The Law on Central Register of Ultimate Beneficial Owners[1], adopted and entered into force mid-2018, provided for the establishment of the Central register of ultimate beneficial owners, thus instructing the Business Registers Agency to set up the new register of legal entities by December 31, 2018. Following that, the Agency will be competent for managing the Central register.
The Central register was established on the last day of the previous year, after which the deadline in which the existing Registered Subjects are required to register their beneficial owners started to run – January 31, 2019.
Who are Registered Subjects?
- Companies, except for public joint-stock companies
- Branches of foreign companies
- Cooperatives
- Business and other associations (except for political parties, labor unions, sport and other associations, churches and religious communities)
- Foundations and endowments
- Institutions
- Representative offices of foreign companies, associations, foundations and endowments
Who is Deemed as Ultimate Beneficial Owner (UBO)?
The Law prescribes several legal grounds on which Registered Subjects should determine who are their beneficial owners. Furthermore, the Business Registers Agency has declared that beneficial owners may choose only one legal ground for the registration in the application for registration of beneficial owners. Thus, it is not possible to register multiple beneficial owners under different legal grounds within a single Registered Subject. Moreover, it is not possible to register a single beneficial owner under multiple legal grounds.
An Ultimate Beneficial Owner is:
1. A natural person who, indirectly or directly, owns 25% or more shares, stocks, voting rights or other rights based on which they participate in managing Registered Subjects, i.e. participates in a Registered Subject’s capital with 25% or more stake;
2. A natural person who indirectly or directly has a prevailing influence on business management and decision-making within a Registered Subject;
3. A natural person who indirectly made/makes available assets to a Registered Subject, thus significantly influences the decision-making of the Registered Subject’s bodies relating to the decisions on financing and business conduct.
4. A natural person who is the founder, trustee, protector, user (if designated), as well as a person with a dominant position in trust management, or in other entity of foreign law;
5. A natural person who is registered for representation of collectives, associations, foundations and institutions, if the authorized person for representation has not registered another natural person as the beneficial owner.
Exceptionally, if it is not possible to determine the ultimate beneficial owner of a Registered Subject in accordance with the grounds under 1 – 4, a Registered Subject’s beneficial owner is a natural person who is registered for representation of a Registered subject, or that is registered as a member of a Registered Subject’s body.
The Obligation to Register Ultimate Beneficial Owners
Registered Subjects, who have been registered by December 31, 2018, are obliged to determine who their beneficial owners are and to register their beneficial owners in the Central Register. In addition, Registered Subjects are required to possess and keep adequate, correct and accurate data and documents, based on which their ultimate beneficial owners are determined, for 10 years as of the date of the beneficial owners’ registration.
An authorized person of a Registered Subject (for instance, a legal representative of a limited liability company) registers beneficial owners by submitting the online application for registration to the Business Registers Agency. It is very important for the application to be signed by a representative’s qualified electronic certificate, which has to contain the representative’s personal unique identification number (if the representative is a Serbian natural person), or the representative’s registration number (if the representative is a foreign natural person who has a temporary residence permit or a permanent residence permit in Serbia) or the representative’s passport number and the name of the country that issued the passport (if the representative is a foreign natural person without the registration number). If a representative has the registration number and has acquired a qualified electronic certificate with the registration number, it is also necessary to register the registration number in the appropriate register of the Business Registers Agency as information about the legal entity’s representative.
Legal Grounds for Registration after December 31, 2018
Registered Subjects, registered beginning with January 1, 2019, are required to register their beneficial owners within 15 days as of the date of registration, which is completed by their authorized persons.
Furthermore, the same deadline is applicable for the registration of changes in the ownership structure and changes in the membership of the Registered Subject’s bodies, as well as to other changes connected with the acquisition of the status of the Registered Subject’s ultimate beneficial owner.
Excerpts and Certificates from the Central Register
Interested parties may file an application to the Business Registers Agency in order to acquire excerpts from the Central Register on ultimate beneficial owners of a Registered Subject, certificates from the Central Register on historical data about the beneficial owners of a Registered Subject, as well as certificates from the Central register that a certain natural person is/was registered as a beneficial owner of a Registered Subject.
Protection of Natural Persons Falsely Registered as Ultimate Beneficial Owners
In case a natural person is unfoundedly registered as a beneficial owner of a Registered Subject, they are authorized to file a lawsuit to prove they are not a beneficial owner. The lawsuit should be filed to the competent court according to the place of the seat of a Registered Subject, and the procedure that follows is to be treated as urgent. If it is determined by a final court judgment that a plaintiff is not a beneficial owner, the court will deliver the judgment to the Business Registers Agency in order to remove the plaintiff from the Central Register.
Penalty Provisions
On the one hand, a violation is prescribed if an authorized person does not apply for registration of ultimate beneficial owners within 15 days as of the date of registration of a Registered Subject that is registered after January 1, 2019, or after a change in a Registered Subject’s ownership structure, or a change in the membership of Registered Subject’s bodies, as well as other changes related to the acquirement of the status of a Registered Subject’s beneficial owner. In that case, a Registered Subject will be penalized with a monetary fine in the amount of RSD 500,000 to RSD 2,000.000, while the responsible person within a legal entity will be obliged to pay RSD 50,000 to RSD 150,000.
On the other hand, a jail sentence for a period of 3 months to 5 years is prescribed for a criminal act committed intentionally in order to hide who the beneficial owner is, thereby not registering information on the beneficial owner in the Central register, registering false information about the beneficial owner, changing or removing accurate information about a beneficial owner.
[1] The Law on Central Register of Ultimate Beneficial Owners (“The Official Gazette of the Republic of Serbia”, no. 41/18)
