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New obligation for legal entities: Indicating and identifying the ultimate beneficial owner

Romina Iancu
Romina Iancu

Recently, Law no. 129/2019 on the prevention and sanctioning of money laundering and terrorism financing, and on the amendment and supplementation of other legislative acts (Law no. 129/2019) entered into force in Romania, i.e. on 21 July 2019.

From a corporate perspective, Law no. 129/2019 prescribes the obligation of legal entities registered with the Romanian Trade Register to declare their ultimate beneficial owner. As a result, the legal entities registered or to be registered with the Romanian Trade Register (except for autonomous state companies, national companies or companies wholly or majority owned by the Romanian State) have the obligation to submit (i) upon incorporation; (ii) annually; or (iii) each time a relevant change occurs, an affidavit regarding the identity of the ultimate beneficial owner.

This affidavit must include the identification data of the ultimate beneficial owner (e.g. last name, first name, date of birth, personal identification number, series and number of the identity document, nationality, domicile or residence), as well as the manner in which such person exercises control over the said legal entity (if there are more persons deemed ultimate beneficial owners, the affidavit must include information for each of them). The affidavit is issued by the legal representative of the legal entity and it is either given before the representative of the Romanian Trade Register Office or submitted in notarized form.

The annual affidavit must be submitted with the Trade Register Office where the company is registered with within 15 (fifteen) days as of the approval of the annual financial statements; in case a change regarding the identification data of the ultimate beneficial owner occurs, the affidavit must be submitted within 15 (fifteen) days as of the date of its occurrence.

The companies already incorporated benefit of a 12-month period as of the entry into force of Law no. 129/2019 for submitting the above mentioned affidavit. Based on informal discussions with the representatives of the Romanian Trade Register Office, currently, the affidavit would not be mandatory at incorporation, considering that the authority benefits, as per the legal provisions, from a 120-day period as of 21 July 2019 for creating the ultimate beneficial owner register; however, the affidavit must be filed afterwards also by companies incorporated during this transition period.

In respect of companies, the ultimate beneficial owner is defined as including at least:
1. the natural person who ultimately owns or controls a legal entity by exercising, directly or indirectly, the right of ownership over a number of shares or voting rights sufficiently large as to ensure control, or through participation in the company’s equity, or by exercising control through other means, if the legal entity owned or controlled is not a legal entity registered with the Trade Register whose shares are traded on a regulated market and which is subject to publicity requirements in accordance with the European Union’s legislation or with internationally set standards. This criterion is considered fulfilled in case of holding at least 25% plus one of the shares or participating in the equity of the legal person in a percentage of over 25%;
2. the natural person who ensures the management of the legal entity, if, after exhausting all possible means and provided that there are no grounds for suspicion, no natural person is identified in accordance with the first point, or in case there is any doubt that the identified person is the ultimate beneficial owner.

Non-compliance with the filing obligation represents an administrative offence sanctioned by fine ranging from RON5,000 to RON10,000 (approx. EUR1,050 – EUR2,100).

Romina Iancu
Associate DLA Piper

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