One of the obligations of legal entities around the world in the battle against money laundering and financing of terrorism (Anti-money laundering – AML), which was recently introduced in Serbia as well, is the submission of an application to a central record of beneficial owners in the appropriate register of the APR (Agency for business registry). The law that regulates this area in Serbia is the Law on the Central Records of Beneficial Owners.
Who is obliged to be registered in the central records of beneficial owners?
All owners of legal entities are required to register, however, most often this refers to companies, more specifically the limited liability companies, which is the most common form of company in Serbia. Although the company is the most common entity obliged to submit an application to the central records of beneficial owners, a non-governmental organization (NGO), or similar type of association, is also obliged to submit an application and register beneficial owners. Most of the founders of NGOs, when they register the NGO, fail to register the beneficial owner of the NGO. The result of the above is the misdemeanor liability of the NGO as a legal entity and the representative of the NGO as a natural person.
In addition to these most common legal entities, the Law on the Central Records of Beneficial Owners prescribes other forms of legal entities that are required to register the beneficial owner. These are cooperatives, branches of foreign companies, business associations (except for political parties, trade unions, sports organizations and associations, churches, and religious communities), foundations, endowments, establishments, representative offices of foreign companies, associations, foundations, and endowments.
When is it required to register the beneficial owner?
The actual owner of a legal entity is recorded in the central records within 15 days from the establishment or change in the ownership structure of the legal entity (most often a company or association). When a company or association is founded, i.e. when the article of association is adopted and the establishment is registered in the Agency for business registry, the period of 15 days for recording the beneficial owner in the registry starts. In addition, the obligation to record the beneficial owner also arises when a member with a certain share in the company changes, by concluding a share transfer agreement, by which the previous member sells or gifts her or his share to the acquirer. This is clear because by changing a member of a company, the owner of the company actually changes, so it is necessary to record the change of the beneficial owner.
How is the beneficial owner registered?
The beneficial owner is registered in the Agency for business registry exclusively electronically because the records of beneficial owners are kept exclusively as an electronic database. In order to fulfill this obligation and record the beneficial owner, it is necessary for the representative (CEO) of the legal entity to have an electronic signature and to register on the website of the Agency for business registry using his electronic signature. This represents a regulatory problem for foreigners who establish a company remotely, through a special power of attorney, given to a lawyer. When they establish a company without coming to Serbia, foreigners do not have an electronic signature in Serbia, which is why they cannot register in the central records of beneficial owners.
Failure to register the beneficial owner is an offense
The Law on the Central Records of Beneficial Owners prescribes fines for the offenses provided for in this Law. If a newly established legal entity or a legal entity that has changed its shareholder (owner) does not register the beneficial owner within 15 days from the occurrence of the legal basis (establishment or change of shareholder), the legal entity, i.e. company or association, risks a fine of 500,000.00 to 2,000,000.00 RSD. In addition to the legal entity, the responsible person in the legal entity, i.e. the CEO or other representative, can be punished for said offense at the same time. The prescribed fine for a CEO in a legal entity is from 50,000.00 to 150,000.00 RSD. Misdemeanor reports prescribed by the Law on Central Registration of Beneficial Owners are filed by the Agency for business registry.
The Law on the Central Records of Beneficial Owners also prescribes a criminal offense, which is reflected in the fact that someone is not registered as the beneficial owner or registers a person who is not the beneficial owner to conceal the beneficial owner.
Attorney for registration in the central records of beneficial owners in Serbia
Law office Pekić provides legal assistance for the purpose of recording in the central records of the beneficial owners, as well as defense in misdemeanor proceedings due to the failure to record the beneficial owner in the central records.
