Ukraine No. 163.
- For non-residents of Ukraine - a document confirming the registration of the legal entity in its country of incorporation.
- A notarised copy of the identity document of the company’s beneficiary.
The information can be submitted on paper in person or by post, or electronically. However, the data collection and processing system does not work properly yet.
Problems with data processing and the USR software
Although less than two months remain until the UBO filing deadline (10.10.2021), a large number of legal entities have still not been able to submit the required information. This is partly due to problems with collecting and processing the information, which the state registrars and the Ministry of Justice openly acknowledge. Because of the shortcomings of the registration forms, in many cases it is unclear in what form companies should submit their ownership structure and how to state up-to-date information properly. In addition, the USR software is still being finalised, and no place has been defined in it for the proper storage of the submitted applications and company data. Under these circumstances, disclosing UBO information becomes a real problem for legal entities, aggravated by the risk of fines of up to UAH 51,000 for failure to comply with the Law.
Legal services for companies and assistance with registration applications
To comply with the requirements of Law of Ukraine No. 361-IX and avoid liability, DEGA Partners Attorneys’ Association offers a full range of legal services for preparing and filing all the required documents, including:
- providing a UBO questionnaire and collecting the necessary data and documents;
- prompt approval of the information and documents on the parent company and its UBOs, as well as translation and legalisation of the required documents (if a member and/or UBO is a non-resident);
- drafting a power of attorney to perform the necessary actions on behalf of the principal;
- completing and filing all the required forms as agreed with and on behalf of the Principal.
DEGA Partners will ensure the proper and timely filing of UBO information for entry into the Unified State Register of Legal Entities, Individual Entrepreneurs and Civic Organisations. The cost and timing of legal advice and legal outsourcing are agreed individually with each client, depending on your needs.
If you have any further questions about filing documents on ultimate beneficial owners, please contact us at +38 (044) 358-01-95, and we will advise you on the steps needed to bring your company’s registration data in line with the law.
