Did you submit the statement regarding the ultimate beneficial owner?

Law no. 129/2019 for preventing and combating money laundering and terrorist financing, as well as for amending and supplementing some normative acts (“AML Law”) established, among others, the obligation for companies to report the ultimate beneficial owner (“UBO”). Below we will try to answer some of the most common questions asked by businesses in connection with the UBO registration.

1. Does the UBO reporting obligation apply to me?

All companies registered with the Trade Registry fall under this reporting obligation, but there are also some exceptions, namely (i) listed companies that are subject to disclosure requirements under European Union law or international standards that ensure transparency regarding the exercise of property rights, (ii) state-owned or majority state-owned companies and (iii) legal entities consisting only of shareholders which are individuals when they are the only ultimate beneficial owners.

2. How is the UBO identified?

The following criteria will be used to determine the UBO (i) direct/indirect control or control by other means or (ii) if UBO cannot be determined according to point (i) the senior management will be considered UBO. In the latter case, the company must keep track of the measures taken to identify the UBO, as well as the difficulties encountered in the process of verifying the identity of the UBO.

For the first criteria (i.e., direct/indirect control), the AML Law provides us, as follows:

holding 25% plus one share or participation in the capital of a company in a percentage of over 25% by a person is an indication of the direct exercise of ownership” and

holding of 25% plus one share or the participation in the capital of a company in a percentage of more than 25% by a foreign corporate entity, which is under the control of an individual, or by several foreign corporate entities, which are under the control of the same natural person, is an indication of the indirect exercise of the property ”.

For the second criteria (i.e., control by other means), we will refer to Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for money laundering or terrorist financing (“The EU Directive”) – the EU Directive provides that “control through other means may, inter alia, include the criteria of control used for the purpose of preparing consolidated financial statements, such as through a shareholders’ agreement, the exercise of dominant influence or the power to appoint senior management”.

If all criteria are exhausted and no UBO is identified, the members of the company’s senior management are deemed ultimate beneficial owners.

3. Where to start from?

To determine the UBO, you will need to identify the company’s ownership chain. The basic idea of ​​the UBO is to identify all the individuals behind the companies that have significant control, as mentioned in point 2 above.

4. I’ve identified the UBO and now what do I have to do?

After identifying the UBO, the legal representative of the company must submit the UBO statement to the Trade Registry, together with a copy of the identity card of the application signatory.

Regarding the form of the statement, the UBO statement can be signed in front of the representative of the Trade Registry, or it can be submitted, personally or through a representative, authenticated by the notary public, or attested by a lawyer.

However, UBO statements may be submitted in the form of a document under private signature or electronic form and sent via electronic means with an electronic signature attached or by post and courier services to the competent Trade Registry. This is a temporary exception provided by Emergency Ordinance no. 191/2020 for the extension of the deadlines for submitting documents provided for associations and foundations, as well as legal entities registered with the Trade Registry (“GEO 191/2020”).

5. What should the UBO statement include?

The UBO statement must include the complete data of the legal representative who signs the statement, the complete data of the company, the UBO identification data: full name, date of birth, personal numerical code, series and identity card number/passport, citizenship, full domicile or residence address, as well as how control is exercised over the company, i.e., the matters set out in point 2 above.

At the same time, attention should be paid to the data already registered with the Trade Registry, in the sense that the Trade Registry is competent to verify where appropriate, the accordance between the data in their database and the data from the UBO statement. This means that if the company determined the director as UBO, and the director’s identification data is not the same as the data already registered with the Trade Registry, the UBO statement will not be registered unless the director’s identification data will be updated accordingly.

6. What is the deadline for submission of the UBO statement?

According to GEO 191/2020, the first statement should be submitted within a maximum of 90 days from the end of the alert state. If the first statement was already submitted and changes were made to the UBO, the amending statement shall be submitted within 15 days from the date on which the change occurred.

7. Who can inspect and what sanctions apply for failure to submit the UBO statement?

The failure to observe the obligation to submit the UBO statement constitutes a contravention and is sanctioned with a fine ranging between RON 5,000 to RON 10,000 (approx. EUR 1,000 – EUR 2,000) or with the dissolution of the company. The ascertainment of the contraventions and the application of the sanctions are made by the tax administration or the agents of the National Office for Prevention and Combating Money Laundering.

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