Tax Alert, June 2018
Law on central register of beneficial owners
With the aim to improve the existing system of discovering and prevention of money laundering and terrorism financing, and to harmonize domestic legislation with the international standards in this area, National Assembly of the Republic of Serbia has adopted the Law on central register of beneficial owners (hereinafter: “Law”) which prescribes the obligation for companies and other registered entities (hereinafter: “Registered entities”) to disclose their beneficial owners, and establishes Central register of beneficial owners of legal entities and other entities registered in Republic of Serbia (hereinafter: “Central register”). The law came into force on 8 June 2018.
1. Central register and the obligation of registration
Existing Registered entities are obliged to determine their beneficial owner by 8 July 2018 at the latest, (a period of 30 days from the date of entry into force of the Law) and to keep data and documents based on which the beneficial owner was determined. Registered entity is obliged to make these data and documents available at the request of the competent state authority and the National Bank of Serbia.
Central register is public, unique, central, electronic database of natural persons that are beneficial owners of a Registered entity, managed by the Serbian Business Registers Agency.
Registered entities are obliged to determine the beneficial owners and to provide supporting documentation, as well as to record these data and documents within the Central register of Serbian Business Registers Agency.
The obligation of registration is based on:
1. establishment of a Registered entity;
2. a change in the ownership structure and management of the Registered entity, as well as other changes which might lead to fulfilment of conditions that may deem one as a beneficial owner of a Registered entity.
The authorized person of the Registered entity is obliged to record data within the Central register, no later than 15 days from the date when the basis for registration occurred.
Registered data are published on the web page (portal) of the Serbian Business Registers Agency, at the moment of registration. Such data have legal effect towards third parties the day after the date of their publication.
Serbian Business Registers Agency should establish Central register in electronic form no later than the end of 2018. The authorized person of the Registered entity will be obliged to record data on beneficial owners within the Central register for entities registered by the end of 2018, no later than 31 January 2019. Bylaws for the implementation of this Law shall be passed within three months from the date of entry into force of the Law.
2. Registered entities
The Law applies to the following legal entities and other subjects registered in Republic of Serbia:
- Companies, except for public joint stock companies;
- Branches of foreign companies;
- Business associations and associations, except for political parties, trade unions, sports organizations and associations, churches and religious communities;
- Foundations and endowments;
- Representative offices of foreign companies, associations, foundations and endowments.
This Law does not apply to companies and institutions in which Republic of Serbia, autonomous province or local authority is the only shareholder or founder.
3. Beneficial owner of the Registered entity
The Law defines beneficial owner as:
1. Natural person, which indirectly or directly holds 25% or more of shares, stocks, voting or other rights, based on which such person participates in management of the Registered entity or participates in the capital of the Registered entity with 25% or more of shares.
2. Natural person which directly or indirectly has predominant influence on business activities and decision making.
3. Natural person, which has indirectly provided or provides funds to the Registered entity and based on that has a significant influence on decision making of the management with regard to financing and business activities.
4. Natural person which is a founder, trustor, trustee, beneficiary (if determined), as well as a person that has a dominant position in managing a trust, or another person in line with foreign law.
5. Natural person which is registered as a representative of cooperatives, associations, foundations and institutions, if the registered representative did not disclose another person as the beneficial owner.
If it is not possible to determine the natural person which is the beneficial owner, as prescribed in points one to four above, the beneficial owner of the Registered entity is the natural person registered as a representative, or registered as a member of the management board of that entity.
4. Penalty provisions
4.1 Criminal offence
The Law prescribes criminal offence for persons which, with the intention to conceal the beneficial owner:
1. Do not register data on the beneficial owner,
2. Register false data on the beneficial owner
3. Amend or delete accurate data on the beneficial owner.
Penalty for this criminal offence is imprisonment ranging from three months to five years.
The Law also prescribe misdemeanor offense for Registered entity and responsible person in the Registered entity in case such entity does not register data on beneficial owner within the prescribed deadline and if such entity does not keep relevant data and documents based on which the beneficial owner was registered. Such misdemeanor is subject to pecuniary fine ranging from RSD 500.000 to 2.000.000 for the Registered entity and RSD 50.000 to 150.000 for responsible person.