In Nicaragua, since 2020 the Registry of Beneficial Ownership of Commercial Companies was created and started the regulation on this matter through several circulars. Then, in November 2020, the Supreme Court of Justice issued the Rules of Operation of the Registry of Beneficial Ownership of Commercial Companies, amended by Agreement number 577 of July 24, 2023, issued by the same State authority.
To date, the legislation applicable to the Registry of Beneficial Ownership in Nicaragua has undergone multiple transformations, both legal and practical.
With the entry into force of Agreement number 577, several relevant aspects were included in the legislative regulation that had not been regulated before, such as the role of the Legal Representative in the Registry of Beneficial Ownership.
According to Art. 2, paragraph 2.1, subsection v), a legal representative is defined as the natural person who holds decision-making powers or authority in the financial, operational and/or commercial agreements adopted, or who exercises another form of control of the corporation.
In general, the function of legal representatives in corporations falls on the president of the Board of Directors, as established in most of the articles of incorporation. However, it is also possible that a corporation grants different powers to other attorneys-in-fact and that the corporation decides to register as legal representative a person other than the president of the board of directors, as long as he/she has a Power of Attorney that allows him/her to act on behalf of the corporation, which allows expanding the options of representation of the mercantile entities.
As part of the requirements to proceed with the Registration of the Beneficial Owner, it is indispensable to have the company’s Legal Representative registered in the Public Mercantile Registry, since this person is the one who will make the declaration and determine who is the beneficial owner of the company, according to the criteria previously established by the same regulation.
Since the reform of the Regulations, one of the novel and relevant aspects that has been incorporated in the beneficial owner registry is the obligation of the corporation to have its information updated and, according to Art. 6, paragraph 3, item h, part of this information corresponds to the data of the legal representative, being necessary to register in the Public Mercantile Registry the data of the person who is the representative, such as name, legal qualities, domicile indicating the exact address, e-mail, and telephone number.
If the requirement is not complied with, the Registry of Beneficial Ownership will not admit any declaration of beneficial ownership of companies that do not have duly registered the appointment and general information of the legal representative, and the Public Mercantile Registry may also suspend registrations, such as elections of board of directors and grant of powers of attorney and amendments.
Therefore, all companies must proceed with the registration of the information of the legal representative in the Public Mercantile Registry, before the declaration of the Beneficial Ownership Registry, to avoid any suspension of the process of beneficial ownership and mercantile procedures and to comply with all the obligations that apply to companies in Nicaragua.