Important amendments to Law no. 129/2019 regarding the identification of ultimate beneficial owners

In brief

Government Emergency Ordinance no. 111/2020 amends and completes various provisions in several normative acts, including those in Law no. 129/2019 regarding the ultimate beneficial owners of companies. The main amendments refer to: (i) the criteria used for identifying the ultimate beneficial owners, (ii) the form of the ultimate beneficial owner statement, (iii) the conditions under which a person can obtain information from the ultimate beneficial owner registry.

In detail

The following amendments have been approved:

• Law no. 129/2019, article 4, paragraph 2, letter a) has been amended - the identification criteria of the ultimate beneficial owners provided in points 1 and 2 of said article apply both to companies subject to registration with the Trade Registry and to foreign corporate entities (no definition is included);
• Law no. 129/2019, article 4, paragraph 2, letter a) point 1 – the first identification criterion of the ultimate beneficial owner -  has been amended - a shareholding of 25% plus one share or an ownership interest of more than 25% in a company held by an individual will no longer directly lead to the fulfilment of the first criterion, but rather it is merely an indication of direct ownership;
• A provision detailing indirect ownership (which did not previously exist) has been included. As such, a shareholding of 25% plus one share or an ownership interest of more than 25% in a company held by a corporate entity which is under the control of an individual, or by multiple corporate entities which are under the control of an individual is an indication of indirect ownership;
• Law no. 129/2019, article 4, paragraph 2, letter a) point 2 – the secondary identification criterion of the ultimate beneficial owner - has been amended - the ultimate beneficial owner may be an individual holding a senior management position, such as: director, board of directors / supervisory board member, general manager to whom the director / board of directors delegated certain functions;
• If the ultimate beneficial owner is identified by applying the secondary criterion, the reporting entities are required to keep documents proving both the measures taken to identify the ultimate beneficial owner based on both criteria (as before the amendment) and the difficulties encountered in verifying the identity of the ultimate beneficial owner;
• A new paragraph (8^1) has been introduced after paragraph 8 in Law no. 129/2019, article 11 – the new paragraph provides that the reporting entities (as defined by Law no. 129/2019) have to obtain proof of registration of the ultimate beneficial owners or relevant information from beneficial owner registries each time such entities start a new business relationship with persons required to declare the ultimate beneficial owner;
• Paragraph (1^1) has been introduced after paragraph 1 in  Law no. 129/2019, article 19 – according to the new paragraph the beneficial owners have to provide Romanian companies with the information required to fulfill the obligations provided under Law 129/2019[1], article 19, paragraph 1, including details related to the owned benefit generating interest.
• Paragraphs (7^1) and (7^2) have been introduced after Law no. 129/2019, article 19, paragraph 7 - according to the new paragraphs, reporting entities have to inform the National Office for the Prevention and Combating of Money Laundering and the authorities that manage the ultimate beneficial owner registries of any discrepancy between the information available in the registries and that held by the reporting entities. The authorities that manage the ultimate beneficial owner registries will include a temporary mention related to the disclosed discrepancy and the National Office for the Prevention and Combating of Money Laundering will take the required measures to resolve it;
• Law no. 129/2019, article 19, paragraph (8) has been amended. Any individual or legal entity can request information from the ultimate beneficial owner registries managed by the National Trade Registry Office or the Ministry of Justice (for non-profit associations and foundations), without having to prove a legitimate reason;
• Law no. 129/2019, article 56, paragraph (5) has been amended. The obligation to submit the own liability statement regarding the ultimate beneficial owners in notarized form has been eliminated. The own liability statement regarding the ultimate beneficial owner may be executed under simple signature or in electronic form and may be submitted to the trade registry office without any other formality, by electronic means (electronically signed), by post or courier. Nonetheless, the own liability statement may also be given in notarized form, certified by a lawyer or given before the trade registry clerks;
• A new paragraph (6) has been introduced after Law no. 129/2019, article 56, paragraph (5). The new paragraph provides that if the article of association also includes the ultimate beneficial owner’s identification information and the manner in which control is exercised, the submission of the ultimate beneficial owner statement will no longer be required upon company incorporation. The subsequent amendment of the ultimate beneficial owner’s identification information will not lead to the amendment of the articles of association, with submitting the own liability statement regarding the ultimate beneficial owner being sufficient.

Source: [Government Emergency Ordinance no. 111/2020 amending and supplementing Law no. 129/2019 for preventing and combating money laundering and terrorist financing, as well as amending and supplementing other normative acts, completing art. 218 of the Government Emergency Ordinance no. 99/2006 on credit institutions and capital adequacy, amending and completing Law no. 207/2015 on the Fiscal Procedure Code, as well as completing art. 12 para. (5) of Law no. 237/2015 on the authorisation and supervision of the insurance and reinsurance activity, published in the Official Gazette no. 620 dated 15 July 2020]

The takeaway 

Government Emergency Ordinance no. 111/2020 brings important amendments to certain provisions related to company ultimate beneficiary owners:

• The criteria for identifying ultimate beneficial owners also apply to foreign corporate entities;
• A shareholding of 25% plus one share or an ownership interest of more than 25% in a company held by an individual is merely an indication of direct ownership;
• A definition of indirect ownership has been included in the first criterion for identifying the ultimate beneficial owner;
• The second criterion for identifying the ultimate beneficial owner refers to an individual who holds an expressly mentioned senior management position;
• Reporting entities can inform the relevant authorities that manage the ultimate beneficial owner registries of any discrepancy between the information available in such registries and the information held by the reporting entities;
• Any individual or legal person can request information from ultimate beneficial owner registries, without having to prove a legitimate reason;
• The obligation to conclude the own liability statement regarding the ultimate beneficial owner in notarized form has been eliminated; 
• The own liability statement regarding the ultimate beneficial owner will no longer be submitted upon company incorporation, provided that such information is included in the articles of association.