Due to amendments to the Law on the Prevention of Money Laundering and Terrorism Financing (in Latvian: Noziedzīgi iegūtu līdzekļu legalizācijas un terorisma finansēšanas novēršanas likums) that came into force on 9 November 2017, most of the legal entities (including such types of companies as SIA and AS, etc.) are required to file information regarding their UBOs (Ultimate Beneficial Owner) by 1 March 2018 with the Company Register making it publicly available. Not filing the information regarding the UBO may affect the company’s further relationships with banks or other institutions.
Paragraph 4 of the Section 1 of the Law on the Prevention of Money Laundering and Terrorism Financing provides a definition of an UBO: a natural person who is the owner of a legal entity or who controls a legal entity, or in whose name and interests business relationships are established or occasional transactions conducted.
In the case of legal persons, the UBO is a natural person who holds, directly or indirectly, more than 25% of the shares or voting rights in a legal person or directly or indirectly controls it. In the case of legal formations, the UBO is a natural person who owns or in whose interests the legal establishment has been established or is acting on behalf of, or who directly or indirectly exercises control over it, including if he is a founder, trustee or supervisor (manager) of such formation. If the sole or majority shareholder of a company (over 25%) is a legal person, then the UBO will be a natural person within the shareholder’s legal entity who conforms with the aforementioned criteria for UBOs.
When submitting an application form to the Company Register, such information as the name and surname, identity, nationality, country of usual residence of the UBO and the type of control the UBO has over the legal entity is required. If the UBO of a company cannot be determined, it should be stated in the application form as well.
Information regarding UBOs may not be filed in case this information has already been submitted to the Company Register due to other reasons provided by normative acts, and the way in which the control over the legal entity is exercised stems from the status of participant, member, owner, founder or member of the management board of the legal entity. As well as in cases when the UBO is a shareholder in a public limited company, the shares of which are listed on the regulated market and the way in which the control over the legal entity is exercised results only from the status of the shareholder.
As of 1 December 2017, the Company Register of Latvia has already started the registration of UBOs. Even though the deadline is almost a quarter of a year away, companies shall be aware that it is a mandatory requirement to file information regarding the UBO even when registering changes in the management board, information regarding management board members or their representation rights, or changes in the shareholders register.
The information will become publicly available on 1 April 2018.