Declaring a company’s beneficial owner

Declaring the beneficial owner of a company: what had to be done and disclosed

At the time of this article, reports were circulating online and in the media that companies registered in the Bulgarian Commercial Register would have to declare their beneficial owners. Under the Measures Against Money Laundering Act, this obligation arose on 8 January following the adoption of implementing regulations containing the application forms. The filing campaign was due to begin on 1 February 2019.

The statutory language prompted considerable debate. A beneficial owner is the natural person or persons who ultimately own or control a legal person or other legal arrangement, and/or the natural person or persons in whose name or on whose account an operation, transaction or activity is carried out.

Lawyers differed over whether every legal entity and its members had to file these declarations, or only those whose beneficial owner differed from the owner shown in the Commercial Register. The question turned on the second sentence of Article 63(5) of the Act: where the beneficial owners are natural persons other than those entered under the first sentence, and fall within paragraph 2 of the supplementary provisions on a basis other than direct ownership of shares, their particulars are entered in the relevant register. This in turn raised questions about the register itself: whether access was public or restricted, which authority kept and administered it, and for what purposes.

Despite the uncertainty surrounding these and other disclosure provisions, the law provided for a penalty of BGN 1,000 to BGN 10,000 for a legal entity or sole trader failing to comply. If the infringement continued, a penalty would be imposed each month until the required particulars were declared.

Given the uncertainty in the wording, we recommend seeking advice from a lawyer on what particulars to declare and how they relate to the Commercial Register entry for the company in which you hold an interest.