Methodology for Determining an Ultimate Beneficial Owner by a Legal Entity Entered into Force

On October 3, Resolution No. 1011 of the Cabinet of Ministers and the National Bank of September 19, which approved the Methodology for Determining an Ultimate Beneficial Owner by a Legal Entity, entered into force.

The press service of the Ministry of Finance reported that the Methodology is a normative legal document, which is currently the first guidance of its kind in the world. The definition of an UBO and the obligation to inform the relevant authorities about the beneficiaries are determined by the requirements of the Association Agreement between Ukraine and the EU, the implementation of FATF international financial monitoring standards into the legislation of Ukraine.

Purpose of the Methodology

Methodology establishes a unified approach to establishing the real owners of companies – mechanisms for researching information about natural persons, which determine the control and decisive influence on the activity of a legal entity at the national level.

In order to identify the UBO, the Methodology explains how to establish:

• methods, ways of finding out features of decisive influence on the activity of the legal entity;

• principles of the process of determining of the UBO by the legal entity, conducting monitoring and updating (renewing) information about the UBO.

Stages of determining the UBO

1) research of the features, nature and measure (level, degree, share) of direct decisive influence on the activity of the legal entity through the final ownership by the individual of a key share of the statutory (composite) capital or voting rights of the legal entity;

2) research of the features, nature (benefit, interest) and measure (level, degree, share) of indirect decisive influence (control) on the activity of the legal entity through ownership by the individual of a key share of the statutory (composite) capital or voting rights of the legal entity through related individuals or legal entities, their own or other similar legal entities, or exerting decisive influence on the activities of the legal entity by exercising the right to control, own, use or dispose of all or part of its assets, the right to receive income from the activities of the legal entity, trust or other similar legal entity, the right to have a decisive influence on the formation of the composition, voting results of management bodies, as well as the execution of transactions that make it possible to determine the basic conditions of the economic activity of the legal entity or the activity of the trust or similar legal entity, to make binding decisions that have a decisive influence on activity of the legal entity, trust or similar legal entity regardless of formal ownership;

3) research of the information about the founders, trust owners, advocates (if any), beneficiaries or a group of beneficiaries, as well as any other individuals who are considered to have a decisive influence on the activities of the trust or similar legal entity (in particular, through the chain of control/possession), in the case of their presence in the ownership structure of the legal entity and/or in the case of the formation of a legal entity similar to a trust. With respect to trusts and other similar legal entities, beneficiaries characterized by certain features or class, information about such beneficiaries is investigated, which would provide an opportunity to establish their identity at the time of payment or exercise of their rights;

4) systematization, generalization, analysis and documentation of received information;

5) monitoring and updating information on unltimate beneficial owners.

Legal entities to which the Methodology is applied

• non-profit organizations;

• joint investment institutions – corporate, share investment and non-state pension funds;

• partnership created in accordance with the legislation of a foreign jurisdiction on the basis of or in accordance with an agreement to conduct activities aimed at obtaining profit or achieving another common goal;

• general partnership and limited partnership.

Text of the Methodology