ATTENTION! Declaration of beneficial owners: who must file it, when and how?

At the beginning of the year, reports appeared that in 2019, from February until 31 May inclusive, many legal entities in Bulgaria must submit to the Commercial Register (CR) or to Bulstat a declaration stating who the actual owner of the company is. This obligation is linked to the entry into force of the documents governing the application of the Bulgarian Law on Measures against Money Laundering.

Under this Law, filing a declaration is mandatory for legal entities, including those not engaged in commercial activity. The obligation to file a declaration also applies to organisations operating on the territory of the country without the status of a legal entity.

Exercising control is also grounds for filing a declaration of beneficial owner. For all trade representative offices on the territory of Bulgaria, the obligation to file a declaration is no exception.

Although trade representative offices are not legal entities and cannot carry out business activity, they are controlled by a foreign legal entity and may be financed by their parent companies and incur expenses. This means that the origin of the funds must be explained, and therefore filing a declaration is mandatory.

The obligation to file a declaration also extends to companies where one of the founders holds up to 25%. Declarations are not filed by companies whose beneficial owners are natural persons entered as sole owners.

The document is signed in the presence of a notary and submitted to the register by the director or by a person authorised under a power of attorney. For declarations to be filed by trade representatives, such powers must be set out in the power of attorney, or the power of attorney must be issued by the director of the parent company to another authorised person.

When filing the declaration, you must complete Application B7 and the declaration under Art. 13 of the Law on the Commercial Register. This can be done electronically using an electronic signature, or completed on the spot at the Registry Agency. Errors made in Application B7 cannot be corrected after submission.

What happens if the declaration is not filed?

As always, ignorance of the law does not exempt anyone from liability for failing to comply with it. If a notarised declaration is not filed with the relevant register by 31 May, the company (representative office) will be fined. The amount payable will be between 1000 and 10000 leva. Moreover, paying the fine does not release you from the obligation to file the declaration. If this is not done, you will have to pay again a month later. The amount of the fine increases over time, and this continues until the declaration is filed with the register. It is not clear exactly how the fines will be allocated among the company’s trade representatives if the director of the parent company fails to arrange for the declaration to be filed on time or does not grant the relevant powers for filing it to their representatives or to another person.

Therefore, it is better to file the declaration straight away, without waiting for penalties. If you are having difficulty preparing the documentation and submitting it, contact us. Bulgarian Expert will help you prepare declarations of beneficial owners and will provide services for filing them with the relevant registers.

Ordinance: http://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=133569

Filing a declaration of beneficial owners

Filing a Declaration under Art. 63, para. 4 of the Law on Measures against Money Laundering.

Price: 98 lv. Includes the state fee.

If you are unsure whether you need to file a declaration of beneficial owner, send us a message with the UIC number (BULSTAT number) of the company or organisation, and we will carry out a free check for you.

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