In order to combat tax evasion and money laundering many countries have adopted the recommendations of the Financial Action Task Force (hereinafter FATF) regarding the incorporation of a Declaration of Final Benefit.
The Republic of Nicaragua has not been oblivious to this, which is why in July 2018 it issued Law 977 or “Law Against Money Laundering, the Financing of Terrorism and the Financing of the Proliferation of Weapons of Mass Destruction”, a law in which the term Beneficial Owner is introduced for the first time.
However, it is only on August 25, 2020, that the National Assembly by means of Law No. 1035 published in the Official Gazette establishes the amendment to the “General Law of the Public Registries and the Commercial Code of the Republic of Nicaragua”, by which the Registry of Beneficial Ownership of Commercial Companies is introduced.
At the same time, in November of the same year, the Special Commission of Registries of the Supreme Court of Justice issued a Circular in which the operation of said Registry is developed.
The purpose of this article is to provide information on the main aspects of the beneficial ownership legislation.
Who are considered beneficial owners?
According to article 2.1 of the aforementioned Circular, a beneficial owner is considered to be the natural person on whose behalf a transaction is carried out.
Likewise, natural persons who have ultimate ownership of a client are also considered as beneficial owners, which includes natural persons who exercise ownership or control through a chain of title or other means of direct control.
It should be noted that the term ownership indicated in the regulation also refers to ownership that is exercised de facto.
The parties obliged to file the Declaration of Beneficial Ownership are all the companies registered in the Public Registries of the country.
Criteria for the Determination of the Beneficial Owner in Commercial Companies
The following must be taken into consideration:
- That the natural person owns equal or more than 25% of the capital stock of the mercantile corporation.
- If it is not possible to determine based on the above, it will be identified through the natural person, who acts as a decision-making unit individually or through other natural persons or legal entities, who have powers that do not derive from ownership, to designate or remove management bodies or have the power to decide on agreements.
- If not identified on the basis of the criteria indicated above, the natural person who holds the most important administrative position must be considered as such.
Registration of Beneficial Ownership of Commercial Companies
The Registry of Beneficial Ownership of Commercial Companies has a natural administrative nature and fulfills the following functions:
- It records the information of the beneficial owner declared by the corporation.
- To ensure the integrity of the data kept.
- To guarantee the access of the interested companies and competent authorities.
In order to register in the Registry, this must be done via web, then the natural person domiciled in the country, who will provide the information of the Beneficial Owner, will be appointed.
When the information of the Commercial Company is uploaded, the declaration of the Beneficial Owner must be completed with the required information.
The certification of the declaration of the Registry will be requested through the designated natural person.
The companies must register in the Beneficial Ownership Registry within 30 days after having registered in the Commercial Registry, being that in the case of already existing companies this registration will be made when the form is published online.
It should be noted that the information must be updated every 12 months, when there are modifications regarding the beneficial owner.
In case this declaration is not filed or is made with error or omission, the obliged subject may be imposed remedial measures, that is to say, a Qualification Note will be issued indicating this and the term to correct it.
In case this persists, the Registrar will issue a sanction, which may reach 1500 Fine Units when the infraction is considered “very serious”.