In an effort to combat abuse of the financial system for engaging in illegal activities including (inter alia) money laundering, financing terrorism, tax fraud and corruption, thus giving effect to the EU Anti-Money Laundering Directive(s) and the Cypriot Prevention and Suppression of Money Laundering and Terrorist Financing Law(s), (collectively referred to as the “Applicable Law”), the Department of Registrar of Companies and Intellectual Property of Cyprus, (the “Registrar”), has announced the establishment of the Register of Beneficial Owners of companies and other legal entities, (the “UBO Register”).

The commencement of the implementation process (14^th of November 2023) marked the beginning of a new era in the business world. Without doubt, and as it goes with all changes, this also entails the element of “unknown” and the need to navigate a new “path”. The purpose of this article is, therefore, to provide a practical guiding tool in order for every company and legal entity to comply with the provisions of the Applicable Law.

1. Holding or being exempted from the Responsibility of Submission of Beneficial Owners’ data

• Subject to the exemptions set out below, all companies incorporated or registered under the Companies Law Cap. 113, European public limited liability companies (SE) and partnerships, (collectively referred to as the “Companies” and individually as the “Company”), shall within the requisite timeframe submit to the UBO Register their Beneficial Owners’ data.
• Companies, which are currently in the process of strike-off, are not exempted from the obligation to submit their Beneficial Owners’ data if and when such process commenced on, or following, the 12^th of March 2021 – taking into consideration the date of filing of the relevant application to the Registrar.
• Companies, which are currently in the process of liquidation, are not exempted from the obligation to submit their Beneficial Owners’ data if and when such process commenced on, or following, the 12^th of March 2021 – taking into consideration the date of resolution approving the company’s liquidation (Voluntary Liquidation) or the date of the relevant application submitted to the court (Liquidation by Court).
• Overseas companies with an established place of business (branch) in Cyprus, companies that are listed on a regulated market subject to disclosure requirements under EU law or are subject to equivalent international standards ensuring adequate transparency of ownership information, do not fall within the scope of the foregoing legislative obligation.

• Definition of “Beneficial Owner”

According to the Applicable Law, the “Beneficial Owner” is any person who has the Company’s ultimate ownership or control through:

• The ownership of a sufficient percentage of shares:
• Direct Ownership: A shareholding of 25% plus one share in the issued capital of the Company held by that person; or
• Indirect Ownership: A shareholding of 25% plus one share in the issued capital of the Company held by that person through another company or legal entity; or
• Direct & Indirect Ownership: Both ownership regimes, as described above, are applicable.

OR

• Voting rights

OR

• Significant influence or control by other means

Provided that a beneficial owner cannot be determined on the foregoing grounds, then the details of one or more senior management officials shall be submitted to the UBO Register.

• Data for Disclosure

The required data which shall be submitted for each and all Beneficial Owners of a Company includes:

• Personal information – the name, date of birth, nationality, residential address and details of Identity Card (only for Cypriots) or Passport; and
• The nature and extent of the beneficial ownership or interest held, directly or indirectly; and
• The date on which such person became or ceased to be a beneficial owner, or on which the previously submitted information has changed.

• Applicable Timeframe(s) & Deadlines

• A newly registered or incorporated Company: The Beneficial Owners’ data shall be submitted to the UBO Register within ninety (90) days from the date of their incorporation or registration.
• Change in the Company’s ownership structure and/or in the data previously submitted for Beneficial Owner(s): The UBO Register shall be updated accordingly within forty-five (45) days from the date on which the said change become known to the Company.
• Annual Confirmation: Between 1^st of October and 31^st of December of each calendar year, all Companies shall re-confirm the data previously submitted for their Beneficial Owners. In this respect, the Amended Law (as defined below) has granted an extension until 31^st of March 2025 for the re-confirmation of such data.

• Consequences of failure of compliance

On 6^th of December 2024, the Prevention and Combating of Money Laundering (Amendment) (No.2) Law of 2024 (number L.141(I)/2024), (the “Amended Law”), was published; therefore, introducing (inter alia) amendments in the penalties for cases of non-compliance.

• In case of failing to submit, update and/or re-submit the Beneficial Owners’ data, notwithstanding the criminal liability or prosecution of any person, the consequences fall on the Company itself. However, the Company’s director or other managing director, who refuses or omits or neglects to take the required action, is jointly and/or severally liable with the Company for the payment of any penalty. Provided that the Company’s director or managing director will not be held liable if they have exercised Due Diligence and non-compliance with the Applicable Law has not been the result of any act or omission or negligence on their behalf.

• The administrative penalties have been revised by the Amended Law and are now as follows:
• One Hundred Euro (€100) on the first day of non-compliance; and
• A further penalty of Fifty Euro (€50) per day of continuation of the default – up to a maximum amount of Five Thousand Euro (€5.000).