Ukraine: Parliament introduced concept of the ultimate “beneficial owner of company”

CMS Cameron McKenna, 
Kyiv, Ukraine, Fri, Nov 7, 2014

MainAspects of the Law

As a key transparency and anti-corruption measure, theLaw introduces:

•           the concept of the ultimate“beneficial owner of a legal entity” and expands the concept of “publicfigures” considerably;

•           mandatory obligations for Ukrainianlegal entities, other than state and municipal enterprises, to identify theirultimate beneficial owners, store information about them, disclose it to theState Register of Legal Entities and Individual Entrepreneurs and regularly updateit (for example, in case of change of ultimate beneficial owners and/or ownersof substantial interest in the legal entity, including ultimate beneficialowners);

•           administrative liability for a legalentity’s failure to disclose (or update) information about their beneficialownership of shares in the form of a fine (from UAH 5,100 to UAH 8,500) imposedon the Director/Manager of the legal entity; and

•           an obligation for legal entities,registered before the Law enters into force, to disclose (or update) theinformation about their beneficial ownership of shares to the State Register ofLegal Entities and Individual Entrepreneurs within six months from the date theLaw enters into force.

According to the Law, information included in the StateRegistry of Proprietary Rights Over Immovable Property (the “Registry”) becomespublicly available. Previously, such information was only available to theowners/users (including their respective heirs) of the relevant property andstate/municipal authorities.

The Registry includes information about land plots,buildings, structures, integral property complexes, residential (includingapartments) and non-residential premises (including parts thereof), as well asencumbrances over such property. The Registry also provides informationregarding the owners and users of the property, such as lessees and persons infavour of whom the servitude, emphyteusis or superficies are established, aswell as mortgages and tax pledges established over the property.  Individuals and companies can obtaininformation from the Registry by means of either (i) applying to the stateregistration officers or notaries for a hard copy of the extracts from theRegistry or (ii) obtaining the information electronically from the website ofthe Ministry of Justice. Information from the Registry is provided with respectto the property only. Thus, details of the property need to be provided (suchas address or identification number) in order to obtain information from theRegistry. Requesting and obtaining information about individuals or companies(such as a list of property they own or use) will not be possible, sincedetails of a particular property need to be provided in order to receiveinformation (including who owns or uses the property).

On the contrary, state and municipal authorities(including judges, prosecutor officers and notaries) are entitled to access andobtain information from the Registry by means of providing either the detailsof a property or the names of individuals or companies.

The detailed procedure for accessing the Registry andobtaining information from it is still pending and will be established by theCabinet of Ministers of Ukraine by way of adopting the relevant resolution.

Law

The draft Law No.5114“On Amendments to Certain Legislative Acts of Ukraine regarding Defining FinalBeneficiary Owners of Legal Entities and Public Persons” dated 07 October 2014available here (in Ukrainian). 

Authors: 

NataliaKushniruk, Senior Associate, natalia.kushniruk@cms-cmck.com

AnnaSpichenko, Lawyer, anna.spichenko@cms-cmck.com