Key Regulatory Updates To Note In 2020

As we reach the final stages of 2020, it is fair to say it has been one of the most challenging years for the global subsidiary governance industry. Not only has regulatory complexity continued its upward trajectory, but almost all businesses have been faced with the prospect of moving to a fully remote environment in a very short space of time.

This has not been without its difficulties. However overall, the global subsidiary governance industry has shown true resilience, with a powerful combination of effective remote working practices and supportive temporary regulation in many jurisdictions. This has ranged from delaying reporting deadlines to temporarily (or even permanently) enabling virtual Annual General Meetings (AGM).

Aside from COVID-19, there has also been a number of important regulatory updates that have been announced during the year. This year, as part of our mission to help keep our multinational clients informed and remain compliant, we launched our Twitter account @CitcoInsights, to provide updates from across the entire set of jurisdictions that we operate in. Here are the highlights:

Ghana makes amendments to UBO regulations

In Ghana, the Companies Act 2019 was amended to make changes to the regulations in respect of Ultimate Beneficial ownership (UBO). The amendment covered all types of legal entities registered in Ghana and companies must submit information to the Central Register, kept by the Registrar of Companies.

The due date of reporting obligation is upon incorporation for a newly incorporated company, otherwise with the filing of Annual Return. In case of any UBO changes, these shall be entered into the register of members and be submitted to the Registrar for registration and to indicate the beneficial owners who are politically exposed persons, within 28 days of the change. For a foreign company, the changes in the BO structure is carried via a notice in the prescribed form of the change and the grace period is up to 2 months.

Significantly, penalties for non-compliance vary from GHS 1,800 to GHS 3,000, excluding administrative penalties for each day the UBO details are not reported. The company’s UBOs are directly liable, with a possibility of imprisonment for non-compliance.

Paraguay: law on registration of Final Beneficiaries of Legal entities

As of 10th January, the authorities of Paraguay adopted Ley de Referencia” (Law 6446/2019), which was formerly regulated by Decree 3241, implementing an Administrative Register of Legal Entities and Ultimate Beneficial Owners.

Subject to the law are all types of legal entities, registered in Paraguay and obliges a legal entity to provide all the details regarding its shareholders, as well as those involved in its’ administration. Furthermore, details related to natural persons, who are the ultimate beneficiaries shall also be submitted (provided that 10% or more of the capital belongs wholly or partly to entities resident abroad). Where it is impossible to identify the Ultimate Beneficiary, the legal representative of the person or legal structure, who is a resident in Paraguay, is assumed to be the Ultimate Beneficiary. The documentation shall be kept for a period of 5 years.

Penalties for non-compliance vary between 50- and 500-times minimum wages or up to 30% of the profits or dividends.

Switzerland approves the general corporate law reform

In accordance with the Parliament’s decision as of 19th June 2020, the Corporate Law Reform was approved, expected to enter into force in 2022. Several key aspects that companies must be aware of during the next two years are:

  • AGMs will be possible online and via issued Proxy, or be conducted abroad, unless the Company’s AoA provide otherwise, issued via Proxy and the rights of the shareholder(s) are not limited.
  • It will be possible to state the share capital in any foreign currency, then used for annual financial reporting. The nominal value could be of any value greater than nil in order to exist without any further tax implications. The procedure of capital reductions is to be simplified, as well as the distribution of capital contribution reserves.
  • The obligation of the Board of Directors to initiate the restriction measures are to be extended, e.g. to monitor a Company’s ability to pay its debt, there is no need for a general meeting, rather a proposal in order to prevent an upcoming/potential insolvency is acceptable.
  • For listed companies, each gender is to be represented by at least 30% and 20% on the board and executive management, respectively.

The Dutch Senate implements UBO register from September 2020

On 23rd June 2020, the Dutch Senate approved the act implementing the long awaited ultimate beneficial ownership register (the “UBO register”) of companies and other legal entities that are incorporated or established in the Netherlands. The UBO register, which will be part of the Dutch Chamber of Commerce (the “CoC”), will enter into force from 27th September 2020. 

Legal entities required to register UBO information are: private companies with limited liability; public companies, except those with a stock exchange listing which are subject to certain publication requirements and their 100% direct and indirect subsidiaries; European public companies (SE) and European cooperative companies (SCE), who have their registered office in the Netherlands; Foundations, associations, cooperatives and mutual insurance associations; Partnerships, commercial partnerships, limited partnerships, European economic interest groupings (EESV), and shipping companies.

From 8th July 2020, all entities incorporated or founded in the Netherlands must obtain and maintain adequate, accurate and up-to-date information about their UBOs. After the UBO register goes live, the existing Dutch businesses will have 18 months to provide the relevant UBO information to the CoC. New entities will have to declare their UBOs upon the registration of that entity with the trade register. Failure to meet the UBO disclosure requirements may result in administrative sanctions.

Public notary services available to be conducted remotely in Dubai

Public notary services are now available to be conducted remotely in Dubai (to be in line with health and safety measures). In accordance with the Notary Public Circular as of 30th March 2020, certain public notary services are conducted remotely. These are the following:

  • Power of Attorney notarisation;
  • Legal Notice notarisation;
  • Acknowledgments;
  • Local Service Agent Agreement notarisation;
  • Civil Companies’ Memorandums/Articles of Association and addendums notarisation.

Dubai Public Notary works remotely from 8am till 4pm, Sunday to Thursday. In order to proceed with this option, the following requirements must be met:

  1. An applicant must have a subscription to the video/voice calling application ‘BOTIM’;
  2. The Notary contacts attest to the document through this video connection to establish the identity of the principal and have full knowledge of the contents of the document, as well as relevant information on the applicant’s name, mobile number, address, Emirates ID or passport, confirmation of capacity, documentation proving the applicant’s authority to appoint powers, and the company’s commercial registration details (e.g. trade license), if applicable;
  3. The items, mentioned in 2, are sent to the dedicated email address in PDF format with an approved declaration to the remote signing on the bottom of each page, e.g. “I, the undersigned, declare with my full capacity, and through video communication, using BOTIM, my consent on all that is stated in this application and I sign accordingly.”
  4. Once the Notary reviews the documents, they contact the applicant for further actions: either requesting for additional documents/ amendments to made, or to acknowledge the notarisation request and verify the relevant details with the applicant.
  5. Provided that applicant receives a confirmation, the Notary will send a further SMS and an email containing the fee for their services together with a link for payment. Once the payment is completed, the original document will be delivered to the applicant’s address.

Toma Razmaite, Knowledge Integration Manager, Citco Global Subsidiary Governance Services
Citco GSGS Focus – Winter 2020/2021