On July 25, 2023, the Supreme Court of Justice through the National Council of Administration and Judicial Career, approved Agreement Number 577, which amends the Operating Regulations of the Registry of Final Beneficiaries of Commercial Companies in Nicaragua.
This instrument established new articles and guidelines to comply with the Final Beneficiary Registry. In this partial amendment, the scope of the application was modified, indicating that only Nicaraguan commercial companies are subject to this registration, excluding foreign companies operating in the country.
By article 6, numeral 1, new companies that are incorporated in Nicaragua, must register their Final Beneficiary within a maximum period of fifteen days after their registration at the commercial registry; thirty days were previously granted to comply with this obligation. The deadlines for ordinary and extraordinary registrations were not affected: the ordinary update is required every twelve months and the extraordinary when there is any change in the basic information of the company or its final beneficiary.
In addition, as regulated in article 6, numeral 3 of the amendment, the obligation to update the basic information of the company in the Public Mercantile Registry is reaffirmed, understanding as such any modification that affects its articles of incorporation and bylaws, such as:
- Changes in corporate participation.
- Corporate purpose.
- Reduction or increase in social capital.
- Changes in the board of directors.
- Appointment of legal representative.
About the legal representative, the amendment requires legal representatives to provide their phone number and email address. The registration in the mercantile registry of the above-mentioned obligations generates the obligation to update the registry of the final beneficiary of the company.
A new and important element to consider in this amendment is that the person authorized to carry out the final beneficiary registration must reside in Nicaragua. In this sense, the regulations establish that in cases where the President of the Board of Directors or the Legal Representative is not domiciled in the country, the company must designate a special appointee for this purpose, who must necessarily reside in the country (article 7 of the Regulations).
In respect to the support documentation for identifying the final beneficiary, companies that at the time of registration do not have those documents, may still provide a Notarial Declaration signed by the legal representative, expressing the required information and explaining the well-founded reasons why the supporting documents could not be obtained at such time. The amendment, however, includes the new obligation for the legal representative to provide the supporting documents within three months of the date of the notarial declaration.
The amendment also specifies the information that must be declared for each shareholder, at each of the levels of the shareholding structure: name, purpose, and address of the company, names, surnames, and general information of its shareholders, share capital, shareholding composition, registry data of the registration in the country of origin and any other information that contributes to the identification of the final beneficiary. The companies that cannot initially present the supporting documents for the registration or update of their final beneficiary, must ensure that they have at least the information indicated above for each of their shareholders, direct or indirect, to complete the elements required in the notarial declaration. Companies shall also ensure that the supporting documentation is obtained (translated and apostilled, where appropriate), to present it to the registry within the three months indicated and avoid the imposition of fines and/or other sanctions.
Concerning the companies obligated to declare or register their final beneficiary, it is now clearly established that only Nicaraguan companies registered in the country must comply with such obligation. Therefore, per articles 1 and 42, branches of foreign companies that operate in the country are excluded from this registration. However, the regulations establish that at the time of registering the branch in the commercial registry of Nicaragua, companies must present the Certificate of Final Beneficiary from the country of origin, and if not possible, a Notarial Declaration before a Nicaraguan Notary identifying their final beneficiary must be filed. This requirement also applies when branches of foreign companies are partners of a Nicaraguan company.
Article 9 includes a new concept related to State or Municipal Companies, which are exempted from complying with the obligation to register their final beneficiary. The same exception applies to commercial companies created by state or municipal companies or to those created by national and foreign state companies.
It should be noted that the criteria to determine the final beneficiary was not modified, nor were the fines to pay in case of infractions. Nonetheless, new minor, serious, and very serious infractions were added. Here are some of the new infractions:
- That the declared domicile does not coincide with the one registered in the commercial registry.
- Not listing the positions of the Board of Directors in the online form.
- Presenting the information extemporaneously.
- Not attaching the information and documentation of the foreign legal partner/shareholder.
- Not identifying appropriately, the natural person who is the financial beneficiary (i.e. using inappropriate criteria to identify the final beneficiary).
Based on the above, companies need to perform a general review of the information registered in the final beneficiary registry, as well as make the pertinent changes to ensure due compliance with these new requirements and avoid fines and/or other sanctions. Do not hesitate to contact us if you have not completed the Final Beneficiary Registration of your company yet, or if you need assistance to verify compliance with these new legal requirements.