Today, November 25, part of Law No. 1701-VII, the anti-corruption package adopted in October, comes into force.
According to this new regulation, companies must identify individuals—their ultimate owners—and register this information in the Unified State Register. Companies must also submit information on the holders of significant participation and the ownership structure of the enterprise group.
These new regulations are intended to make information about the owners of a given enterprise public. Companies are also required to regularly update this information. Previously, this requirement only applied to new companies, making it easy to circumvent.
These new rules should simplify the fight against corruption and encourage businesses to conduct their business correctly and legally. A unified registry with accurate information on company owners should help better identify tax and antitrust violations, as well as corruption schemes.
If a businessman is law-abiding, it will be very difficult to conceal the true owner of the company. This information may already be in the files of the National Bank of Ukraine, tax authorities, the state register, and the Antimonopoly Committee. Furthermore, financial institutions, as well as realtors, lawyers, and notaries, collect this information about all their clients.
If any violations are identified, these new laws stipulate no currency or antitrust amnesty. Experts believe this will further push businesses into the shadow economy, with compliance with these rules being merely formal. This interpretation is explained by the fact that the majority of Ukrainian businesses are controlled through foreign holdings.
Fines for violating antitrust regulations in Ukraine are currently enormous (amounting to approximately 5% of annual turnover). Not every company will take such risks. This will contribute to the lack of transparency in the information provided, even by law-abiding enterprises or holdings.
Businesses and companies have six months to implement this new regulation. The implementation deadline and the imposition of fines and penalties will apply beginning May 25, 2015.
Based on materials from LIGA.Business
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