The Central Register of Beneficial Ownership – AAA Advogados

Law No. 89/2017, which came into force in Portugal on 20 November 2017, transposes into national law Chapter III of Directive (EU) 2015/849 of the European Parliament and of the Council, of 20 May 2015 (4th Money Laundering Directive), and approves the legal framework for the Central Register of Beneficial Ownership (CRBO) under Article 34 of Law No. 83/2017, which establishes measures to prevent and combat money laundering and terrorist financing (the “Money Laundering Law”).

To date, the Ministerial Ordinance that implements the CRBO framework is not yet in force. However, obligations regarding the internal register of commercial companies, which include the company partners’ obligation to update their identification details, are already in force.

On the one hand, this Law creates a specific register (CRBO) in which it systematically centralizes details about the beneficial owners of a broad range of legal entities, on which it imposes declaration duties (as detailed in III) and, on the other, requires them to keep an internal register of the identity of their members and their beneficial owners (as detailed in II.1).

INTERNAL REGISTER OF BENEFICIAL OWNERSHIP

1.            DUTY TO MAINTAIN AN UP-TO-DATE REGISTER

Commercial companies are obliged to keep an up-to-date internal register of identification details about:

(i)           their partners, providing a breakdown of their holdings;

(ii)          natural persons who, directly or indirectly – even if through a third party – own holdings;

(iii)         any persons who, in any other manner, exercise effective control.

Company partners are also required to inform the company of any change to their identification details within 15 days of such changes. However, the company may notify a member to update their identification details within a maximum period of 10 days.

2.            NON-COMPLIANCE AND PENALTIES

Non-compliance by a company with the requirement to keep an up-to-date internal register of beneficial ownership will constitute an administrative offence punishable with a fine of €1,000 to €50,000.

When a member has unjustifiably failed to update the identification data, the company is entitled to amortize the shareholdings in question under the terms of the Commercial Companies Code.

CRBO

The CRBO consists of a database for organizing and keeping up-to-date information about the natural person or persons who own or exercise effective control of entities subject to the CRBO (obliged entities), even if indirectly or through third parties, and which have a declaration obligation.

1.            OBLIGED AND EXCLUDED ENTITIES

The following entities are required to register on the CRBO:

(i)           associations, cooperatives, foundations, civil and commercial companies as well as any other legal persons, subject to Portuguese or foreign law, which carry on business or conduct acts or legal transactions in national territory and are required to have a Portuguese tax number (NIF);

(ii)          representation offices of international legal persons or persons governed by foreign law that carry on business in Portugal;

(iii)         other entities which, in the pursuit of their own objectives and different activities from those of their associates, have no legal personality;

(iv)         trusts and external financial branch offices registered in the Madeira Free Trade Zone;

(v)          trusts or legal arrangements similar to trusts, when not covered by the preceding paragraphs, are also subject to the CRBO, whenever:

a.            the trustee, the person legally in charge of the respective management or the person or entity holding a similar position is an obliged entity within the meaning of Articles 3 and 4 of Law No. 83/2017 of 18 August 2017, or they, acting in any of these capacities, establish business relationships or conduct occasional transactions with obliged entities;

b.            they are allocated a tax number (NIF) by the Tax and Customs Authority (AT);

c.            they establish business relationships or conduct occasional transactions with obliged entities.

(vi)         condominiums, buildings or groups of buildings subject to the legal provisions governing horizontal property, when:

a.            the total equity value, including common areas, exceeds €2,000,000.00; and

b.            a per thousandth share which exceeds 50% is held by a single owner, co-owner, or natural person or persons who, according to the indexes and control criteria set out in Law No. 83/2017, are considered beneficial owners.

Excluded from the scope of application of this regime and thus, from the requirement for the beneficial owner declaration, are:

(i)           companies that issue shares which are traded on a regulated market, subject to disclosure requirements consistent with either European Union law or equivalent international rules which ensure sufficient transparency for information relating to share ownership;

(ii)          consortiums and complementary groupings of companies;

(iii)         condominiums, buildings or groups of buildings subject to the legal provisions governing horizontal property, provided that the following cumulative requirements are met:

a.                           the total equity value, including common areas, does not exceed €2,000,000.00; and

b.            no single owner, co-owner or natural person or persons who, in accordance with the indexes and control criteria set out in Law No 83/2017 of 18 August 2017, is considered a beneficial owner, holds a per thousandth share which exceeds 50%.

When owing to some occurrence that changes the exclusion conditions of an entity that was originally excluded from the beneficial owner declaration requirement, the entity in question will be required to comply with this obligation and submit the beneficial owner declaration as soon as possible, but no later than one month after the fact which gives rise to the need for registration.

However, in the case of commercial companies, the fact of being excluded from the obligation to provide the declaration within the scope of the CRBO will not invalidate the obligation to keep an internal register, as set out in II.

2.            FORM AND TIME OF SUBMISSION OF DECLARATION; DUTY TO UPDATE

The obligation to provide a declaration must be complied with by completing and submitting an electronic form, to be defined in a ministerial ordinance, or through a registration service, by means of computer-assisted completion, together with the application for commercial registration or registration of any fact with the Central Archive for Legal Persons.

The above-mentioned ministerial ordinance will establish the time for submission of the first beneficial owner declaration.

Nevertheless, the obliged entities must submit the initial beneficial owner declaration upon registering the incorporation of the company or at the same time as initial registration at the Central Archive for Legal Persons, according to whether or not the entity is subject to commercial registration.  An annual beneficial owner declaration confirming that the information is accurate, complete and up-to-date must be made by 15 July every year; if the obliged entity is required to submit Simplified Company Information (SCI), the annual declaration must be made when the SCI is submitted.

The obliged entities must also keep the relevant information for the purposes of the CRBO up to date. This obligation must be fulfilled whenever there is a fact that brings about a change in the relevant information, as soon as possible but no later than 30 days after the date of the fact that gives rise to the change. Whenever the entity concerned is closed, dissolved or terminated, any changes that have occurred in the meantime with respect to the relevant beneficial owners must also be declared.

3.            CONTENT OF DECLARATION

The beneficial owner declaration must contain relevant information on:

(i)           the entity subject to the CRBO;

(ii)          the identity of the share capital owners, with a breakdown of their holdings, in the case of commercial companies;

(iii)         the identification of the managers, directors or those who hold similar positions in the entity concerned;

(iv)         the beneficial owners; and

(v)          the declarant.

When the entity subject to the CRBO or shareholders owning qualified holdings are legal persons, the following information must also be provided:

(i)           the legal person tax number (NIPC) attributed in Portugal by the competent authority and, in the case of a non-resident entity, the tax number or equivalent number issued by the competent authority of the jurisdiction of residence, when applicable;

(ii)          the name and legal form;

(iii)         the registered office, including the jurisdiction of registration, in the case of foreign entities;

(iv)         the Economic Activity Code (CAE);

(v)          the Legal Entity Identifier (LEI), when applicable; and

(vi)         the institutional e-mail.

With regard to the beneficial owner, managers, directors or those who hold similar positions at the entity concerned, or the founder, settlor, trust director or their alternates, the trustee, beneficiaries or any other person exercising effective control of a trust that is subject to the CRBO (all of whom are natural persons), the following information must also be provided:

(i)           full name;

(ii)          date of birth;

(iii)         place of birth;

(iv)         nationality or nationalities;

(v)          full permanent residence address;

(vi)         identification document data;

(vii)        identification of the tax representative, where applicable, when the beneficiary is not resident in Portugal, indicating the representative’s full name, full address and tax number;

(viii)       tax number, when applicable; and

(ix)         contact e-mail.

With regard to the declarant, the beneficial owner information listed in points (i), (v), (vi), (viii) and (ix) above must be provided, as well as information about the professional license and the capacity in which the declarant is acting, where applicable.

4.            LEGITIMACY TO MAKE THE DECLARATION

The members of company management bodies or persons holding similar positions at other legal persons (directorial positions) and, in the case of trusts, the natural person acting as trustee or, when there is no such position, the legal or de facto administrator, have the legitimate capacity to make the declaration.

Nevertheless, the beneficial owner declaration may always be made by the members who founded the legal person using special procedures for immediate or online incorporation, and also by lawyers, notaries and solicitors, with the required powers of representation, or certified accountants, specifically when declaring the commencement of activity or associated with compliance with the obligation to provide Simplified Company Information.

5.            ACCESS TO THE CRBO AND DATA PROTECTION

The CRBO data about the obliged entities and beneficial owners may be viewed freely and without limitation by the judicial, police and sector authorities (classified in the Money Laundering Law as ‘competent authorities’), as well as by the Tax Authority, and these are not only allowed access, but may also process and cross-reference the CRBO data, provided that the personal data is processed in compliance with the principles and rules of the National Data Protection Law, approved by Law No. 67/98.

Obliged entities will have total access to information on the CRBO, with the exception of the data relating to the declarant, in which case they may only access the declarant’s name and capacity.

Access to the general public is limited to the following data:

(i)           with regard to the obliged entity, the legal person tax number (NIPC), name of the company, legal form, registered office, Economic Activity Code (CAE), legal entity identifier and institutional e-mail address;

(ii)          with regard to the beneficial owners, name, date of birth, nationality, country of residence and economic interest.

Access to this information by obliged entities and by the general public may be totally or partially limited when such disclosure may lead to the exposure of the person identified to the risk of fraud, kidnapping, extortion, violence or intimidation, or if the beneficial owner is a minor or incapable of exercising their rights freely and clearly. The risk assessment is conducted on a case-by-case basis by the president of the management board of the Institute of Registries and Notaries, I.P. (IRN, I.P.).

Those responsible for the processing of personal data are bound to professional secrecy, including after such duties have ended.

If the CRBO registration is cancelled, personal data may be kept on the database for a maximum period of 10 years without prejudice to other applicable legal and regulatory provisions.

6.            INSPECTION AND RECTIFICATION

Any omission, inaccuracy, inconsistency or outdated information in the CRBO must be communicated to the relevant department (to be defined by ministerial ordinance) by any of the following interested parties:

 (i)          the entity concerned;

(ii)          the persons indicated as beneficial owners;

(iii)         criminal investigation authorities, supervisory and inspection authorities, the Financial Information Unit and the Tax Authority;

(iv)         obliged entities within the meaning of Articles 3 and 4 of Law No. 83/2017, in the pursuit of their preventive responsibilities.

When an interested party other than the entity concerned reports any inaccuracy or inconsistency in the information, the relevant entity has a maximum period of 10 days from the notification by the relevant department to correct the error or justify a dispensation. No justified situations are listed in the CRBO framework, even in a general manner.

7.            NON-COMPLIANCE AND SANCTIONS

Any person who provides false declarations for the purposes of beneficial ownership registration is liable to criminal and civil proceedings for any damage caused.

Without prejudice to the preceding paragraph, until the declaration obligations and the applicable corrections have been made, the obliged entities are prohibited from doing or benefiting from the following acts:

(i)           distributing profits or making advances on profits during the financial year;

(ii)          executing contracts for the supply of goods or services, public works or for the acquisition of goods and services with the State, autonomous regions, public institutes, local municipalities, and private charitable institutions mainly funded by the State Budget, or renewing existing contracts;

(iii)         bidding for public service concessions;

(iv)         in the case of share companies, to trade in a regulated market its own shares or convertibles;

(v)          launching public offerings to distribute any financial instruments, in particular, securities or monetary instruments issued;

(vi)         receiving European or public structural or investment funds;

(vii)        being a party to any transaction involving the transfer of property, whether for consideration or free of charge, or the creation, acquisition or disposal of any other property rights of enjoyment or guarantees over any immovable assets.

A failure to comply with declaration obligations or to submit justified dispensations dispensation within 10 days will imply publication of the entity’s defaulting situation on the official CRBO website.

 

Dulce Franco is partner at AAA Advogados. She can be reached at df@AAA.pt

Miguel Calado Moura is of counsel at AAA Advogados. He can be contacted at mcm-cons@AAA.pt