Government Emergency Ordinance No. 111/2020 on amending and supplementing Law No. 129/2019, is the result of intense debates between legal professionals and recipients of Law No. 129/2019 on the prevention and combating of money laundering and terrorist financing.
The new text, published in the Official Gazette no 620 of July 15, 2020, provides important clarifications regarding the identification of the ultimate beneficiary owner of companies, as well as associations and foundations.
Identification of the ultimate beneficial owner of the companies
In accordance with the new ordinance, “ultimate beneficial owner” means any natural person who ultimately owns or controls the client and/or the natural person in whose name/on whose behalf a transaction, operation or activity is carried out directly or indirectly.
In the context of companies incorporated under the Law no. 31/1990 on company, the beneficial owner is the natural person who owns or ultimately controls the company which may be registered in the Trade Register.
Control of such a company can be exercised by directly or indirectly holding the right of ownership over a sufficient number of shares or voting rights, or by participating in the equity of the company, including by holding bearer shares or by exercising control by other means.
GEO n ° 111/2020, like the text of Law n ° 129/2019, provides obligation to declare the beneficial owner for all companies registered in the Trade Register, except companies listed on a regulated market (such as listed companies).
Ownership of 25% plus (1) one of the shares or an ownership interest of over 25% in a company held by an individual is considered by GEO no 111/2020 as an indication of direct ownership ensuring control of the company.
As a novelty, GEO no. 111/2020 provides that the ownership of 25% plus (1) one of the shares or an ownership interest of over 25% in a company held through one or multiple foreign corporate entities that are under the control of an individual is construed as an indication of indirect ownership ensuring control of the company.
Identification of the ultimate beneficial owner of the associations and foundations
GEO no: 111/2020 introduces express provisions on the identification of associations’ and foundations’ ultimate beneficial owner, thus putting an end to discussions and interpretations which have arisen on this topic.
With regard to associations and foundations, a detailed list of individuals that may be considered beneficial owners is provided:
a.associates or founders ;
b.members of the boards of directors ;
c.individuals with executive duties authorized by the board of directors to exercise its competencies;
d.the category of individual(s) or the individual(s) for whose main benefit the association/foundation was established ;
- any other individual exercising last instance control, by any means, over the non-profit entity.
Other new provisions of the geo no 111/2020
Among the other provisions introduced by GEO no. 111/2020, note the fact that the ultimate beneficial owner declaration can now be filed as a wet ink document or as an electronically signed document and sent without any other formality to the Trade Register by electronic means or by post.
Likewise, the ultimate beneficial owner declaration will no longer be necessary if, upon the incorporation of legal entities subject to registration with the Trade Register, the ultimate beneficial owner’s identification details and manner of exercising control (directly or indirectly) is declared through the articles of company.
For more transparency, GEO no 111/2020 also introduced the possibility for any natural or legal person to request information from the National Trade Register Office regarding the beneficial owner of companies, in accordance with the standards pertaining to the protection of personal data, without justifying a legitimate interest, according to Law n ° 129/2019.
The new provisions introduced by GEO no 111/2020 follow the legislative trends of simplifying the ultimate beneficial owner declaration procedures, which arisen since the entry into force of Law no 129/2019 and which materialized in a series of normative acts adopted so far in this direction.
With a slight delay, the new legal text complements the efforts of the Romanian authorities to transpose the 5th European Money Laundering Directive, strengthening the national system for the fight against money laundering and the financing of terrorism.
GRUIA DUFAUT LAW OFFICE
Attorneys at law (Paris & Bucharest)