On November 22, 2022, the Court of Justice of the European Union issued a landmark judgment in Joined Cases C-37/20 Luxembourg Business Registers and C-601/20 Sovim, where it ruled that the provision of the so-called Fourth AML Directive, which allows unrestricted access to information about beneficial owners of corporate entities, is invalid . This ruling is a breakthrough for the regulation of the obligation to publicly disclose beneficial ownership in Poland. There are nearly half a million companies, foundations, associations, and cooperatives operating in Poland, for which this judgment will have a direct impact.
On 13 October 2019, the regulations introducing the Central Register of Beneficial Owners entered into force.
In accordance with applicable regulations, every entrepreneur operating in the form of a commercial company and other entities indicated in the Act are obliged to report to the CRBR information on the beneficial owners of companies .
Failure to do so may result in a fine of up to PLN 1 million .
The beneficial owner of a partnership is generally all partners, and in the case of corporations, partners who hold more than 25% of the votes or shares in the company's share capital. In the case of foundations or associations, the decisive factor will be who actually has influence over its operations; typically, these will be members of the management board and the foundation council, or the founder himself.
A notification to the CRBR should be submitted by the entity that directly or indirectly controls this entity, e.g. in capital companies, partners holding more than 25% of the votes or shares in the company's share capital.
The formal registration is made by a person authorized to represent the company , and the entire registration process can be completed free of charge online.
According to the Court, such regulations are contrary to the guarantees contained in the Charter of Fundamental Rights of the EU.
Thanks to this decision, Polish entrepreneurs will be able to apply for limiting public access to information about their beneficial owners.
In its justification, the Tribunal indicated that universal access to information on beneficial owners is a serious interference with the right to respect for private life and the protection of personal data by giving an unlimited number of entities the possibility of obtaining access to information on the ownership structure of the beneficial owner.
Obviously, sharing such sensitive data carries a high risk of misuse, especially when the data is not only viewed but also stored and distributed.
The consequence of the Court of Justice’s judgment should be the removal from the legal order of certain provisions of the Act on Counteracting Money Laundering and Terrorist Financing, which impose on selected entities the obligation to make information on beneficial owners available to the interested person in each case.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 27, 2022
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