Structuring and Managing Your Global Wealth.

Cyprus: Disclosure of Beneficial Owners

20 MARCH, 2021

Cyprus: Disclosure of Beneficial Owners

On 23 February 2021 Cyprus enacted the amending Law on Prevention and Suppression of Money Laundering Activities to implement in Cyprus the 5th EU Anti-Money Laundering Directive.

The law requires Cyprus companies and their service providers to:

  • Obtain and hold adequate, accurate and current information on their beneficial ownership; and
  • Identify and record electronically on the centralised register of beneficial owners maintained by the Cyprus Registrar of Companies (“Register”) certain information of the beneficial owner(s) who own or control Cyprus companies.

“Beneficial Owners”

A beneficial owner is any natural person who ultimately owns or controls the Cyprus company through direct or indirect ownership of more than 25% of the shares or voting rights or ownership interest or by other means such as:

  • shareholder’s agreement;
  • dominant influence;
  • influence through family links or other types of connection with decision-makers;
  • the holding of negotiable shares or convertible stock;
  • the power to appoint senior management; or
  • otherwise.

The Disclosure

The following information must be filed in the Register for each beneficial owner:

  • Name, surname, date of birth, nationality and residential address;
  • Nature and extent of the beneficial interest held directly or indirectly by each beneficial owner, including through percentage of shares, voting rights, or the nature and extent of the significant influence or control with other means exercised by each controlling person
  • Identification document number indicating the type of document and the country of document issuance (Identity card or passport);
  • Date on which the natural person was entered in the register as beneficial owner; 
  • Date on which the particulars of the natural person changed; and
  • The date on which the natural person ceased to be a beneficial owner.

Where the shareholding structure of a Cyprus company leads to a trust, a foundation, other similar legal arrangement, or a listed company as beneficial owner, the following information must be submitted in the Register:

  • Name
  • Registration number (if any)
  • Country of Jurisdiction
  • Business address (not applicable to trust)
  • Nature and extent of the beneficial interest,
  • Date on which the Trust, was entered in the register as beneficial owner; 
  • Date on which the particulars of the Trust changed; and
  • The date on which the Trust ceased to be a beneficial owner.

Trusts in this context are “express trusts”.

Express Trusts and Disclosure

The Register of such trusts and of other legal arrangements shall be kept by the Cyprus Securities and Exchange Commission (“CySEC Register”). The access to the CySEC Register will be available to:

  • The Regulatory Authorities (i.e. the Central Bank, the CySEC etc.), the Police, the Tax Department and the Customs Department;
  • Any natural or legal person who is required by Law to undertake their own due diligence of other entities (i.e. financial institutions, banks); and
  • Natural and legal persons who prove that they have a “legitimate interest” to access the CySEC Register. Whether a person has “legitimate interest” will be decided by CySEC. In making this decision the law requires CySEC to look at the following factors:
  • Whether the person requesting access to the CySEC Register is duly authorised; and
  • Whether access to the CySEC Register will contribute to the prevention and suppression of money laundering and terrorist financing.

Where no natural person is identified as the beneficial owner based on the ownership rights or when there is doubt that the person identified is the beneficial owner, the details of the senior management official must be submitted, indicating whether the person is a director in the company or holds other position, and declaring that position. In this case, the nature and extent of the beneficial interest is not submitted on the system.

The information on the beneficial owners of Cyprus companies will be available for 10 years after the company or other legal entity is struck off the register. However, 5 years after the date of the strike off the access to such information shall be permitted only in the course of administrative or criminal enquiry conducted by the Cyprus enforcement authorities such as, for example, Tax Authority, Police or others.

The Implementation and the Timeframes

The implementation of the Register involves two stages:

  • The interim stage until the final system is implemented; and
  • The final stage.

The Interim Stage

The interim stage commenced on 16th March 2021 and will last until the final stage is implemented. This is expected to take 2 years.

The interim stage requires:

  • The Cyprus companies existing on 16th of March 2021 to submit the information in the Register within 6 months, i.e. by 15th September 2021;
  • The Cyprus companies registered after 16th March 2021 to submit the information to the Register within 30 days from the date of the registration; and
  • A change of information to be submitted to the Register within 14 days.

During the interim stage:

  • no penalties shall be imposed; and
  • access to the information submitted to the Register will only be available, on written request to the Registrar of Companies, to the following Cyprus authorities:
  • Regulatory Authorities;
  • the FIU;
  • the Customs Department;
  • the Tax Department; and
  • the Police.

The Final Stage

Upon implementation of the Final Stage, any member of the general public will be able to obtain from the Register the following information, for the fee of EUR 3.50:

  • the name;
  • the month and year of birth;
  • the nationality;
  • the country of residence; and
  • the nature and extent of the beneficial interest held.

During the Final Stage it will also be required to confirm the details of beneficial owners recorded on the Register annually in December.

The Exceptions

No disclosure of beneficial owners is required in respect of the following companies:

  • Companies listed on stock exchanges in the EU;
  • Companies that applied to the Registrar of Companies for strike off before 16th of March 2021;
  • Companies that commenced liquidation before 16th March 2021; and
  • Overseas companies.
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Conclusion

 At this time, pending the publication by the Cyprus Securities and Exchange Commission of the guidelines for the implementation of the Register of Trusts, clients should be advised to start reviewing the ownership structures of the Cyprus companies in order to identify the extent of the required disclosure on the case by case basis. Consulco specialists would be happy to discuss your case with you.