Monday 13 April 2020 is the deadline for submitting applications to the Central Register of Beneficial Owners ("CRBO") for those companies registered in the KRS before 13 October 2019.
Any companies registering in the KRS after 13 October 2019 are required to submit their CRBO filings within 7 business days from the date of the registration.
The following are some of the important issues relating to the CRBO.
What is the CRBO?
The CRBO is an IT system operated by the Ministry of Finance to process data on the beneficial owners of certain entities (in practice, these are almost all companies and partnerships registered in the Polish National Court Register – KRS). The CRBO, which became operational on 13 October 2019, is available to the public and its content is presumed to be true.
The Register is available at: https://crbr.podatki.gov.pl
Who is a beneficial owner?
For CRBO purposes, a beneficial owner is any natural person with direct or indirect control over the entity concerned, based on powers arising from legal or factual circumstances that allow them to exercise decisive influence over the entity's actions or activities. An entity may have more than one beneficial owner.
The beneficial owner(s) of a corporate entity other than a publicly traded company may be:
- any natural person who is a shareholder of the entity and owns more than 25% of its shares;
- any natural person who holds more than 25% of all voting rights in the decision-making body of the entity, including as a pledgee or usufructuary or under agreements with other vote holders;
- any natural persons in control of an entity that jointly owns more than 25% of its shares or jointly hold more than 25% of all voting rights in the decision-making body of the entity, including as pledgees or usufructuaries or under agreements with other vote holders;
- any natural person who is the "parent undertaking" of the entity for the purposes of the Accounting Act (meaning, inter alia, that the person has the right to appoint a majority of the members of its management or supervisory body or the right to direct its financial and operating policies).
If no natural person from the above can be identified, or if there is any doubt concerning their identity, a natural person(s) holding the position of senior managing official(s) in the organization (e.g. management board members) will be considered to be the beneficial owner(s).
Who is required to file CRBO notifications?
All registered partnerships, limited partnerships, partnerships limited by shares, limited liability companies and joint-stock companies (other than publicly traded companies) must file notifications with the CRBO. According to the plans, this obligation will also apply to simple joint-stock companies.
What disclosures need to be made and when?
The required CRBO disclosures include:
- company or partnership identifying particulars (name; type of organization; registered office; KRS number; and NIP taxpayer identification number);
- identifying particulars of beneficial owners and of members of governing bodies or shareholders with representation authority (full name; nationality; country of residence; PESEL identification number or, if a PESEL is unavailable, date of birth; information about the size and nature of interest held or about the beneficial owner's authority).
Any companies or partnerships registering with the KRS on or after 13 October 2019 have seven days to submit their CRBO filings. Those registered on 12 October 2019 or earlier will have until 13 April 2020 to make the relevant disclosures.
If there are any changes to previous CRBO disclosures, an update is needed within seven days of the change.
The two seven-day periods do not include Saturdays, statutory non-working days, and days on which there are any CRBO operating disruptions or failures (as announced in the Bulletin of Public Information, or BIP).
If a filing contains a manifest error, the entity is allowed three more business days after the error is discovered to correct it.
What format is used for CRBO filings?
Both original and updated CRBO filings are submitted online via the website https://crbr.podatki.gov.pl and signed with a qualified electronic signature or ePUAP trusted profile. An official acknowledgment of receipt (UPO) will be issued once a notification is submitted successfully.
The aplication also contains a statement by the filer, signed under the penalties of perjury, that the CRBO disclosures are true.
The CRBO allows to prepare a "draft" version of the application and then import it again and sign it by the authorised persons.
Who must submit CRBO filings?
Filings must be made by authorised representatives of a company or partnership. Primarily, these would be management board members and proxies. According to the official position of the General Inspector of Financial Information, it is not possible to make submissions by holders of powers of attorney.
What are the legal and business risks associated with the CRBO?
AMLA provides for a fine of up to PLN 1,000,000 to be imposed if an entity fails to make its CRBO filings or updates on time.
Moreover, CRBO filers will be liable in two ways for the correctness of disclosures, namely: (i) under criminal law as regards their mandatory statements that disclosures are true, and (ii) under civil law for any damage caused if disclosures are not true or if they were not made or updated within statutory deadlines.
Given the complicated ownership arrangements of many entities, especially those in multinational groups, identifying beneficial owners can be a difficult process in practical terms. Also, more often than not, there are considerable delays in Polish entities learning of matters of relevance to beneficial owner identification (e.g. of changes to their parent's ownership structures), which might prevent them from complying with the statutory seven-day period for CRBO updates.
Last but not least, given that the CRBO will be open to scrutiny and publicly available, a lot of investors may feel uncomfortable and reluctant to disclose the level of their financial involvement in specific business entities.
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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.