Changes to the Form and Content of the Ownership Structure of Legal Entities Has Been Proposed

Ministry of Finance is planning to introduce changes to the Regulations on the Form and Content of the Ownership Structure, currently approved by the Order of the Ministry of Finance of Ukraine dated March 19, 2021 No. 163.

These Regulations were developed with the aim of bringing the provisions regulating the sphere of prevention and countermeasures against the legalization (laundering) of criminal proceeds, the financing of terrorism and financing of the proliferation of weapons of mass destruction into compliance with the requirements of the law.

Prerequisites

On December 29, 2022, Law No. 2571-Х, which amended and supplemented the Law of Ukraine No. 361-ХХ of December 6, 2019 “On Prevention and Counteraction of Legalization (Laundering) of Criminal Proceeds, Financing of Terrorism, and Financing of Proliferation of Weapons of Mass Destruction” and the Law of Ukraine dated May 15, 2003 No. 755-IV “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations”, entered into force. It establishes the following:

? legal entities shall have up-to-date information on the ultimate beneficial owner (UBO) or their absence and ownership structure, are required to maintain information on the UBO and ownership structure of the legal entity and submit information on the UBO or their absence and ownership structure for entry into the Unified State Register;

? the form and content of the ownership structure of a legal entity shall be established by the Ministry of Finance in agreement with the Ministry of Justice, except for entities whose activities are subject to state regulation and supervision by the National Bank of Ukraine and the National Securities and Stock Market Commission;

? the form and content of the ownership structure of legal entities, the state regulation and supervision of the activities of which is carried out by the NSSMC, are established by the MSSMC in agreement with the Ministry of Finance.

What data about the ownership structure is proposed to be approved under the new rules?

The draft order proposes to supplement the text of Law No. 2571-IX with the requirements for:

?form and content of the ownership structure of a legal entity;

? design of the ownership structure;

? information necessary to provide on each person specified in the ownership structure;

? method of definition of a size of participation in the legal person in the corresponding chain of ownership of a share (corporate rights);

? submission of a schematic image of the ownership structure and its presentation;

? list of documents which have be added to the ownership structure.

Submission of information by electronic means

The draft complements the provisions of Laws No. 755 and No. 361 on the submission of the ownership structure by appropriate legal entities to the USR in electronic form that will allow the submission of such information in machine-readable formats and implement automated verification of data by the USR software. At the same time, the software shall be built in such a way as to search for relationships in the ownership structure of a legal entity between all persons who directly or indirectly own such a legal entity independently or jointly with other persons (all founders (participants)) of a legal entity.

Terms of submission of information

Legal entities will submit information about the UBO and the ownership structure within six months from the date of entry into force of the normative legal acts, which will approve the provisions on the form and content of the ownership structure and the methodology for determining the UBO by a legal entity, but not earlier than 90 days from the date of termination or cancellation of martial law in Ukraine.

At the moment, the draft of updated provisions has been published for public review and discussion.

Explanatory note to the draft order “On Introducing Amendments to the Order of the Ministry of Finance of Ukraine dated March 19, 2021 No. 163”