On the 14th of October 2014 the Supreme Court of Ukraine passed the law “On Introducing Amendments to Certain Laws of Ukraine to Disclose Ultimate Beneficial Owners of Legal Entities and Public Officials”.
One of the main purposes of the respective law is the reduction of the corruption level in Ukraine by identifying individuals who are ultimate beneficial owners of legal entities (not only direct shareholders – legal entities).
Basically, the Law obliges legal entities to disclose the information about the ownership structure of their founders and members, as well as information about the ultimate beneficial owners of the legal entity.
In particular, the law prescribes the following:
I. The law introduces the term “Ultimate Beneficial Owner of a Legal Entity” as a natural person, who has an ability to make decisive influence on the management or business activities of a legal entity, directly or through other natural persons.
Conditions for determining of decisive influence:
What way: (i) direct or indirect ownership of more than 25% of shares of the legal entity’s share capital or (ii) voting rights in the legal entity.
Who: (i) one person independently or (ii) together with other natural persons and/or legal entities.
N.B. It is important to mention that according to the law a natural person who is an agent, nominee beneficial owner or the one who is only an intermediary of such right CAN NOT be determined as an ultimate beneficiary individual.
II.Legal entities (except of government and communal entities) will be obligated to disclose information about the ownership structure of their founders and members as well as information about the Ultimate Beneficiary Owners. This information should be also entered and updated in the State Register of Legal Entities in case of any changes.
III.Non provision or provision of false information about the Ultimate Beneficial Owner, may lead to the administrative responsibility of the legal entity’s director in the form of a fine ranging from the amount of UAH 5.100 up to UAH 8.500.
The respective law applies also to legal entities which are registered before the law comes in force. Such entities should provide the information on their ultimate beneficial owners within a period of 6 months from the date that this law will come in force.
The law was already signed by Ukrainian president Petro Poroshenko and it will come into force in the end of November 2014.