Central Register of Beneficial Owners – practical issues

Central Register of Beneficial Owners (CRBO) has operated in Poland since 13 October 2019. Companies that were founded before 12 October 2019 have to submit the required information by 13 July 2020.

The originally set deadline for meeting the statutory obligation was 13 April 2020, however, it was extended due to the coronavirus pandemic pursuant to the first Anti-Crisis Shield. However, some obligated entities have already reported the required information to the CRBO.

Several months of operation of the CRBO shows that the filing (especially for a company with a complex corporate structure) requires a significant amount of work and causes difficulties, starting with the most important step i.e. identifying the person of beneficial owner.

Learn more: Anti-Crisis Shield 4.0 – proposed changes to employment regulations

Identification of beneficial owner

The Act on counteracting money laundering and financing of terrorism (AML Act) which contains a legal definition of beneficial owner is complicated and unclear, if only due to references to another complex legal act – the Accounting Act.

If in a company being reported to the CRBO there is:

• a natural person who owns more than 25% of shares

or

• a natural person who holds more than 25% of total votes in the company’s governing body   

the beneficial owner is usually identified without problems. In this case, an analysis of the company’s shareholding structure is sufficient. However, if there is no such person, it should be determined which person has actual control over the company’s activities and has a decisive influence on its operations.

Finally, if the beneficial owner cannot be identified by reference to the shareholding criterion or the Accounting Act (what must be documented), it is necessary to determine the natural person holding a senior management position in the company (e.g. board members, CEO). However, the regulation does not directly determine whether it should be a natural person holding a senior management position in the company or in a parent company or other higher-ranking company within the holding.

In addition, the Act does not specify what documentation the company should demonstrate to prove that it is impossible to identify the beneficial owner in accordance with the above criteria. Most likely, these documents could be excerpts from the National Court Register or relevant foreign registers, as well as those presenting the company’s share structure.

Registration of beneficial owner

There are also problems with the internet platform through which the application to the CRBO is submitted because it is not available in other languages. Thus, filling out the application form is only possible in Polish.

Persons authorized to represent the company – board members and commercial proxies – can electronically sign the application to the Central Register of Beneficial Owners. This task cannot be entrusted to a representative.

Signing a .xml file (with the notification) requires making appropriate changes to the settings of the qualified electronic signature. Otherwise, the file changes its extension from .xml to .xades, which CRBO no longer accepts. An alternative might be to use the ePUAP trusted profile.

CRBO – sanctions

Given the complexity of the AML Act and the level of penalties for non-compliance, it is extremely important to carefully examine the identification process of beneficial owner. Especially as according to Announcement No. 9 published on the website of the Ministry of Finance, the legal concept of “active repentance” does not apply when reporting information to the CRBO. It should also be noted that the notification is made under pain of criminal liability.

Failure to submit to the Central Register of Beneficial Owners within the statutory deadline is subject to a fine of up to PLN 1 milion.

Author:

Artur Rogozik
Partner, Legal Advisor
TGC Corporate Lawyers

Company law – see how we can help: