The Serbian Law amending the Law on Central Records of Ultimate Beneficial Owners has been applied since 1 January 2020. The Law extended the deadline for the existing entities to register their ultimate beneficial owners (“UBO”) no later than January 2020 and it introduced stricter provisions on supervision over the implementation of the law.

Deadline for registration of UBO – again?

The Law on Central Records of Beneficial Owners (“LCRBO”) was adopted in 2018, implying an obligation of all registered entities thus far to record their UBO by the end of January 2019.

Although the legislation of the Republic of Serbia recognized the institute of ultimate beneficial owner under the Law on Prevention of Money Laundering and Terrorism Financing, the new law should have ensured further alignment with international standards in this field, notably with the European Union regulations (Directive 2015/849 and Directive 2017/1132). However, only a few months of enforcement of the LCRBO demonstrated that there was no implementation of mechanism that would ensure efficient supervision over the application of the law, especially regarding the penalties for entities that failed to fulfil their legal obligations. In particular, the LCRBO stipulated the offences but failed to stipulate the competence to file motions for misdemeanour proceedings.

The Law amending the LCRBO was adopted for the purpose of eliminating these shortcomings of the main text, whereas the legislator also extended the deadline for registration of UBO by end-January 2020, which applies to all entities already registered.

Who is entitled to registering UBO by 31 January and what are the consequences of failure to do so?

This obligation applies to all subjects of registration under the LCRBO which failed to register within the previously prescribed period (by end-January 2019), or after that.

Obligation to record information about UBO applies to:

• companies, other than public joint-stock companies;
• cooperatives;
• branch offices of foreign companies;
• business associations and associations, other than political parties, trade unions, sports organisations and associations, churches and religious communities;
• foundations and endowments;
• institutions;
• representative offices of foreign companies, associations, foundations and endowments.

The entities that timely fulfilled their obligation – whether by end-January 2019 or within 15 days after their establishment – given that they were established in 2019 or at the beginning of 2020, shall not have any further obligation and this deadline extension shall not apply to them.

The Business Registers Agency has special authorisation to control whether all registered entities have entered their UBO by end-January 2020 and to institute misdemeanour proceedings against those who have failed to do so.

Who will control the application of LCRBO?

In addition to the Business Registers Agency, the LCRBO application will also be supervised by other competent state authorities in charge of supervision and control in their scope of activities and relating to the work and operation of registered entities. Such authorities include Tax Administration, Administration for the Prevention of Money Laundering, National Bank of Serbia, etc.

All these authorities are also explicitly authorised under the law to file motions for misdemeanour proceedings.

Penalty provisions of LCRBO have been additionally elaborated and instead of initial two there are now five offences, including the entry of inaccurate information.

Fines for offences have not changed, hence a legal entity may be fined from RSD 500,000 to 2,000,000, whereas authorised persons in a legal entity is subject to fine from RSD 50,000 to 150,000.

Procedure of registration of UBO

The procedure of registration is exclusively done electronically, via the Internet page of the Business Registers Agency, with mandatory use of qualified electronic signature of the representative.

However, this is not the only obligation relating to the registration of beneficial owner – each entity shall be obliged to possess and keep the documentation verifying the accuracy of registered information, which is also subject to control by responsible authorities.

This article is to be considered as exclusively informative, with no intention to provide legal advice.
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