In recent articles (available at links: KRS part 1 and KRS part 2), we presented the registry obligations of commercial companies concerning entries in the National Court Register (KRS). However, KRS registrations do not exhaust the scope of commercial companies’ registry obligations. It should be remembered that these companies are also obliged to report and update data in the Central Register of Beneficial Owners (CRBR) and the tax office.
What is the CRBR and what information should be reported to it? What should be reported to the tax office? What are the consequences of failing to fulfill these obligations? We answer all these questions in today’s article.
What is the Central Register of Beneficial Owners?
The Central Register of Beneficial Owners is a public, official database containing information about natural persons holding the status of beneficial owners of entities entered in the KRS. It is one of the tools used to identify natural persons making decisions on the activities of business entities.
Who is a “beneficial owner”?
A beneficial owner is a natural person who directly or indirectly controls a given entity (e.g., a company) through powers arising from factual or legal circumstances. These powers must enable this natural person to exert decisive influence on the actions or activities undertaken by the given entity.
More simply, a beneficial owner is any natural person who actually controls a given entity by exerting decisive influence on its actions.
It is not always easy to determine at first glance the person exerting decisive influence over a given entity. Therefore, the requirement to disclose beneficial owners in the CRBR has been introduced – so that these persons do not remain anonymous.
In companies without complex corporate structures, determining the beneficial owner usually does not present many difficulties. However, in many entities, such a person must be sought at higher levels of the structure.
In addition to the general definition cited, the act introduces some more detailed guidelines to help determine who is the beneficial owner in a given entity.
In the case of commercial companies, the beneficial owner will in particular be any natural person who:
- In capital companies:
- is a shareholder or stockholder holding more than 25% of the total number of shares or stocks in that company; or
- controls more than 25% of the total number of votes at the meeting of partners or shareholders of that company, including as a pledgee or user, or on the basis of other agreements; or
- exercises control over a legal person or legal persons who collectively in a given company:
- hold ownership rights of more than 25% of the total number of shares or stocks; or
- control more than 25% of the total number of votes at the meeting of partners or shareholders of that company, including as a pledgee or user, or on the basis of other agreements; or
- exercise control over that company by holding the rights belonging to a dominant entity over a dependent entity.
- In partnerships:
- is a partner authorized to represent the partnership and manage its affairs; or
- is a partner with voting rights;
- In cases where it is not possible to determine the beneficial owner in a given company (partnership or capital company) according to the above criteria, this status is held by the person holding the highest managerial position (e.g., a member of the management board).
Example 1: In the ABC sp. z o.o. company, Partner 1 holds 30% of the shares, Partner 2 – 20% of the shares, and Partner 3 – 50% of the shares. The beneficial owners of this company will be: Partner 1 and Partner 3.
Example 2: In the ABC sp. z o.o. company, there are three partners. Partner 1 holds 10% of the shares, Partner 2 – 35% of the shares, and Partner 3 – 55%. Partner 3 is the XYZ sp. z o.o. company, which has two partners: Partner A, holding 90% of the shares in the company XYZ and Partner B, holding 10% of the shares in the company XYZ. The beneficial owners of the ABC sp. z o.o. company will be: Partner 2 – holding 35% of the shares in the ABC company and Partner A, since he holds 90% of the shares in the XYZ company, which has 55% of the shares in the ABC company.
The detailed criteria presented above do not, however, exhaust the definition of a beneficial owner. The general definition given at the beginning is crucial. This means that in a given company, in addition to persons who control the company due to fulfilling one of the above criteria, other persons may function who exert decisive influence on the company’s activities. Such persons, even if they do not meet the detailed criteria, also have the status of beneficial owners.
Therefore, a comprehensive determination of beneficial owners in a given company always requires a thorough analysis of its corporate documents.
How to submit a notification to the CRBR?
Notification and updating of information in the CRBR are carried out exclusively electronically, using the provided form and are free of charge. This is done by a person authorized to represent the company – e.g., a member of the management board or a partner representing the company. The notification must be signed with a qualified electronic signature or a trusted profile.
Note: The notification cannot be made by a proxy.
The notification and update include the company’s identification data:
- name;
- legal form;
- registered office;
- KRS number;
- NIP number.
And the identification data of the beneficial owner:
- first and last name;
- citizenship;
- country of residence;
- PESEL number or date of birth (if no PESEL number);
- information on the size and nature of the share or powers held.
The notification of information must be made within 14 days of the company’s entry into the KRS, and updates within 14 days of the changes being made. Saturdays and public holidays, as well as periods of failure or disruptions in the functioning of the CRBR, are not included in the running of these deadlines. Information is entered into the register immediately after it is submitted or updated.
An event justifying the updating of the notification to the CRBR will primarily be a change on the part of the company’s partners. It may occur, for example, through the sale of shares in a limited liability company, the transfer of all rights and obligations in a partnership, the death of a partner, etc.
It should be remembered that beneficial owners are obliged to provide companies with all the information and documents necessary for making notifications and updates.
Consequences of failing to submit a notification and update information, and providing false information in the CRBR
For failure to submit information to the CRBR on time and for providing false information, the company faces a financial penalty of up to PLN 1,000,000. In addition, a beneficial owner who has not provided the company with the required information and documents is subject to a financial penalty of up to PLN 50,000 if, due to this, the company has not made the correct notification to the CRBR.
Note: Companies in liquidation or bankruptcy are not exempt from the obligation to submit and update information in the CRBR.
It should also be remembered that each notification contains a declaration by the person submitting it regarding the truthfulness of the information submitted. Submitting a false declaration entails criminal liability.
Clarification of discrepancies and verification of the correctness and timeliness of data in the CRBR
The obligated institution (e.g., bank, accounting office, notary) notes discrepancies between the information on the beneficial owner disclosed in the CRBR and those established by it in the course of carrying out transactions with the given company. If such discrepancies are noted, this institution must then take appropriate steps to clarify them. After confirming the noted discrepancies, the institution reports the discrepancies to the Minister of Finance.
The Minister of Finance may initiate proceedings to clarify whether the information disclosed in the CRBR is correct and up-to-date. Subsequently, as a result of the proceedings, he may issue a decision to correct the data, which replaces the notification of information by the company. In these circumstances, it is also possible to impose financial penalties on the company for failure to submit a notification correctly and on time.
Submission of company data to the tax office
After entering the company into the KRS, it is obliged to submit supplementary data to the tax office (identification notification). The basic data disclosed in the KRS are automatically transferred to the tax office, but supplementary data require separate notification. The following data are subject to notification:
- abbreviated company name;
- list of bank accounts;
- addresses of business locations – other than the company’s registered office;
- address of storage of accounting documentation;
- PKD code of the predominant activity;
- contact details;
- data concerning individual partners;
- expected number of employees.
Similarly, separate notification is required for changes to supplementary data (updating notification).
Notification of supplementary data must be made on the NIP-8 form within 21 days of the company’s registration. Updates to this data must be made within 7 days of the changes being made. The notification can be submitted electronically or traditionally – by sending the form by post or submitting it in person at the appropriate tax office. Notification and updating of data are free of charge, and can be done by a proxy.
Note: Data reported or updated as a result of submitting the NIP-8 form are automatically transferred to ZUS and GUS.
Failure to report or update supplementary data on time and providing false or incomplete data constitutes a tax offense and is subject to a fine.
Summary
Determining the beneficial owners of commercial companies requires an individual approach and thorough analysis in each case. Providing incorrect information by the company is subject to severe financial penalties. It is also important to remember to submit and update data within the specified deadlines – both in the case of CRBR and the tax office.
To avoid problems, it is worth using the support of experienced lawyers from our Law Firm, who will help to efficiently and correctly make all necessary notifications.
