All Estonian companies are obligated to submit the data of the person who benefits from the company’s activities’, or so-called
beneficial owner, in the Estonian Business Register. Submitting the data of the company’s beneficial owner is mandatory due
to the updates in the Money Laundering and Terrorist Financing Prevention Act. The new requirement is in force from 10 March 2020.
Although in Estonia the company’s information has always been open to the public, these changes in the law add another layer of transparency by making the beneficial owner data public in the Estonian Business Register.
It is possible to insert the data of the beneficial owner during the registration of the company either when the company is registered in a notary’s office or in the e-Business Register. Companies that have been registered before the legislation change in March 2020 should check if the information is in the registry and add it if it is not there.
It is also important to keep in mind that if there have been any changes among company’s beneficial owners, then you must update the information in the e-Business Register in 30 calendar days, as the system doesn’t update the data automatically. If the beneficial owner of the company has not changed, then the data needs to be confirmed once a year when submitting an annual report.
In this article, we will give you an overview of who the beneficial owner of your company is, and how can you register the beneficial owner data in the e-Business Register.
Who is your company’s ’beneficial owner’?
According to the Estonian Ministry of Finance’s Guideline, the definition of a beneficial owner is: “In the case of companies, a beneficial owner is a natural person who ultimately owns or controls a legal entity 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.”
There are different types of beneficial owners, and if your situation is complex, we recommend you to read the Estonian Ministry of Finance’s Guideline. However, usually the beneficial owner of a company is a person holding a share that comprises more than 25% of the company’s share capital. Such shareholders exercise control by way of direct ownership.
The most common scenario for e-Residents is a company with one shareholder who is at the same time the sole beneficial owner of the company. It means that there is only one owner, who is also the only board member and beneficial owner of the company, and there are no complicated co-ownership structures.
In case the company has two natural persons as shareholders, then both of them are beneficial owners.
It gets more complicated when another company (parent company) owns a share comprising more than 25% of your company’s (subsidiary company) share capital. This means that whoever is a natural person owning the parent company, is the beneficial owner of your Estonian or subsidiary company. For example, if a natural person owns 50% of a company, that owns 50% of your company, then this person indirectly owns more than 25% of your company. Therefore, this person is one of the beneficial owners of your company.
To see more examples and get more information read the full Guideline for definition of a beneficial owner.
Why is it important to add the data of the beneficial owner?
It is very important that you add the data about your company’s beneficial owner to the Estonian Business Register, as otherwise, you can’t submit your company’s annual report, renew e-residency card or use some other services in the Business Register.
Also, in case you fail to submit the data of the company’s beneficial owner, or do not notify about the change of the beneficial owner of your company, then fines may be applied.
So, whether you alone are the beneficial owner of your company, or there are more people involved, we will give you instructions on how to add the data to the e-Business Register in the following section.
How to submit the data of the beneficial owner?
This process takes only a couple of minutes and can be done online after logging in to the Estonian e-Business Register.
First, you will see a notification next to your business name that says ’Beneficial owners not appointed’. Click on the notification.
Next appears a list of people who are related to your company. Click ’Add’ to submit all the people who own more than 25% of the company to add them as the beneficial owners of the company.
If the person you want to register as the beneficial owner is not on the list, click on ’Add new person’.
After choosing a person from the list or adding a new person, you will see a form for each person like the one below. Confirm or fill in the data and click on ’Add’. Please make sure that you enter your current place of residence correctly.
Now your company’s beneficial owners have been added to the Estonian e-Business Register.
Changing the beneficial owners of the Estonian company
If there have been changes in the ownership of the company and there is a new direct or indirect owner who owns more than 25% of the company (or somebody now owns less than 25% of the company), then you need to update the beneficial owners of the company in the Estonian Business Register.
To do that, log in to the e-Business Register and click on your company’s name.
In the section about beneficial owners, you have to click on a box ’Start amending beneficial owners’. Next, you will have an option to add a new beneficial owner or remove an existing one. You will also have to provide a reason for removal if you want to remove an existing beneficial owner. Then click on ’Add’ or ’Remove’.
Note that the system does not allow you to remove all the existing beneficial owners, before at least one new beneficial owner is added.
Adding beneficial owner is fast and easy
As you can see, if you have not submitted the data of your Estonian company’s beneficial owner, then you can easily and quickly do that in the e-Business Register. E-Residents and Estonian ID-card holders can do it online in the Estonian e-Business Register (see the instructions above). Adding beneficial owner information is mandatory by law for all Estonian companies. If the company does not have beneficial owner data, then penalties may be applied and it can affect your future activities like applying for an e-Residency card renewal, submitting the annual report and so on.
If you do not have an e-Residency card, then the data of the beneficial owner of your company must be added through the Estonian notary. We can help you with the process, please contact us to request a quote.