Albania requires UBO disclosure
On 29 July 2020 the Albanian Parliament approved Law no. 112/2020 for the establishment of a registry for beneficial owners (the "UBO Law"). The law has been published in the Official Gazette of the Republic of Albania and will enter into force after the 28 August 2020.
The Law aims to approximate the Albanian legislation with the EU requirements under Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC.
The UBO Law provides for a detailed list of entities registered in the Republic of Albania, which are required to report their beneficial owners. The list of reporting entities includes, between others, limited liability companies, joint stock companies, branches and representative offices of foreign companies, foundations, associations etc.
Businesses conducted by persons registered as individual entrepreneurs, companies fully owned by the state, religious communities and political parties are excluded from the list or reporting entities.
Under the UBO Law, beneficial owner is the individual who ultimately, through the direct or indirect ownership of a sufficient portion of the equity or voting rights in a reporting entity, has the control of that entity, or is able to exercise control of the entity through other means, or otherwise benefits from the transactions performed by the entity on his/her behalf.
The founder, the legal representative or the individual that exercises ultimate effective control in the management of NGOs and their branches, is also deemed by the UBO Law as a beneficial owner. Ultimate effective control is defined as the power of the individual to determine the decision-making of the NGO or otherwise control by any mean, the election, appointment or dismissal of the decision-making bodies of the NGO.
In case of a trust, the beneficial owner is deemed to be the settlor, the trustees, the protector, if any, and the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates, as well as any other individual exercising ultimate control on the trust, by way of direct or indirect ownership or by other means.
Direct ownership is defined as the ownership of by individual (in his/her own name) of at least 25% of the shares or interest in a reporting entity. Indirect ownership is the ownership or control exercised by the same individual, in one or more legal entities, which, individually or combined, own at least 25% of the shares or interest in a reporting entity.
The registry of beneficial owners (the “RBO”) is a public registry administered by the National Business Centre (the “NBC”). The NBC is a central government agency that administers the commercial registry of the Republic of Albania.
Pursuant to the UBO Law, the RBO shall be established and function in electronic form, by no later than 31.01.2021.
Reporting entities are required to declare their beneficial owners at the RBO, within a term of:
· 30 days of their initial registration (establishment); or
· 30 days of the factual change of an already submitted report.
The set of data to be reported, as well as the reporting procedure is determined by the UBO Law and secondary legislation that is expected to be approved pursuant to it.
In addition to the above, the reporting entities are required to keep on an ongoing basis, accurate and up-to date information and documents related to their beneficial owners. The data and documents to be kept by the reporting entities must be made available upon request to the competent inspection authorities (i.e. tax authorities).
The beneficial owners have the obligation to provide the reporting entities with the necessary informant and documents to comply with the requirements of the law.
Reporting entities that existing prior to the establishment of the RBO, are required to identify their beneficial owners by 31.12.2020 at the latest, and report to the RBO within a term of not more than 60 calendar days of the day of establishment of the RBO (i.e. mandated by the law to be no later than 31.01.2021).
Publicity and access
The RBO will make available to the public the following set of data regarding the beneficial owners: name and surname, nationality, year and month of birth, date of determination of the individual as beneficial owner, the percentage of ownership and if the ownership is direct or indirect.
The other data entered in the RBO will be freely accessible only to the authorized persons of the reporting entity (exclusively in relation to the data provided with respect to that reporting entity) and to competent public authorities.
Other persons that require RBO data, which is not freely accessible, must submit a written request to the NBC and prove that they have a legitimate interest in the required data.
The data entered in the RBO shall be kept for a period of at least 10 years from the date of de-registration of the reporting entity from the relevant public registry.
Rights of the beneficial owner
The person who has been entered in the RBO as beneficial owner of a reporting entity is entitled to sue the reporting entity in court, in order to ascertain that he/she is not the beneficial owner of that entity.
The NBC must correct the entries in the RBO within 2 working days of the date it has received an enforceable court decision.
Additionally, any interested party (e.g. including the reporting entity or the beneficial owner) has the right to file an administrative complaint at the NBC in case of actions/omissions by the NBC in registering and publishing data at the RBO, contrary to the provisions of the law. The term for the submission of the administrative complaint is 30 calendar days of the date of registration or refusal to register the submitted data in accordance with the law.
The UBO Law provides for the following sanctions related to the failure to comply with its requirements.
a. the reporting entity that fails to report the data on its beneficial owner, within 30 days of its initial registration, shall be fined with 500,000 Lekë;
b. the reporting entity that fails to report the data on its beneficial owner, within 30 days of any factual change of the previously submitted report, shall be fined with 250,000 Lekë;
c. the existing reporting entity that fails to report the data on its beneficial owner, within 60 days of the establishment of the RBO, shall be fined with 250,000 Lekë;
In the above circumstances, the legal representative of the reporting entity shall be also with 150,000 Lekë.
In case of repeated offenses under items a) and b) above, the fine shall be doubled.
The above fines are imposed by the NBC, and the relevant public registry of the reporting entity shall not offer service until the fines are paid.
In addition to the above, the reporting entity that fails to keep accurate and up-to date data and documents regarding its beneficial owners, may fined by tax authorities, with 50,000 Lekë.
The fines imposed under the UBO Law may be directly challenged in front of the competent court.