Law of Ukraine “On Prevention and Counteraction to Legalisation (Laundering) of Proceeds of Crime, Terrorist Financing, and Financing of Proliferation of Mass Destruction Weapon” No. 361-IX, dated 6 December 2019 (“Law”), became effective on 28 April 2020.
The Law established a new approach for disclosing ultimate beneficial owners (“UBO”) and ownership structure for Ukrainian companies.
Until now, Ukrainian market players could not fulfil these requirements due to the lack of a relevant bylaw. On 19 March 2021, the Ministry of Finance of Ukraine eliminated such a gap by approving Order “On Approval of the Regulations on the Form and Content of Ownership Structure” No. 163 (“Order”). The Order became effective on 11 July 2021.
What information must be disclosed?
Each Ukrainian company must submit the following additional documents/information to the Unified State Register of Legal Entities, Individual Entrepreneurs, and Civil Organisations (“USR”):
- information regarding its UBO(s)
- ownership structure
- documents confirming the accuracy of its ownership structure. Depending on the jurisdiction of each respective company, an extract from the local trade/commercial/business register or an incumbency certificate may be required
- notarised copy of the UBO’s passport (unless the UBO has either a Ukrainian passport in the form of an ID card or a Ukrainian permanent residency permit)
When to disclose the information regarding companies’ UBOs and ownership structure?
Each Ukrainian company must disclose the above information:
- during its state registration (for newly established companies)
- during the first registration action following the Order’s effective date
- in any event by 11 October 2021 (for all other companies)
Each Ukrainian company must also update the disclosed information:
- within 30 business days from the date of changes in its ownership structure
- on an annual basis – within 14 calendar days after the anniversary of its state registration
In case of failure to comply with such requirements, company officials may face a fine of up to UAH51,000 (approx. EUR1,575). Needless to say that from now on it will be impossible to perform any registration actions without providing the above information or documents.
What does it mean for the business?
For companies with sophisticated corporate structures such disclosure obligations create a burden to collect many documents from various jurisdictions. Thus, it is worth launching the collection of the required documents already.
All companies will have to track changes in their corporate structures to meet the deadline for updating the information in the USR.
Corporate secretaries, especially those in charge of many Ukrainian companies (e.g., those that comprise a group), must create a relevant schedule to comply with annual disclosure obligations.
We will keep monitoring any updates on this matter.