An expert from the GARANT Legal Consulting Service talks about the methodology for determining the indirect participation of an individual in the capital of an organization in order to establish the possibility of recognizing him as a beneficial owner. Lyubov Karasevich.
Sometimes determining whether individual beneficiary of one or another joint stock company, is not so simple, but in some cases it is simply necessary to know this - including to comply with the requirements of anti-money laundering legislation Money. A special law, of course, determines who is the beneficiary of the company (Article 3 Federal Law dated August 7, 2001 No. 115-FZ " "; hereinafter referred to as Law No. 115-FZ), however, this does not always help resolve the issue of the presence or absence of beneficiary status.
For example, one of the founders of a company (let's call it ZAO-1), owning 60% of its shares, is another company (ZAO-2), and the controlling stake in ZAO-2 belongs to an individual. Let's try to determine whether this individual is a beneficiary of ZAO-1
The concept of beneficial owner, as used in the law, is explained in this law. The beneficiary is an individual who ultimately directly or indirectly (through third parties) owns (has a predominant participation of more than 25% in the capital) a client-legal entity or has the ability to control the actions of the client.
In the situation under consideration, an individual owns 51% of the shares in ZAO-2. In turn, ZAO-2 is the owner of 60% of the shares in ZAO-1. Since an individual does not directly own the shares of ZAO-1, his participation in the capital of this company should be considered indirect. Taking into account the above explanations, we will calculate the share of indirect participation of an individual in CJSC-1. It will be: 0.51 x 0.6 = 0.306 or 30.6%. Consequently, an individual has a predominant participation in the capital (more than 25%) and meets the criteria of the beneficial owner of CJSC-1.
Please note that, in accordance with the law, a credit institution decides to recognize an individual as a beneficial owner if such person has the ability to control the client’s actions, taking into account the following factors:
A)
an individual directly or indirectly (through third parties) has a dominant participation (more than 25%) in the client’s capital or owns more than 25% of the client’s total voting shares;
b)
an individual has the right (opportunity), including on the basis of an agreement with a client, to exert direct or indirect (through third parties) significant influence on decisions made by the client, to use his powers in order to influence the amount of income of the client, an individual has the opportunity influence decisions made by the client on transactions (including those bearing credit risk (issuing loans, guarantees, etc.), as well as financial transactions.
The credit institution also has the right to determine other factors on the basis of which an individual will be recognized by the credit institution as the beneficial owner.
Beneficiary- this is the recipient of cash payments (income) according to the drawn up agreement or debt document. Such a recipient can be not only an individual, but also a legal entity that is the owner of all or the majority of the company’s shares and receives all income from the company’s activities.
Sometimes the concept of beneficiary can be transported to beneficiary. However, its value will not change at all.
Description of the beneficiary in simple words
A beneficiary is a person who owns documents for property (company, business, real estate) and receives the main profit from this.
Beneficiary - information from Wikipedia
Other meanings of the term "beneficiary"
However, the concept of beneficiary can be considered from other non-identical points of view.
- This may be the name given to persons who receive income from their property, which is in the use of third parties or in trust management. We are talking about the lease of movable and immovable property or the fact of transferring securities for use by brokers.
- There is another interpretation of the concept of beneficiary. In this case, they will be presented with a claimant who has been nominated by the policyholder. In this case, the beneficiary is indicated in insurance policy. If the beneficiary, due to certain circumstances, cannot receive the agreed debt, all rights to ownership of the funds being paid will be transferred to the person who is the heir of the beneficiary.
- This term also refers to the immediate recipients of a bank certificate, funds in collection, or recipients of financial benefits from a trust. The beneficiary can also be called persons who were indicated by the issuing bank as potential owners of a documentary letter of credit.
- If we talk about the business sector, here the actual owner of the company who receives profit can act as a beneficiary. This is an individual who is able to enjoy all the rights of an owner and position himself as the owner of the company. This process can be carried out directly or through participation in other organizations. Moreover, from a legal point of view, the ownership right belongs entirely to another person. Most often, the same person also acts as the manager of the company’s bank account. The beneficiary can only be disclosed to the financial institution and the company's agent of record.
The beneficiary, who is positioned as the owner of the securities, has full rights to transfer ownership rights. In addition, he has an indirect voting right at a meeting of the joint stock company, as well as the right to directly participate in the process of selecting new management and resolve issues related to the change procedure authorized capital or changing the profile of the joint-stock company.
To hide the identity of the final beneficiary, a nominee service is often used, which is permitted in many offshore companies. The choice of the level of protection of a suitable company and accompanying document requirements can be made depending on the personal wishes of the client.
Providing information about the beneficiary is a mandatory procedure. An exception may be companies that are publicly listed. The same list includes charitable and public organizations, state-type institutions that cannot have owners or if they are known.
Only an individual can act as a beneficiary. A trust agreement can be drawn up for a legal entity, but you must first provide all information about the individual who is the actual owner of this organization.
What does it mean?
A beneficiary is a person who receives benefits, profits, and income from a business. This is what the final recipients of the payment are called. The meaning may vary depending on the situation.
Company Ownership
Most often, when opening enterprises, shareholders, directors, etc. are registered, but the names of the real owners remain unspoken. In this case, the beneficiary is the person who is actually the owner and receives the benefit and profit from the activities of the enterprise. This role can be played by an individual who, through participation in other companies or directly controls the shares of the enterprise. In this case, legal ownership can be assigned to other people or companies. Information about beneficiaries is confidential and is provided exclusively to the bank or registered agent.
Through the use of nominee directors and shareholders in offshore companies, it is often hidden who the ultimate beneficiary is. This scheme is most often concluded using a nominee agreement or a declaration of trust. Occasionally, a deed of trust is used.
Thus, the chain of ownership, including beneficiaries, rarely becomes public knowledge.
Owning a bank account
In this case, the beneficiary is the owner who has control over the assets or funds in this account. This person can indirectly or directly manage finances. Moreover, the concept applies exclusively to persons who have full control over these funds, even if the beneficiary does not directly perform any transactions, but they take place at his direction. When opening an account, credit institutions always request information about the ultimate beneficiaries.
Trust management
In this case, the beneficiary is the person who receives income from property transferred to trust management or given for use to third parties.
Insurance
IN in this case the term is applied to the person who will receive the sum insured. If a person has death insurance, the primary (or contingent) beneficiary can be any other person.
Inheritance
The beneficiary is the heir in accordance with the will.
Renting out property for rent
The term applies to an individual who receives or annuities.
Letter of Credit
If money is issued under a letter of credit, the beneficiary is the person in whose name the issuing bank opens it.
Opportunities and rights of beneficiaries
If a beneficiary owns shares in a business, he has the right to transfer his ownership rights to another person. The ultimate owner takes part in resolving issues relating to the authorized capital. The beneficiary also has an indirect presence at shareholder meetings. The owner can take part in choosing the board of the company.
A beneficial owner is an individual who can control the business not only de jure, but also de facto. Beneficial owners are entrepreneurs whose status is determined on the basis of the provisions of Law No. 115-FZ - let's look at them in more detail.
Beneficiary: definition of the term
A beneficial owner - this is enshrined in the legislation of the Russian Federation - is recognized as an individual who directly or through third parties owns more than 25% of the capital of a legal entity or has the ability to exercise control over the actions of this legal entity (Article 3 of the Law “On Combating Money Laundering” dated 07.08.2001 No. 115-FZ). The law also provides for the status of the beneficial owner of an individual (by default, this is the same individual, unless there is reason to believe otherwise).
Example
The authorized capital of Salut LLC belongs 70% to Lux LLC, 20% to V. S. Petrov and 10% to A. V. Stepanov. At the same time, Stepanov owns 100% of the authorized capital of Lux LLC. Thus, Stepanov - beneficial owner Salyut LLC, despite the fact that de jure its share in this organization is 2 times less than Petrov’s share.
Thus, the status of a beneficial owner is a legal category, and its characteristics are prescribed at the level of industry-wide legal norms. However, what position can a beneficiary occupy in the business management structure? Let's consider how the key positions in the company of the founder and general director relate to the status of the beneficial owner - this is important from the point of view of a more detailed understanding of the role of beneficiaries at various levels of legal relations.
Is the beneficiary the founder or the CEO?
Fundamentally, it does not matter what position a person holds in a business - founder, director or co-owner. The main thing for establishing the status of the beneficial owner is the compliance of the person’s role in the business with the criteria defined in Art. 3 of Law No. 115-FZ. He may be the actual owner (without having a legally secured share in the business - we will consider the features of this status later in the article) and at the same time general director or de facto make key decisions in the management of the organization, while another person will be the director.
Of course, in general, the beneficial owner is the founder of the company (or one of them). But it is possible that he will be the person who subsequently purchased the required share of the authorized capital. There are common cases when the beneficial owner of a legal entity is the founder of the company that owns the main share of the relevant legal entity.
Example
Citizen Lvov A.E. owns 55% of the shares in PJSC Victoria, which, in turn, owns 70% of the shares in PJSC Almaz. In fact, Lvov does not directly own Almaz shares, but is an indirect participant in this company. The share of his indirect participation will be 0.55 × 0.70 = 0.385, or 38.5%. Consequently, Lvov has a dominant participation (more than 25%) in the capital of PJSC Almaz and meets the criteria of the beneficial owner of this company.
So, the concept of a beneficiary is enshrined in law. But can we say that the status of beneficial owner is the same concept as implied by another common term - “actual owner”?
Are the beneficiary and the actual owner (legal entity or individual) the same thing?
The concept of “actual owner” at the level of legislation of the Russian Federation, in turn, is not fixed. In some sources of law it is given in the same context as the term “beneficial owner” (for example, in the letter of the Ministry of Finance of the Russian Federation dated 04/09/2014 No. 03-00-РЗ/16236). Is it possible to identify them in this regard?
In principle, this is legal, and the reason for this is given by the definition of beneficial owner given in Law No. 115-FZ. In this normative act it is said that a beneficiary may correspond to a person who has the ability to influence decisions made by a legal entity (even though he may not own any shares in the authorized capital of the company).
It is quite acceptable to call the “actual owner” a person who, for one reason or another, is the beneficial owner of an individual. Moreover, in this case it is legitimate to talk about some “pure form” of actual ownership, since the legislation does not provide for the allocation of the authorized capital of an individual. For example, the beneficiary (actual) owner of an individual can be called the recipient of funds indicated by the individual in his will.
Thus, the status of a beneficial owner is a legal category that can be identified with the concept of “actual owner,” and this identification is best applied in the context of control over the actions of a legal entity or an individual. In the context of ownership of the authorized capital of a legal entity, it is better to use only the term “beneficial owner”.
Which companies must keep records of beneficiaries?
Obligations for accounting of beneficiaries are assigned to legal entities that are not:
- state or municipal structures;
- international organizations;
- by issuers of shares within the framework of organized trading (when disclosing information on securities in the prescribed manner);
- foreign issuers of shares as part of trading on a foreign exchange (if the exchange is included in the list determined by the Bank of the Russian Federation);
- foreign subjects of legal relations that do not have the status of a legal entity and do not provide for the presence of beneficiaries and the position of a general director.
Organizations are obliged to know their beneficiaries and, if necessary, take measures to obtain information about them listed in subparagraph. 1 clause 1 art. 7 of Law No. 115-FZ, update this information annually, store the received data for at least 5 years.
In addition, information about the beneficiaries of the company may be disclosed in its reporting - in the manner prescribed by law (clause 7, article 6.1 of law No. 115-FZ).
Which firms must disclose their beneficiaries?
Legal entities, as well as individual entrepreneurs, are required to provide information about beneficiaries upon request (Clause 6, Article 6.1 of Law No. 115-FZ, Clause 10 of the regulations approved by Decree of the Government of the Russian Federation of March 19, 2014 No. 209):
- to Rosfinmonitoring;
- to the Federal Tax Service.
In addition, when contacting an organization or individual entrepreneur that manages funds, the legal entity and individual entrepreneur provide information about their beneficial owners - this is also their legal duty, provided for in paragraph 14 of Art. 7 of Law No. 115-FZ. The scope of this information is defined in paragraph. 2 subp. 1 clause 1 art. 7 of Law No. 115-FZ.
Failure by the company to provide within the specified government bodies information about beneficial owners is a reason for applying sanctions against it under Art. 14.25.1 Code of Administrative Offenses of the Russian Federation. Namely, a fine for officials in the amount of 30,000-40,000 rubles, for legal entities - 100,000-500,000 rubles.
Results
A beneficial owner is a founder or director, one of the owners or the actual owner of the company (even if de jure he does not own any shares in the authorized capital of the organization), who has the ability to at least control the activities of the relevant business entity. In this case, the organizational and legal status of this entity does not matter - it can be either a legal entity or an individual entrepreneur.
To legally determine the status of beneficial owner, it is necessary that an individual owns at least 25% of the authorized capital of the organization. Firms and individual entrepreneurs are required to inform Rosfinmonitoring, the Federal Tax Service, and organizations managing funds about their beneficiaries upon request.
You can learn more about the specifics of the work of financial control authorities (which, in particular, have the authority to request information about their beneficiaries from legal entities and individual entrepreneurs) in the articles:
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Beneficiary(from French benefice - benefit, profit or lat. beneficium - benefit) is a beneficiary, that is, the recipient of a cash payment, income, profit and other advantages and benefits according to a debt document or agreement. The beneficiary can be either a legal entity or an individual. The spelling “beneficiary” is common.
The beneficiaries are:
1. Persons who receive income from their property held in trust or used by third parties. For example, when leasing or leasing movable and immovable property, or transferring shares for use to brokers.
2. Recipients of insurance payments appointed by the policyholder. In this case, the beneficiary is indicated in the insurance policy (it is possible to insure property in favor of a third party). If the beneficiary specified in the insurance contract does not live to see the payments, the person who inherited the rights becomes the beneficiary.
3. Persons indicated by the issuing bank as the owner of the documentary letter of credit.
4. Persons receiving financial benefits from the trust.
5. Recipients of funds in collection.
6. Recipients of a bank certificate.
