On 25 May, the Serbian Parliament adopted the Law on Ultimate Beneficial Owners Central Registry ("Law") and it entered into force on 8 June 2018.
This Law was adopted in order to harmonise domestic legislation with international standards and to improve the existing system of detecting and preventing money laundering and the financing of terrorism. The Law introduces a single, public, electronic database maintained by the Serbian Business Registers Agency ("SBRA"), containing information on natural persons which are the ultimate beneficial owners of the companies ("Register").
Companies incorporated before 31 December 2018 are obliged to prepare and keep documentation regarding their ultimate beneficial owners at their offices, while new companies are obliged to register this information with the Register within 15 days as of their incorporation. However, all companies will have to be registered in such manner by 31 January 2019.
Who does this Law influence?
This Law is applicable to the following entities registered in Serbia ("Company"):
- companies, excluding public joint-stock companies;
- branch offices of foreign companies;
- business and other associations excluding political parties, trade unions, sports organizations and associations, churches and religious communities;
- foundations and endowments;
- institutions; and
- representative offices of foreign companies, associations, foundations and endowments.
Who is the ultimate beneficial owner?
The ultimate beneficial owner of the company ("UBO") is a natural person which:
- has direct or indirect ownership of at least 25% of the shares, stocks, voting or other rights, under which the natural person participates in the company's management or in the company's capital with 25% or more share;
- has direct or indirect prevailing influence on business management and decision making;
- indirectly provided or provides funds to the company, on the basis of which the natural person has significant influence on the company's management bodies, in relation to decisions regarding financing and business operations;
- is a founder, trustee, protector, user (if determined) or a person that has a dominant position in the management of the trust or another foreign law entity; and,
- is a registered representative of cooperatives, associations, foundations, endowments and institutions, if the authorised representative has not registered another natural person as the ultimate beneficial owner.
If none of these criteria is applicable, the UBO is the company's registered representative i.e. the person that is registered as member of the company's body (excluding the item (v)).
What information will the Register contain?
The Register will contain the following information ("Information") in relation to the UBO:
- in the case of Serbian citizens, the person's name, identification number and country of residence;
- in the case of foreigners, the person's name, passport number and issuing country and / or their personal number and / or identity card number and issuing country, time and place of birth, the country of residence and citizenship; and,
- the title for acquiring UBO status.
What needs to be done?
The Company is obliged to:
- determine the UBO and have in possession the data and documents according to which the UBO is determined ("Documents"), until 8 July 2018;
- keep the Documents for a period of ten years following the day of registration; and,
- provide the Documents upon request to the competent state authority and National Bank of Serbia.
The Company's authorised person is obliged to:
- to register the Information until 31 January 2019 with the SBRA, using a qualified electronic signature (for companies incorporated by 31 December 2018);
- register the changes to the Information with SBRA, within 15 days from the day of change; and,
- register the Information with the SBRA, within 15 days from the day of the company's incorporation (for companies incorporated after 31 December 2018).
It should be noted that the SBRA is obliged to establish the Register until 31 December 2018.
Also, relevant by-laws need to be adopted within three months from the day the Law enters into force - which should provide more detailed information on the implementation of the Law.
What are the sanctions?
The Law prescribes monetary fines in the range from RSD 500,000 (approx. EUR 4,240) to RSD 2,000,000 (approx. EUR 16,950) for the company and monetary fines in the range from RSD 50,000 (approx. EUR 420) to RSD 150,000 (approx. EUR 1,270) for the company's responsible person if the Company does not:
- register Information within prescribed deadline; or,
- keep the Documents for the prescribed period.
In addition, the Law prescribes felony charges for a person which, in order to hide the UBO, does not register the Information, registers false Information, changes or removes the correct Information. For this felony there is a prescribed prison sentence in the range from 3 months to 5 years.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.