Bulgaria-Based Corporates And Ngos Must Disclose Their Ultimate Beneficial Owners By June 2019

December 2018 - Significant regulatory developments marked the year 2018 in Bulgaria. A new Act on the Measures against Money Laundering (the "AML Act" or the "Act") was also adopted with view to transposing Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Further rules detailing the mechanics for disclosure of ultimate beneficial owners ("UBOs") of Bulgaria-based entities are expected to become effective in the next few weeks.

We set out below the key aspects that businesses need to take into account in order to comply with the new requirements.

Ultimate beneficial owners

Ultimate beneficial owners are considered to be natural persons ultimately owning or controlling, directly or indirectly, a corporate or another legal entity. The definition applies also to natural persons on whose behalf the entity carries out a particular operation, transaction or activity.

Particularly with respect to corporate legal entities, a natural person directly or indirectly owning at least 25% of the shareholding in that entity would qualify as its UBO for the purposes of the AML Act.

The test for determining whether a natural person exerts control over a legal entity is rather broad. Under the AML Act, any indication of the ability to decisively influence the entity (e.g., in decision-making on issues essential to its activity, such as the composition of its management and supervisory bodies or the termination of its business activity) shall be deemed to constitute control.

Obligation to register

All corporate and other legal entities established in Bulgaria must disclose their UBOs in the relevant company registries/registries of legal entities listed below. With the exception of publicly listed companies (i.e. those the shares of which are traded on regulated markets), the requirement to disclose the UBOs applies not only to companies, but also to economic enterprises (such as trusts etc.) and non-profit organisations (such as foundations, associations, etc.).

Information about UBOs to be disclosed

Entities subject to the disclosure obligation must file an application with a detailed set of information about the UBOs in accordance with an approved template. This includes:

1. Full names of the ultimate beneficial owners;

2. His/her citizenship;

3. Personal identification number if the ultimate beneficial owner is (a) a Bulgarian citizen, (b) a foreign citizen who has been...