Romania: How to Accurately Determine the Ultimate Beneficial Owners

As the deadline of November 1st, 2020 for registering Ultimate Beneficial Owners (“UBOs”) with the Commercial Register is closing in, the Anti-Money Laundering Office (“AMLO”) in Romania has come up with new explanations on how to interpret the legal definitions on UBOs and accurately determine such beneficiaries in complex situations.

Such explanations, which indicate a shift in view of the aforesaid authority, are particularly valuable in the context of an ever-changing practice of the Commercial Registers.

The key points to be noted are:

1. “de facto“ control

AMLO underlined that the accurate determination of the UBOs implies verifying all means of exercising control, which includes also “de facto” control relationships.

For example, a natural person can “de facto” control a legal entity, even if it does not hold more than 25% of the shares/ voting rights in such entity. This control “by other means” is given, for example, when such natural person holds certain veto rights in a Romanian company or can influence the nomination of the board of directors.

2. fictive UBOs

AMLO warned not to misuse the provisions of the law allowing for the nomination of the local manager of a Romanian company as a “fictive UBO” in case no other individual holds more than 25% of the shares/ voting rights. Fictive UBOs can be registered only in exceptional situations, when no other person can be indicated as the real UBO following the exhaustion of all criteria for determining such beneficiaries (incl. verifying the existence of a “de facto” control by other means).

Sufficient documentary proof for the determination of the UBOs must in all cases be compiled by the local manager, making sure that such stems from independent third parties (such as attorneys at law, public notaries, auditors).

More information on this topic can be found below:
https://stalfort.ro/wp-content/uploads/2020/10/20201009_NEWSFLASH_The_correct_identification_of_the_ultimate_beneficial_owners.pdf