Business, Business in Europe, Estonia, Legal Counsel, Legislation

For the purposes of the law, in the case of companies, a beneficial owner is the natural person who ultimately owns or controls a legal person through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that person, including through bearer shareholdings, or through control via other means, the Estonian Chamber of Commerce and Industry said.

Direct ownership means a natural person holding a shareholding of 25% plus one share or an ownership interest of more than 25% in a company. Indirect ownership means a company which is under the control of a natural person holding, or multiple companies which are under the control of the same natural person, holding a shareholding of 25% plus one share or an ownership interest of more than 25% in a company.

The Chamber of Commerce and Industry said that in the case of a simple and clear ownership structure business operators have no problem fulfilling the obligation. In the case of a more complex ownership structure disclosing information about beneficial owners may be difficult, especially if the circle of owners extends to other countries.

The law clearly sets forth the obligation for companies to provide the commercial register with information about the names of beneficial owners, along with responsibility for failing to do so or presenting incorrect information. Where, after all possible means of identification have been exhausted, the beneficial owner cannot be identified and there is no doubt that such person exists, or where there are doubts as to whether the identified person is a beneficial owner, the natural person who holds the position of a senior managing official is deemed as a beneficial owner.

In addition, the obliged entity must register and keep records of all actions taken in order to identify the beneficial owner.

The requirement of disclosure of ultimate beneficial owner the does not apply to listed companies, apartment associations, and certain foundations.

The data that must be presented about the beneficial owner are the person's name, personal code and the country that issued the personal code, country of residence, and information about the conduct of the identity check. In the absence of a personal code the date and location of birth must be provided.

In the case of new companies, information about the beneficial owner must be presented to the commercial register already upon the registration of the business with the application for entry into the commercial register.

The penalty for not submitting data about the beneficial owner or submitting incorrect data is up to 300 fine units for a physical person, meaning up to 1200 euros, or up to 32 000 euros for a legal person. For breach of the obligation to identify the beneficial owner the law sets forth a fine of up to 300 units or detention for a physical person, and a fine of up to 400 000 euros for a legal person.