beneficial ownership

Central Ultimate Beneficial Owner Register is fully operative

The application of the Central Ultimate Beneficial Owner (“UBO”) Register became fully operative as an electronic system linked to the Tax Identification Number (TIN) of each legal person or legal entity by the use of an online application of the General Secretary of Information Systems.

The relevant legislation is included in Law 4557/2018, which introduced in the Greek legal system the new framework for the prevention and suppress of money laundering and terrorism financing (incorporation of Directive 2015/849/EU), as well as in Decision No 67343 EX 2019 (Government Gazette B 2243/20-6-2019) of the Minister of Finance. Aim of the EU and national legislation is the transparency in the corporate structures, the direct access of audit/prosecution authorities to them and the prevention of the abuse of corporate structures for purposes of money laundering and terrorism financing purposes. The interconnection of the national Central UBO Registers of the EU Member States and the creation of a European Central Platform are expected within the year 2021.

Ι. SPECIAL AND CENTRAL REGISTER 

In particular, Art. 20 of Law 4557/2018 provides for the creation of two different types of registers: 1) a “Special Register” to be kept by companies and other legal entities having their registered office in Greece and 2) a “Central Register” held in the General Secretariat for Information Systems (GSIS) at national level.

All corporate and other entities with registered office in Greece are obliged to collect and keep adequate, accurate and updated information in relation to their beneficial owners. Such information shall be kept at a Special Register to be incorporated at the place where such entities are seated and shall include at least the name and surname, the date of birth, the nationality and the country of residence of all beneficial owners, as well as the nature and extent of the rights held by them. The legal representative or the specially authorized person following the competent corporate body’s resolution is responsible to keep the Register adequately documented and duly updated.

In addition, all data kept in the Special Register shall be entered into the Central Register, held in the Secretariat for Information Systems of the Ministry of Finance, within sixty (60) days as of the date of the gradual registration of each corporate entity according to the below mentioned. Moreover, any changes in the data of the beneficial owners shall be registered with the Central Register within sixty (60) days as of their effective date.

ΙΙ. TRUSTS

Further, according to Art. 21 of Law 4557/2018, trustees of express trusts governed by the Greek legislation are obliged to collect and keep adequate, accurate and updated information in relation to the beneficial owners of the trust in a special register kept by them at their seat, which is linked to the aforementioned Central UBO Register. The trustee is responsible to keep the Register adequately documented and properly updated.

ΙII. DEFINITION OF “BENEFICIAL OWNER”

According to the Law a “beneficial owner” means “any natural person(s) who ultimately owns or controls a legal entity, as well as, the natural person(s) on whose behalf a transaction or activity is conducted”. 

  1. Specifically, in case of corporate entities, the following persons are considered as “beneficial owners”: 

a) The natural person(s) who ultimately owns or controls a corporate entity through direct or indirect ownership or control of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means. A shareholding of more than 25 % or an ownership interest of more than 25 % in the corporate entity held by a natural person, shall be an indication of direct ownership. A shareholding of more than 25 % or an ownership interest of more than 25 % in the corporate entity held by another corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership. 

Further, control through other means may be determined using any kind of criteria; these include criteria used in order to decide whether consolidated financial statements shall be made, such as, whether a shareholders’ agreement exists, whether a shareholder has a dominant influence or whether a shareholder is entitled to appoint the company’s senior management.

It should be noted that the above criteria do not apply to companies listed on a regulated market that is subject to disclosure requirements consistent with European Union law or subject to equivalent international standards which ensure adequate transparency in relation to the beneficial owner.

b) In exceptional cases and only if, after having exhausted all the above criteria, no person  can be identified as the beneficial owner, or if there is any doubt that the person(s) identified is/are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s), is/are meant to be the beneficial owner(s). It should be noted that the right to name a senior manager as beneficial owner should be considered on a case-by-case basis, whereas, in principle, only managers with an adequate degree of seniority – who have sufficient knowledge of the degree of exposure of the company to the risk of money laundering and terrorism financing activities, and at the same have sufficient seniority to take decisions that affect the risk of exposure of the company – can be identified as beneficial owners. Such director or employee is not required to be a member of the company’s Board of Directors.

2.  In case of trusts (and other types of legal entities or legal arrangements similar to trusts), the following persons are considered as the “beneficial owners”: 

a) the settlor; 

b) the trustee(s); 

c) the protector, if any; 

d) the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates; 

e) any other natural person exercising ultimate control over the trust by any means of direct or indirect ownership or by other means. 

IV. SPECIFIC ISSUES – FOREIGN TRUST

1. The specific issues (time, method of registration etc.) in relation to the keeping and registration process in the Central UBO Register are regulated by Decision No 67343 EX 2019 (Government Gazette B ‘2243/20-6-2019) of the Minister of Finance, according to which any kind of legal persons and legal entities having their registered office in Greece or carrying out business activity taxed in Greece, regardless of their registered office or any tax exemptions provided under specific provisions, are required to report information regarding their UBOs to the Central Register. In this context, it is noted that subsidiaries of Greek or foreign companies with UBO a listed company in Greece or abroad shall enter as UBO the listed parent company in accordance with the special provisions of the aforementioned Ministerial Decision.

2. In addition to the above, Art. 2. A. 5. of the aforementioned Ministerial Decision provides that persons obliged for registration are also trusts and similar entities, namely: a) the legal entities of Art. 2.d. of Law 4172/2013; b) foreign trusts whose settlor, trustee or beneficiary is a Greek tax resident; and c) foreign foundations. 

In particular, as for foreign trusts, which are an institution not governed by Greek legislation, it is observed that they have been gradually incorporated into the scope of  various special Greek Laws, such as in the current Greek Income Tax Code (ITC, Law 4172/2013), according to which the definition of “legal entity” includes also the institutions of trust and foundation so that any form of trust or any other entity of similar nature, Greek or foreign, is recognized as separate taxable subject. 

With regard to the obligation for registration in the UBOs Central Register, questions arise concerning the conditions to be met in order for foreign trusts to have report obligations. Specifically, based on Art. 20 of Law 4557/2018 in connection with Art. 2 of the above Ministerial Decision, it can be, in principle, concluded that in order for a foreign trust to be obliged for registration, the following conditions should be cumulatively met: a) business activity taxed in Greece and b) tax residence of the settlor, trustee or beneficiary in Greece. A contrario, it can be concluded that a) a trust with business activity taxed in Greece whose settlor, trustee or beneficiary is not a Greek tax resident, and b) a trust with no business activity taxed in Greece whose settlor, trustee or beneficiary is a Greek tax resident, are not entities to be registered in the UBOs Central Register. However, the above issue (i.e. the cumulative fulfillment of the above conditions for foreign trusts) needs to be clarified so that there is a clear framework for the entities that are obliged to report information regarding their UBOs to the Central Register according to the above.

V. TIME AND ORDER OF REGISTRATION

As for the time of the said registration, it should be noted that the registration in the Central Register takes place gradually, by group of the entities obliged, as follows:

  • Group A: from 16-9-2019 to 14-10-2019

The first group includes inter alia the Greek shipping companies (such as M.C.P.Y., shipping companies of Law 959/1979) and the offices of foreign shipping companies established in Greece pursuant to Art. 25 of Law 27/1975.

  • Group B: from 30-9-2019 to 1-11-2019

The second group includes inter alia single-member Société Anonymes, private capital companies, branches of foreign companies, foundations, joint ventures and civil non-profit partnerships.

  • Group C: from 14-10-2019 to 29-11-2019

The third Group includes inter alia Société Anonymes, Limited Liability Companies and General and Limited Partnerships (OE, EE), which do not belong to specific categories of companies of the previous two groups.

VI. SANCTIONS

In case of non-compliance with the above obligations, the non-compliant legal person/legal entity and/or trust shall not be able to receive a tax clearance certificate. The competent Tax Authorities and the Anti-Money Laundering Authority are informed via the online electronic application of the Central Register within a time period of sixty (60) days the latest, after the expiry of the deadline within which the relevant entities are obliged to report the beneficial owner data to the Central Register. In addition, in case of breach of the above obligations, a fine amounting to 10.000 euros is imposed on the liable entities, which shall be doubled, in case of failure to comply within a fixed deadline for compliance.

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