Navigating the Changing Landscape of Beneficial Ownership

Author  I  Nataša Pipan Nahtigal

 

Slovenia changed the rules on access to information on ultimate beneficial owners (UBOs). What does this mean and how does it affect me? Here are some fast facts.

 

 

What is an UBO?

 

An UBO is generally a natural person who ultimately owns or controls a company or another legal entity, that means the “real individual” behind the company.

 

 

I am the manager. Why am I identified as the UBO, even if I don’t own any shares in the company?

 

The management is identified as the UBO when no other natural persons can be identified as UBOs. This happens rather often in practice, for example in companies with dispersed ownership and in groups with a publicly traded ultimate parent company.

 

 

Who collects information on UBOs of Slovenian companies?

 

Slovenian companies are obliged to identify their respective UBOs and register them with the Slovenian Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES) that keeps a special register of ultimate beneficial owners.

 

 

So what is changing?

 

Rules on the access to the AJPES register of UBOs are changing with the implementation of changes to the Prevention of Money Laundering and Terrorist Financing Act (ZPPDFT-2C). Under the current rules, this AJPES register is publicly accessible and includes the names of all UBOs and the manner in which they control the respective company. Under the new rules, the access will be more restricted, but on the other hand individuals and legal entities proving legal interest or with presumed legal interest will have access to more information on the UBOs.

 

 

Who will have access to UBO information under the new rules?

 

There are three categories of persons: those who will continue having unrestricted access, those who will have to prove their legitimate interest and those with presumed legal interest.

 

Persons with unrestricted access include persons who are obliged to take measures to detect and prevent money laundering and terrorist financing (such as banks and insurance companies), law enforcement authorities, courts, investigative commissions of the Slovenian parliament and supervisory authorities under the AML rules, including the Slovenian Commission for the Prevention of Corruption, the Bank of Slovenia, the Securities Market Agency, the Insurance Supervision Agency, the Financial Administration, the Market Inspectorate, the Public Oversight of Auditing Agency, the Bar Association, the Notary Chamber of Slovenia and the police.

• Any individual or legal entity can access information on personal name, month and year of birth, country of permanent and temporary residence, nationality, level of ownership and form of control of the UBOs, provided that it demonstrates a legitimate interest. A legitimate interest shall be established in any of the following conditions are met: the purpose of the access is related to the detection and prevention of money laundering and financing of terrorism and related prior criminal offences, or

 

• the respective legal entity wishes to obtain information on its beneficial owners, or

 

• the respective individual or legal entity intends to enter into a business relationship with a legal person, which intent may reasonably be inferred from the documentation provided.

 

Journalists, researchers and NGOs benefit from a special legal assumption of legitimate interest. The following persons shall namely be deemed to have a legitimate interest:

 

• an individual or legal entity who, for the purposes of journalism, reporting or other forms of media expression relating to the prevention of and the fight against money laundering, related offences or the financing of terrorism, needs information on the beneficial owners of a legal entity, and

 

• an individual or legal entity performing a scientific, research or educational activity or a book production activity, or a non-governmental organisation as defined by the law regulating non-governmental organisations, which, in connection with its activity, needs information on the beneficial owners of the legal entity for its activities related to the prevention of or fight against money laundering, related crimes or terrorist financing.

 

These persons are also entitled to receive some additional information, including information on identified inconsistencies of UBO information.

 

What is the procedure to demonstrate a legitimate interest?

 

The new law foresees a special administrative procedure before AJPES in which legitimate interest is to be proven. If access is denied, the administrative court will decide on the matter in administrative dispute procedure. Journalists, researchers and NGOs mentioned above do not need to prove legitimate interest, but instead have to claim and prove their status entitling them to the respective information. The law does not foresee that the respective UBOs or their legal entities would be informed of the procedures relating to disclosure of their data.

 

Are there any sanctions for misuse of information?

 

Yes, a legal entity that uses information contrary to the purpose stated in the AJPES decision can be fined in the amount of EUR 3,000 to EUR 30,000, and its responsible individual in the amount of EUR 400 to EUR 2,000. Independent entrepreneurs and individuals can be fined in the amount of EUR 1,500 to EUR 15,000.

 

 

Can we expect additional changes?

 

Yes, ZPPDFT-2C did not yet implement all provisions of Directive 2024/1640/EU, therefore further changes are to be expected. The Ministry of Finance said that transposition of certain provisions of Directive 2024/1640/EU requires a technical change in the AJPES system, and these changes also have a longer implementation period, until 10 July 2026.

 

Interested to know more? Here is the reason for the change!

 

The Court of Justice of the EU (CJEU) ruled that unrestricted public access to beneficial ownership data violates privacy and data protection rights under Articles 7 and 8 of the EU Charter of Fundamental Rights, even though, on the other hand, public access to such data supports an objective of general interest, as it contributes to the fight against money laundering and terrorist financing. CJEU ruled that Directive 2015/849/EU did not sufficiently consider the principle of proportionality, since the same objectives could have been achieved by less intrusive measures, such as restricting access to the competent authorities or persons with a proven legitimate interest. Joint cases C‑37/20 and C‑601/20 (Luxembourg Business Registers) are especially important in this respect.

As a result, Art. 74 of Directive 2024/1640/EU amended Articles 30 and 31 of Directive 2015/849/EU (AMLD4) in this respect. Under Directive 2024/1640/EU, UBO registers should no longer be fully open to the general public, but should be accessible to:

 

• competent authorities and Financial Intelligence Units (FIUs), without any restriction;

 

• obliged entities, within the framework of their customer due diligence in accordance with the Directive; and

 

• any person or organisation that can demonstrate a legitimate interest.

 

The persons and organisations demonstrating a legitimate interest shall be permitted to access at least the name, the month and year of birth and the country of residence and nationality of the beneficial owner as well as the nature and extent of the beneficial interest held.

During the process of adoption of the new law, there was a rather heated discussion on whether the new law accurately implements the applicable EU rules. Among others, the Slovenian Ministry of Finance and the Slovenian Commission for the Prevention of Corruption had different opinions on this matter, and provisions of the law also rather substantially changed during the adoption procedure. Therefore, it will be particularly interesting to follow the practical implementation of the new rules.