Serbian UBO Register Established – Call to Act Quickly
Serbian UBO Register Established – Call to Act Quickly
On 8 June 2018 the Ultimate Beneficial Owner Central Registry Act (Zakon o centralnoj evidenciji stvarnih vlasnika, “Official Gazette of the Republic of Serbia”, no. 41/2018, the “Act”) came into force. The main subject of the Act was formation of the Central Register of Ultimate Beneficial Owners (“UBO Register”) which applied to companies (except public joint-stock companies and companies whose sole shareholder is the state, autonomous region, or local self-governance), cooperatives, branches of foreign companies, business and other associations (except political parties, unions, sports organizations and associations, churches and religious communities), foundations and endowments, institutions; as well as representative offices of foreign companies, associations, foundations and endowments. The Act also does not apply to legal entities in insolvency or mandatory winding up proceedings, but it does apply to legal entities in the process of regular winding up proceedings.
The Act provided that the UBO Register shall be established by 31 December 2018, and that application for UBO registration must be filed until 31 January 2019.
UBO is a natural person which fulfils one of the following:
- a direct or indirect shareholder of at least 25% of shares, or holding at least 25% of voting or other management rights, or holding at least 25% shareholding interest in the capital of an entity;
- a holding with direct or indirect prevailing influence on business conduct and decision making;
- indirectly procuring funds to the registered entity, allowing such natural person a significant influence on decision making of the registered entity’s management bodies with reference to financial or business activities of a registered entity;
- a founder, trustee, custodian, beneficiary (if determined) or a natural person that has a dominant position in the trust or another foreign law entity management; and,
- a registered representative of cooperatives, associations, foundations, endowments and institutions, if the authorized representative has not registered another natural person as a UBO.
The same applies to registered entities which could not be determined in accordance with any of the previous four points.
It is Finally Possible to Register the UBO. Be Aware of Short Deadlines
The Ministry of Commerce of the Republic of Serbia (“Ministry”) enacted two rulebooks aimed at implementing the Act:
- Rulebook on the Content of the Central Register for Registration of the Ultimate Beneficial Owner of the Registered Entity (Pravilnik o sadržini centralne evidencije radi sprovođenja evidentiranja stvarnih vlasnika registrovanog subjekta, “Official Gazette of the Republic of Serbia”, no.94/2018, “Rulebook on Registry Content”), and
- Rulebook on the Manner and Requirements for Electronic Data Exchange among the Business Registry Agency, state authorities and National Bank of Serbia, for Registration of Ultimate Beneficial Owners (Pravilnik o načinu i uslovima elektronske razmene podataka između Agencije za privredne registre, državnih organa i Narodne banke Srbije radi sprovođenja evidentiranja stvarnih vlasnika, “Official Gazette of the Republic of Serbia”, no.94/2018, “Rulebook on Electronic Data Exchange”).
Both of these Rulebooks allowed technical conditions for UBO Registration. They came into force on 31 December 2018, and the deadline for submission of applications for UBO registration remains the same – they must be submitted by 31 January 2019.
Main Technical Features and Obstacles
Registration of UBO can be conducted only in electronic form. This requires legal representatives of relevant legal entities to acquire an electronic signature, as well as to register themselves as users of the UBO Register. The Act does not contain any provision whether UBO registration could be done on the basis of a power of attorney. However, it does explicitly require a registered legal representative to submit such application.
Submission of application for UBO registration also requires special software, which is available on the Business Register Agency’s (“BRA”) web page, and its download is free of charge.
The Act requires the registered entity to keep all documents based on which the UBO was determined for a 10-year period from the date of registration, and to provide to BRA, NBS or other state authorities at their request.
Any change of UBO has to be registered in the UBO Register within 15 days from the actual change of UBO, or from establishment of a registered entity.
Possible Severe Consequences of Non-Compliance
In case of failure to register a UBO in the UBO Register within the above-mentioned deadlines, this could be a misdemeanor or even have criminal consequences.
In case a registered entity fails to register information on change of UBO within 15 days from the actual change or fails to keep the documents based on which the UBO was determined for a 10 year period from the date of registration, it could be fined with a misdemeanor fine ranging from RSD 500,000 (approx. EUR 4,200) to RSD 2,000,000 (approx. EUR 16,900). For the same misdemeanor, a court would fine the authorized representative of a registered entity with a fine ranging from RSD 50,000 (approx. EUR 420) to RSD 150,000 (approx. EUR 1,270).
On the other hand, a person intending to conceal the UBO’s identity that fails to register data on the UBO in the UBO Register, or registers false data on the UBO, or changes or removes the correct data on the UBO, could be charged for a criminal offense and sentenced to prison for a period between 3 months and 5 years.
The Act is silent with regards to consequences of a failure to register the UBO until 31 January 2019. Our opinion is that misdemeanor liability could be applied as well, accordingly. Moreover, such failure could impose criminal liability on the offender.
This newsletter is only for the blogging purposes and does not in any mean pose as legal advice of SOG law firm. If you are interested in expert’s opinion on this matter or any advice of legal nature, feel free to contact us.
Milan Samardžić, LL.M. (Georgetown), Partner
+381 63 318 320
Ivan Nikolić, Senior Associate
+381 69 3282 806
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