Central Register of Beneficial Owners – new obligations and sanctions for companies

On 13 October 2019, came into effect provisions regarding the Central Register of Beneficial Owners (hereinafter: “CRBO”), introduced by the Act on Counteracting Money Laundering and Terrorist Financing of 1 March 2018 (hereinafter: the “Act”).

What is CRBO?

CRBO is an information and communication technology system designated chiefly for processing information about companies’ beneficial owners for the purposes of implementation of tasks aimed at counteracting money laundering or terrorist financing. CRBO is a public register and data recorded therein are presumed to be true.

What information are subject to notification?

Under new provisions, all the registered and newly incorporated commercial companies (except for joint-stock public companies and professional partnerships) must provide CRBO with information about their beneficial owners. Subject to notification to CRBO are identification data concerning the company, particulars of members of the company’s bodies or its shareholders authorised to represent the company, as well as data identifying the beneficial owner.

What is the data reporting deadline?

Newly incorporated companies must make a notification to CRBO within 7 days of new company’s entry in the National Business Register. Information entered in the register must be updated within 7 days of their change.

Companies that had been registered with the National Business Register before the new provisions entered into force (i.e., before 13 October 2019) were given 6 months to determine their beneficial owners and notify CRBO thereof (the notification deadline is 13 April 2020). Further changes of information reported to CRBO should be made within 7 days – just like it is the case with newly incorporated entities.

Who is a beneficial owner?

A beneficial owner is a natural person or natural persons that exercise direct or indirect control over a company through rights held therein, which arise from legal or actual circumstances, and permit to exert a decisive influence on actions taken by a company, or a natural person or natural persons on whose behalf business relationships are established or a one-off transaction is carried out. In companies that are legal persons, a beneficial owner is considered to be, in particular, a natural person who is a shareholder of a relevant company and holds more than 25% of the total number of shares therein.

Although provisions of the Act contain a definition of the beneficial owner, practical application of those provisions may prove difficult. Determining a beneficial owner may prove particularly difficult in companies of extensive capital structure or those whose bylaws grant certain entities with special entitlements.

Financial sanctions. Civil and penal liability.

A company’s failure to provide CRBO with information about beneficial owners within the set time limit is subject to a financial penalty of PLN 1,000,000.

Irrespective of liability imposed on the company itself, company representatives that are required to report or update information on beneficial owners bear penal liability for making a false statement and civil liability for damage caused due to a failure to provide information or to update it on time, or damage caused by making a false statement.

How can we be of help?

The Law Firm of D.Dobkowski sp.k. has had a long track record of providing legal assistance in implementation of necessary procedures to combat money laundering and terrorist financing. We support companies in adjusting their activities to requirements of the new Act and carry out legal due diligence in order to verify correctness of the imposed procedures and implementation of the statutory obligations.

Giving regard to entry into force of provisions of the Act relating to the Central Register of Beneficial Owners, we offer our clients assistance in fulfilling the obligation to report information about the beneficial owner to CRBO.

Irrespective of the above, in connection with a subsequent amendment of the Act that will enter into force on 30 November 2019 and will determine necessary qualifications of beneficial owners of certain obliged institutions, our Law Firm offers its assistance also in establishing whether statutory requirements have been fulfilled.

Since deadlines provided for in the Act for implementation of an obligation to notify CRBO are extremely tight, we suggest that you contact us as soon as at the stage of planning personal changes in your company’s management board or other changes that are subject to entry in the National Business Register in order to permit coordination of relevant activities and avoid the risk of payment of high financial penalties. We wish to emphasise that prior to notification it may prove necessary to carry out numerous auxiliary activities, e.g. acquisition of electronic signatures for the company representatives.

Considering the above, all arrangements necessary to establish a beneficial owner, in particular in companies with an extensive capital structure, and to make a notification to CRBO by companies recorded in the National Business Register, should start without delay.

We are ready to provide you with any advice you might require in the above-mentioned scope.