Starting from October 13, 2019, the provisions introducing the Central Register of Beneficial Owners will enter into force in Poland, in response to the implementation of the EU Directive on preventing the use of the financial system for money laundering or terrorist financing. Polish commercial law companies entered into the Register of Entrepreneurs of the National Court Register before this date have time to submit information about their beneficial owners by April 13, 2020. Companies entered into the Register of Entrepreneurs after the said date must do this within 7 days of entry in the Register of Entrepreneurs. It cannot be excluded that the majority of entities obliged to report information will face the problem of correct identification of their beneficial owners Late or incorrect submissions may have legal consequences.
Pursuant to the new provisions, commercial law companies that have not complied with the obligation to report information about their beneficial owners in a timely manner are subject to a fine of up to PLN 1m (approx. € 250k). In other words, if the information is not reported to the Register by April 13, 2020 – in the case of entities entered in the Register of Entrepreneurs before October 13, 2019 – or 7 days from the entry of a given company in the Register of Entrepreneurs (if the entry is made on October 13, 2019 or later), a large fine may be imposed on the company.
Given that this penalty is an administrative penalty, it should be expected that the body imposing it, although acting within the framework of administrative discretion, will be guided by the directives indicated in the Code of Administrative Procedure. Certainly the amount of the penalty should be adequate to the gravity and circumstances of the violation. One of the circumstances that should affect the penalty is that the company is a subsidiary in the international capital structure. In practice, persons representing such a company may have troubles in obtaining information about a natural person at the top of the structure and exercising ultimate control over it. In such situations, one should rather expect the authority to impose a small penalty, of course, provided that the company proves that it is unable to obtain information despite all due diligence. It cannot be ruled out that the authority will refrain from imposing a penalty if the company notifies the Minister of Finances about the violation of law and that it is unable to remove it within the prescribed period.
In addition to imposing a financial penalty, persons representing the company may incur criminal liability for submitting a false statement in connection with submitting information to the Register. The associated prison sentence may be from 6 months to 8 years. However, the court may (although it does not have to) apply extraordinary mitigation of punishment, and even withdraw from it, if the perpetrator voluntarily corrects a false statement before settling the case. The minimum condition for committing a crime is the knowing or anticipating by the perpetrator of false or incomplete submission of information about beneficial owners and at the same time accepting this state. Therefore, persons reporting information to the Register should refrain from this in case of doubts as to the veracity of the data.
In addition, persons submitting information on beneficial owners and their updates bear civil liability for damage – also through unintentional fault as a result of negligence – caused by submitting false data to the Register, as well as failure to report data and changes of data covered by the entry in the Register within the statutory period, unless the damage occurred due to force majeure or exclusively through the fault of the injured party or a third party for which the person making the notification is not responsible. It is a matter of damage in the broad sense of the word, and therefore damage to both material and non-material nature. The manifestation of damage may be the inclusion in the Register – which is currently public – of the data of a person who is not in fact the real beneficial owner of a given company.
It is worth to be well prepared
The list of consequences of untimely or unreliable reporting of information to the Registry should now prompt persons representing Polish commercial law companies to verify and obtain the required information about beneficial owners of these companies. Although entities already registered in the Register of Entrepreneurs of the National Court Register have time to submit information by April 2020, it is better now to protect themselves against possible sanctions. It may turn out that obtaining true and complete information will not be as easy as it seems.
By Tomasz Piejak & Piotr Trzebicki