New requirements for disclosure of beneficial ownership of companies become effective on 28 April 2020.
Implications for Ukrainian companies
All existing companies will be required to update the information on their ultimate beneficiaries and ownership structure in the public companies' register. Going forward, the companies will be also required to annually update such information.
The companies are required to follow the established deadlines for disclosure/updating of information on their ultimate beneficiaries and ownership structure. Fines for failure to comply with the disclosure obligations have been significantly increased.
What the law says
On 28 April 2020, the Law of Ukraine "On Prevention and Counteraction of Legalization (Money Laundering) of the Proceeds of Crime or Terrorism Financing, as well as Financing of the Proliferation of Weapons of Mass Destruction" becomes effective. This law replaces the current law on financial monitoring, and also amends the Law of Ukraine "On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations of Ukraine" with respect to the disclosure of ultimate beneficiaries of Ukrainian companies.
Starting from 28 April 2020, Ukrainian companies will be required to comply with the following new requirements:
- Update information on ultimate beneficiaries and ownership structure in 2020. The specific deadline for such update is not clear yet, since the regulator should first approve the regulation setting out the form and content for disclosure of the ownership structure. All existing companies will be required to comply with this obligation within three months from the effective date of the regulation. The regulation should be approved by 28 July 2020.
- Update information on ultimate beneficiaries and ownership structure on an annual basis. In addition to the above obligation, all Ukrainian companies will be required to annually submit to the companies' register documents confirming their ultimate beneficiaries (i.e., ownership structure, copies of the passports of ultimate beneficiaries that are certified by a notary, and extract(s) from the companies' register confirming the state registration of the participant/shareholder of a Ukrainian company in its jurisdiction).
- Report any changes in information. Companies should report any changes of/in information on their ultimate beneficiaries and ownership structure to the companies' register within 30 business days from the date of such change. Additionally, any registration actions in the companies' register (e.g., change of a director, composition of participants, registered address, charter, etc.) will have to be accompanied with disclosure of information on ultimate beneficiaries and ownership structure or confirmation that the ultimate beneficiaries and/or ownership structure remain(s) unchanged.
Failure to comply with the disclosure obligations may result in fines on the director of the company in an amount of UAH 17,000-51,000 (which is approximately USD 600-1,900).
Actions to consider
We recommend that the management of Ukrainian companies, their participants/shareholders and ultimate beneficiaries consider the following actions:
- Check the accuracy of information on the ultimate beneficiaries in the companies' register and, if required, urgently make changes to this information under the current procedure.
- File information on ultimate beneficiaries and ownership structure with the companies' register as soon as possible after the approval of the form and content of the ownership structure by the regulator.
- Consult with the legal advisor about the particular circumstances of your company, e.g., presence of trust in the ownership structure, ultimate beneficiaries being concerned about disclosure of their personal information, etc.
- Add a deadline for the annual update of information on ultimate beneficiaries and ownership structure to the corporate maintenance calendar in order to meet the statutory deadline.