Today, the issue of business transparency in Ukraine is one of the key factors for the stable development of companies and compliance with legal requirements. One of the obligations of legal entities is to update information about the ultimate beneficial owner.

Failure to comply with the requirements to submit up-to-date information about the ultimate beneficial owner results in serious consequences, including financial penalties. Given the changes in legislation and the increased attention regulatory authorities are paying to this issue, businesses must act quickly and effectively.  

LET’S START FROM THE BEGINNING: WHO IS THE ULTIMATE BENEFICIAL OWNER?  

An ultimate beneficial owner is an individual who exercises decisive influence over a company’s activities (either directly or through other legal entities). An important condition is ownership of directly or indirectly 25% or more of the authorized capital or votes in the company.  

It is worth noting that the very need to disclose information about beneficiaries arose due to the requirements of the Association Agreement between Ukraine and the EU and the incorporation of the FATF’s International Standards on Financial Monitoring into Ukrainian law. This information is used to monitor and detect money laundering and transactions related to drug and arms trafficking.

In addition, information about the ultimate beneficial owner is used to monitor cash flows as part of financial monitoring.

IMPORTANCE OF UPDATING INFORMATION ABOUT ULTIMATE BENEFICIAL OWNER FOR BUSINESS   

In practice, many Ukrainian companies face difficulties when updating information about their ultimate beneficial owner. The main issues include:  

– the complexity of the document submission process (if there are non-residents among the company’s owners, it becomes difficult to obtain the necessary documents from abroad);  

– the need to gather additional information, such as a description of the ownership structure;  

– Failure to update data in a timely manner due to changes within the company.  

Such situations can result in fines and other financial and reputational risks.  

When is it necessary to submit information about the ultimate beneficial owner?  

• It is necessary to notify the state registrar of the ultimate beneficial owner when registering a legal entity; 
• If a company was registered before October 3, 2023, the first filing of information regarding the ultimate beneficial owner and ownership structure must be submitted within 90 days of the termination of martial law in Ukraine;
• If information regarding the ultimate beneficial owner has already been submitted, and in the event of a change in the company’s ultimate beneficial owner, state registration of changes to the information regarding the company’s ultimate beneficial owners must be completed within 30 business days from the date such changes occur.

What risks face the companies in the event of a violation of the requirements?  

– Fines. Failure to submit, or late submission of, information regarding the ultimate beneficial owner of a legal entity—or regarding the absence of such an owner—shall result in the imposition of a fine on the legal entity in the amount of 17,000 to 340,000 hryvnias.

In addition, the head (director) of a legal entity is subject to an administrative fine ranging from 17,000 to 51,000 hryvnias for failing to submit or for late submission of information regarding the legal entity’s ultimate beneficial owner or the absence thereof. However, during martial law and for three months after its termination, administrative liability does not apply.

– Loss of reputation. Participating in tenders or attracting investors or partners will be difficult without a transparent ownership structure.  

BUSINESS TIPS

1. Check that the data is up to date.

Please make sure that the information about the ultimate beneficial owner is accurate. This applies to both internal documentation and information in the Unified State Register.  

2. Bring in experts.  

Updating information about the ultimate beneficial owner requires attention to detail and knowledge of the law. The law firm “ARMADUM LAWYERS” is ready to provide legal support throughout this process, helping you avoid mistakes and penalties.  

WHY SHOULD YOU CHOOSE THE “ARMADUM LAWYERS” TEAM?  

Expertise and experience.  

Our attorneys have many years of experience in corporate law, particularly in successfully assisting companies with updating information on their ultimate beneficial owners and representing your interests in dealings with government agencies.

A personalized approach.  

We know that every business is unique. That is why we analyze your company’s needs and offer solutions that are tailored to your specific circumstances.

Efficiency and reliability.

By working with the law firm “ARMADUM LAWYERS,” you’ll receive prompt legal support that will help you avoid fines and ensure your company’s transparency.  

The law firm “ARMADUM LAWYERS” is ready to be your trusted partner in this process, providing professional support and effective solutions to legal issues.

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