On June 26, 2017, the Executive Branch regulated the law that governs, among other matters, the obligation of commercial companies and other entities based in Uruguay to identify the ultimate beneficiaries and holders of nominative equity shares (Fiscal Transparency Law, No. 19.484). The regulations govern, among other aspects, the deadlines, formalities, and scope of the obligation to make the corresponding communications to the Central Bank of Uruguay ("BCU").
1. OBLIGATION OF IDENTIFICATION AND INFORMATION OF ULTIMATE BENEFICIARIES TO THE BCU
1.1. What is meant by "Ultimate Beneficiary"?
The decree begins with the legal definition of ultimate beneficiary, reiterating the concept that was included in law 19.484. Ultimate Beneficiary is the natural person who, directly or indirectly, holds at least 15% of the paid-in capital or its equivalent, or voting rights, or by other means exercises ultimate control over an entity (whether it is a legal person, a trust, a mutual fund or any other equity of impairment or legal structure, with or without a legal capacity).
Indirect control refers to the exercise of said control through a chain of ownership interposed between the entity and the natural person.
1.2. Which entities are required to inform their ultimate beneficiaries to the BCU?
- Resident entities: Corporations (S.A.), limited partnerships by shares, Agricultural companies and associations, trusts and investment funds, SRLs, de facto partnerships, partnerships, limited partnerships, sociedades de capital e industria, cooperatives, foundations, economic interest groups, civil corporations and associations.
- Non-resident entities: a) entities acting in the national territory through a permanent establishment, (e.g. a branch of an entity from abroad); b) those that establish in the national territory their effective registered offices (that is, the administration and control of all their activities), for the development of business activities in the country or abroad; C) those that are holders of assets located in the national territory for a value greater than approximately US$ 320,000 (2,500,000 IU); and d) foreign investment funds and trusts whose managers or fiduciaries are residents in Uruguay.
It also includes foreign investment funds whose directors are residents in Uruguay and foreign trusts whose trustee or manager resides in the national territory. These entities must register with the DGI.
The Decree establishes a series of exceptions, both for the obligation to identify the ultimate beneficiaries and for the obligation to submit information to the BCU. In such cases, the companies will be exempt from the obligations provided by these regulations.
1.3. What information should be included in the sworn statement?
Information should be submitted in affidavits that must contain:
- Detailed personal information of the ultimate beneficiaries;
- Detailed information of the entire stock chain up to the ultimate beneficiaries, if applicable;
- Information regarding the paid-in capital (or its equivalent) of the entity under the requirement.
2. IDENTIFICATION OF ULTIMATE BENEFICIARIES AND HOLDERS OF NOMINATIVE EQUITY SHARES
2.1. Which entities must inform their ultimate beneficiaries to the BCU?
The following resident entities, issuers of registered or book-entry shares or equity must inform about their holders to the BCU Registry:
- Limited partnerships by shares
- Agricultural companies and associations
- Trusts and investment funds
- In general, any other legal person or entity authorized to issue shares or registered or book-entry securities.
The decree establishes that the provisions corresponding to the issuing entities will be applicable to the trusts and the administrators of investment funds, with their beneficiaries or quotaholders deemed titleholders.
2.2. What information should be included in the sworn statement?
In addition to the Ultimate Beneficiary information indicated above, the affidavit must contain, in the case of the holders of registered or equity shares, the following information:
- Information related to the total nominal value of the shares and the ownership interest of the holder, as well as its place of deposit, if applicable.
- Detailed personal information of the holder of the shares. In the case of a legal entity, information about the second company must also be included.
3. OTHER RELEVANT ISSUES
3.1. How is the information presented to BCU?
The BCU may establish declaration formats to be used, and may require that information be added to the affidavit additional to the provisions of the decree under consideration.
The BCU will make available a form, which must be completed and signed by the entities under obligation. The intervening Notary Public will send the form and its certification to the Superintendence of Financial Services of the BCU through an advanced electronic signature system. The computer site will automatically issue the certificate attesting to the receipt of the declaration by the BCU and its incorporation into the registry. So far, the BCU has not made these forms available.
3.2. What are the deadlines?
The entities must send the affidavits within the following deadlines:
- Before October 1, 2017, in the case of entities governed by Law 18,930 (companies with bearer shares, branches of foreign entities, and certain non-resident entities). The rule provides for an extension of this period in certain cases.
- Before July 1, 2018 in the case of entities issuing registered shares, personal partnerships and other obligated entities.
It is important to note that entities that are or will become required to comply with this rule will have to present the affidavit with the information of their ultimate beneficiaries within a period of 30 days from the date of the effective formalization of the entity or of the assumptions by which they become obligated.
3.3. Modifications of information and changes in ownership
The modification of the data contained in the affidavit (except for a variation of the nominal value that does not alter the percentage of participation) must be communicated by the obligated entity within 30 days of its realization.
This term will be 90 days if the ultimate beneficiaries or holders of registered securities are non-residents. If the percentage is altered (because of the modification of the contract or bylaws, or an increase in paid-in capital), the term will be counted from the date of the change or the resolution that determines the change in the participations.
3.4. Control and penalties
The National Internal Audit Office (AIN) is the body in charge of controlling compliance with the obligations and imposing sanctions, it being able to report the breaches to the BCU and the General Revenue Service (DGI). Sanctions are provided, namely:
- If dividends, redemptions, withdrawals or assets remaining in the liquidation or any other items of similar nature have been paid, the issuing entity will be sanctioned with a fine whose maximum will be equal to the amount unduly distributed;
- Suspension of the unified certificate issued by the DGI;
- Restriction from registering legal acts in the General Directorate of Registries.
- Corresponding economic sanctions varying according to the economic size of the entity and the period of non-compliance. The decree defines the criteria to be considered for the evaluation of the economic size of the entity. Fines can go up to approximately US$ 25,000.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.