By: Stella Evangelou | LEGAL CONSULTANT – CORPORATE ADMINISTRATOR @ A. Karitzis & Associates LLC
Understanding the New UBO Register: Compliance Obligations and Key Definitions
In an effort to combat the abuse of the financial system for engaging in illegal activities such as (inter alia) money laundering, financing terrorism, tax fraud, and corruption, thus giving effect to the EU Anti-Money Laundering Directive(s) and the Cypriot Prevention and Suppression of Money Laundering and Terrorist Financing Law(s), collectively referred to as the “Applicable Law,” the Department of Registrar of Companies and Intellectual Property of Cyprus (the “Registrar”) has announced the establishment of the Register of Beneficial Owners of companies and other legal entities (the “UBO Register”).
The commencement of the implementation process on the 14th of November 2023 marks the beginning of a new era in the business world. Without a doubt, and as is the case with all changes, this also entails an element of the “unknown” and the need to navigate a new “path.” The purpose of this article is, therefore, to provide a practical guide for every company and legal entity to comply with the provisions of the Applicable Law.
1. Holding or Being Exempted from the Responsibility of Submission of Beneficial Owners’ Data
(i) Subject to the exemptions set out below, all companies incorporated or registered under the Companies Law Cap. 113, European public limited liability companies (SE), and partnerships (collectively referred to as the “Companies” and individually as the “Company”), shall, within the requisite timeframe, submit to the UBO Register their Beneficial Owners’ data.
(ii) Companies that are currently in the process of strike-off are not exempt from the obligation to submit their Beneficial Owners’ data if and when such process commenced on or after the 12th of March 2021—taking into consideration the date of filing of the relevant application to the Registrar.
(iii) Companies that are currently in the process of liquidation are not exempt from the obligation to submit their Beneficial Owners’ data if and when such process commenced on or after the 12th of March 2021—taking into consideration the date of the resolution approving the company’s liquidation (Voluntary Liquidation) or the date of the relevant application submitted to the court (Liquidation by Court).
(iv) Overseas companies with an established place of business (branch) in Cyprus, companies that are listed on a regulated market subject to disclosure requirements under EU law, or those subject to equivalent international standards ensuring adequate transparency of ownership information do not fall within the scope of the foregoing legislative obligation.
2. Definition of “Beneficial Owner”
According to the Applicable Law, the “Beneficial Owner” is any person who has ultimate ownership or control of the Company through:
(i) The ownership of a sufficient percentage of shares:
- Direct Ownership: A shareholding of 25% plus one share in the issued capital of the Company held by that person.
- Indirect Ownership: A shareholding of 25% plus one share in the issued capital of the Company held by that person through another company or legal entity.
- Direct & Indirect Ownership: Both ownership regimes, as described above, are applicable.
OR
(ii) Voting rights
OR
(iii) Significant influence or control by other means
Provided that a beneficial owner cannot be determined on the foregoing grounds, the details of one or more senior management officials shall be submitted to the UBO Register.
3. Data for Disclosure
The required data that shall be submitted for each Beneficial Owner of a Company includes:
(i) Personal information: The name, date of birth, nationality, residential address, and details of the Identity Card (only for Cypriots) or Passport.
(ii) The nature and extent of the beneficial ownership or interest held, directly or indirectly.
(iii) The date on which such person became or ceased to be a beneficial owner, or on which the previously submitted information has changed.
4. Applicable Timeframe(s) & Deadlines
(i) A newly registered or incorporated Company: The Beneficial Owners’ data shall be submitted to the UBO Register within ninety (90) days from the date of incorporation or registration.
(ii) Change in the Company’s ownership structure and/or in the data previously submitted for Beneficial Owner(s): The UBO Register shall be updated accordingly within forty-five (45) days from the date on which the said change becomes known to the Company.
(iii) Annual Confirmation: Between the 1st of October and the 31st of December of each calendar year, all Companies shall reconfirm the data previously submitted for their Beneficial Owners. In this respect, the Amended Law (as defined below) has granted an extension until the 31st of March 2025 for the reconfirmation of such data.
5. Consequences of Failure to Comply
On the 6th of December 2024, the Prevention and Combating of Money Laundering (Amendment) (No. 2) Law of 2024 (number L.141(I)/2024) (the “Amended Law”) was published, thus introducing, inter alia, amendments to the penalties for cases of non-compliance.
(i) In the case of failing to submit, update, and/or re-submit the Beneficial Owners’ data, notwithstanding the criminal liability or prosecution of any person, the consequences fall on the Company itself. However, the Company’s director or other managing directors who refuse or omit to take the required action are jointly and/or severally liable with the Company for the payment of any penalty. The Company’s director or managing director will not be held liable if they have exercised due diligence and non-compliance with the Applicable Law has not resulted from any act, omission, or negligence on their part.
(ii) The administrative penalties have been revised by the Amended Law and are now as follows:
- One Hundred Euro (€100) on the first day of non-compliance; and
- A further penalty of Fifty Euro (€50) per day of continuation of the default, up to a maximum amount of Five Thousand Euro (€5,000).
