All fines imposed on employees of Cypriot companies for late submission of beneficial ownership data have been cancelled.
This was announced on Tuesday 8 October by Irini Milona Chrysostomou, head of the company registration department in Cyprus.
According to her, the Parliamentary Committee on Commerce met recently and decided to change the penalty for those who ignore the rules. According to the changes, the fine will no longer be imposed individually on each responsible person, but on the organisation as a whole. In addition, the amount of the fine will not exceed 250 euros. Chrysostomou noted that the total amount the department has so far managed to recover from local organisations is 14 million euros. Of this, €600,000 has been returned directly to the accounts of the companies from which the payment was made.
It should be noted that Cypriot companies had until 31 December 2023 to provide information on their final beneficiaries to the Department's register. However, due to technical problems with the Ministry's website, around two hundred of them were unable to complete the form, for which they were fined. In some cases, the maximum fine was €80,000. This caused great dissatisfaction among businesses.
Entrepreneurs, through their representative organisations, informed Chrysostomou of their disagreement with the way her office was handling the matter. They stated that the entry into force of the decree on 1 January 2024 had caused many problems for a large number of businesses. In particular, the fines imposed on companies and individuals were disproportionately high. It was not easy to make appointments at citizen service centres to obtain codes to access the system, and the registrar's website itself was not working, making it impossible to comply with the agency's requirements. Chrysostomou agreed to help businesses by extending the registration period, and later to revise the approach to the penalty system altogether.
It should be recalled that Cyprus introduced an electronic register of ultimate beneficial owners of companies on 1 January 2002.
However, it turned out that the system was not functioning properly. As a result, many were unable to provide the required data by 31 December 2023, as required by the rules. The Department of Company Registration and Intellectual Property received hundreds of complaints. These included complaints about the helpdesk, which was impossible to reach. Therefore, the department decided to extend the registration on the platform until 31 March 2023. Since some companies have already managed not only to issue fines but also to collect money from them, it was decided to make a refund.
It should be noted that the creation and launch of the electronic register is being carried out by a private company which won a public tender.
The funds for the digital version of the Final Beneficiary Register have been allocated from the EU funds under the Cyprus Recovery and Development Programme. The digital portal with final beneficiary data is regularly tested. A beneficial owner or Ultimate Beneficial Owner (UBO) is an individual who ultimately owns or controls a company. The following types of ownership or control can be distinguished
- Direct - the beneficial owner directly owns more than 25% (25% + 1 share) of the shares or has an interest in more than 25% of the shares of the company;
- indirect - the beneficial owner owns shares/interests in the company in the above amounts through a legal entity;
- mixed - the beneficiary's direct and indirect shareholdings total more than 25%.
The beneficial owner of a company can be an individual, a trust, a foundation or a listed company. If the beneficial owner of a company is a partnership, the individuals behind the partnership who control the company must be disclosed.
What information about beneficial owners is recorded in the register?
About individuals:
- Full name, date of birth, nationality, current place of residence;
- Passport details, country of issue;
- Amount of shareholding (direct or indirect);
- Date of entry of the individual's data in the register as a UBO;
- the date on which the individual's details were changed or the date on which the individual ceased to be the company's UBO.
About trusts, foundations:
- Name, registration number (not applicable to trusts outside Cyprus), country of jurisdiction;
- Legal address (not applicable to trusts);
- Nature and amount of beneficial interest;
- Date of registration of the legal entity as a UBO in the register;
- the date of the change of the legal entity or the date on which the legal entity ceased to be a UBO of the company.