Central register of beneficial owners – Serbian legislation

The National Assembly of the Republic of Serbia had urgently passed the Law on Central Register of Beneficial Owners, which envisages the establishment of a special register with the names of the beneficial owners of legal entities. This Law creates an obligation for the authorized persons to determine the beneficial owner of a legal entity that, directly or indirectly, has more than 25% of the shares.

Legal entities – registered legal entities now have an obligation to determine who their beneficial owners are, to provide appropriate documentation, and then register them in the Central Register, after its formation.

This law entered into force on June 8th, 2018, and the authorized persons have a deadline of 30 days to determine the beneficial owner, that is, they must obtain the documentation by July 8th.

The main reasons for the adoption of the law are the prevention of further concealment of the beneficial owners of domestic and foreign legal entities. One of the more important reasons is the improvement of the existing system for detecting money laundering and financing of terrorism, as well as fighting it. The aim is to bring national legislation in line with European and international standards.

What is the central register?

The Central Register is a unique public electronic database, which contains data on natural persons who are the beneficial owners of a legal entity or the Registered Subject. All data changes must be entered in the register, whether it is an entry, modification or deletion of data.

The Central Register will be managed by the Business Registries Agency, in electronic form through the registry, which will be established no later than December 31st, 2018. Authorized persons will then be obliged to electronically register the data within this database, by 31st January 2019 at the latest.

Who are the legal entities who must register the beneficial owners in the central register?

The Law on Central Register of Beneficial Owners refers to:

• Companies (not public joint stock companies),
• Cooperatives,
• Branches of foreign companies,
• Business associations and associations (political parties, trade unions, sports organizations and associations, churches and religious communities do not have this obligation);
• Foundations and endowments,
• Institutions,
• Representative offices of foreign companies, associations, foundations and endowments.

This Law does not refer to:

• Companies, public companies and institutions of which the Republic of Serbia, an autonomous province or a local self-government unit is the only member or founder, or if its ownership amounts to 100%
• Organizations for mandatory social security, including their direct and indirect users of budget funds,
• Public joint stock companies,
• Political parties, trade unions, sports organizations and associations, churches and religious communities.

For example, if the Republic of Serbia owns a certain share of a company, then there is an obligation to register the beneficial owner of the capital of that legal entity in the Central Register.

Beneficial owner – term

A beneficial owner is a natural person in the following situations:

• if he/she owns, directly or indirectly, 25% or more shares, voting rights or other rights on the basis of which he/she participates in the management or in the capital of the Registered Subject,
• if he/she has, indirectly or directly, a dominant influence on the operations and decision-making,
• if he/she indirectly provides or regularly provides funds to the Registered Subject, and thus significantly influences the decision-making process when deciding on financing and operations,
• if he/she is the founder, trustee, patron, if he/she is designated as a beneficiary, or a person holding a dominant position in trust management,
• if he/she is registered for the representation of cooperatives, associations, foundations, endowments, institutions and if he/she is an authorized person for the representation of the other beneficial owner.

What compromises the central register?

The Central Register contains two sets of data, which are:

• Corporate data on the legal entity,
• Data on the beneficial owner of the Registered Subject.

Corporate data on the legal entity include: full corporate title; address; date of entry, change and deletion; identification number; TAX ID; status; form of organization of the company; activity code; data of the representative; data of members of the organ; basic capital; data on founders and percentages of their share; abbreviated corporate title; corporate title in a foreign language; abbreviated title in a foreign language; address for receiving mail; E-mail address; bank account numbers; Contact Information.

Registration of corporate data on legal entities is done by the registrar. He/she takes over the data on the legal entity from the competent state authorities, at the latest, two working days of the day of the change (of the reception of the notification by the competent state body on the occurred change).

The data on the beneficial owner – the natural person include:

• Domestic natural person – name, identification number and country of residence,
• Foreign person – name, passport number, state, a personal identification number for the foreigner, ID number of the foreigner and country, date and place of birth, country of residence and citizenship,
• Refugees and expelled persons – name, identification number, date and place of birth, country of residence,
• The basis for acquiring the properties of the beneficial owner,
• Dates of data registration.

Registration of the data on the beneficial owner of the Registered Subject is performed by an authorized person via electronic signature (registration of new members, change of existing data…). The data must be registered no later than 15 days after the establishment of the legal entity or after the change of the owner, members of the organ, and the like.

What are the obligations of the registered subjects?

Registered businesses and the Business Registries Agency have the obligation to store data and documents.

The registered subjects are obliged to determine the beneficial owners by July 8th, 2018. They are also obliged to keep appropriate, accurate and up-to-date information for 10 years, from the date of registering the data on the beneficial owner. If the competent state authority or the National Bank of Serbia asks for these data to be provided to them, economic operators are obliged to do so.

The BRA is obliged to keep all data permanently.

Extracts and certificates from the central register

The Business Registries Agency may issue extracts or certificates from the Central Register. The requested documents are issued for up to two business days from the date of receipt of the request. The following documents may be issued from the Central Register:

• an extract from the Central Register of data on the beneficial owners of the Registered Subject,
• a certificate from the Central Register of historical data on the beneficial owners of the Registered Subject,
• a certificate from the Central Registers that any natural person has been registered as the beneficial owner of the Registered Subject.

Penalties and offenses

If legal entities commit an offense, they may be punished by a fine of 500,000 to 2,000,000 RSD. The responsible person of the company will also pay a fine of 50,000 to 150,000 RSD. The following violations will be sanctioned:

1. if the registration of the data on the beneficial owner is not completed within the prescribed deadline,
2. if adequate, accurate and up-to-date data and documents are not stored.

A person attempting to conceal the beneficial owner, or if he/she does not enter the data, if he/she enters false data, if he/she changes or erases the correct data, he/she will be punished by imprisonment from three months to five years.