On April 19, 2021, the Registry of Beneficial Ownership began to operate in Nicaragua, date from which said Registry is available to the users and the declaration and/or update of the basic information and of the beneficial owner of the mercantile companies before the corresponding Public Registry becomes mandatory.
Pursuant to Information Circular Number 008-2021 issued by the National Directorate of Registries on April 15th of the current year, a schedule is established to proceed with the above mentioned in accordance with the initial of the company’s name or company name, dividing the updating process in two blocks in alphabetical order:
Letter “A” through “H” from April 19, 2021 to October 18, 2021.
Letter “I” through “Z” from October 19, 2021 to April 18, 2022.
Before knowing the legal implications of not proceeding with the updating of basic information (address of the place where the company carries out the operations, legal representative and shareholder composition) and the registration of the beneficial owner within the indicated deadlines, it is appropriate to refer to what is considered “Beneficial Owner” for the Nicaraguan Public Registry, and for this the Circular dated November 25th, 2020 issued by the Special Commission of Registries of the Supreme Court of Justice, establishes 3 criteria to determine the beneficial owner of the commercial companies, which are the following:
- natural person with a shareholding percentage equal to or greater than 25% of the capital stock of the corporation (including the chain of title in case the natural person is through this).
- In the case that it cannot be determined with numeral 1, it will be identified through the natural person that, acting as a decision making unit, individually holds powers to appoint or remove the majority of the administrative, management or supervisory bodies, or has decision in the financial and operative agreements, etc.
- When the beneficial owner is not identified by the above criteria, the natural person holding the highest administrative position or the legal representative of the company will be considered.
Once the beneficial owner has been determined in accordance with the criteria established above, the companies must proceed to update their basic information and register the beneficial owner in the respective Public Registry, the implications of not complying with these registrations within the indicated term are as follows:
- Economic sanctions that will be calculated according to the amount of the Capital Stock.
- Immobilization of the commercial register transaction, which would cause the company to be unable to register corporate documents necessary for the operation of the company, such as election of the board of directors, granting of Powers of Attorney, amendments to the articles of incorporation, among others.
- Non-processing of claims filed by companies with outdated information.
In the case of companies in the process of incorporation, according to Law Number 1035 of Reform to the General Law of Public Registries and the Code of Commerce of the Republic of Nicaragua, in which the Registry of Beneficial Ownership was created, the identification of the beneficial owner must also be included in the articles of incorporation, notwithstanding, in Information Circular Number 009-2021 issued by the National Directorate of Registries on April 19, 2021, it was established the possibility that the beneficial owner of the new companies may be identified through the Report of Beneficial Owner that must be made by the authorizing notary and sent to the General Centralizing Directorate of Information and Prevention (DGCI), in order to protect the confidentiality of such information.
In view of the above, it is necessary that all corporations comply with the requirements to update the information and identification of the beneficial owner before the corresponding Registry and within the deadlines indicated, so that this new obligation does not jeopardize other legal matters of the corporation that may be of great importance for the daily operation of the company.