Transparency of ownership is one of the key tools of EU legislation against money laundering and terrorist financing. Bulgarian legal entities are required to identify their ultimate beneficial owners and register information about them in the public registers.
Who is a beneficial owner
A beneficial owner is the natural person who ultimately owns or controls the legal entity — directly or indirectly, through holding a sufficient percentage of the shares or voting rights, or through other means of control, such as the right to appoint the majority of managers. Where no such person can be identified, the person holding a senior management position is treated as the beneficial owner.
When the obligation arises
- On incorporation of the company;
- On any change of circumstances — share transfers, group changes, a change of the controlling person;
- On changes in the personal data of an already registered beneficial owner.
Complex and foreign structures
Structures involving foreign companies, trusts and funds cause the most difficulty. They require tracing the entire chain of ownership up to the natural persons and documenting each link. Nominee arrangements also require particular attention.
Consequences of non-compliance
Failure to comply may lead to administrative sanctions and also creates practical difficulties — banks and business partners refuse or delay establishing relationships with companies whose information is incomplete or outdated. In corporate transactions, missing or incorrect data is identified during due diligence and may delay the deal.
Our recommendation
Include a review of registered beneficial owners in the company's annual corporate check-up. SM Legal analyses the ownership structure, prepares the required declarations and applications and keeps the information up to date upon every change.
This publication is for information purposes only and does not constitute legal advice. For advice on a specific matter, please contact us.
Sylvia Marushkina — Attorney-at-law, Founder of SM Legal