Is the beneficial owner the founder or director of the legal entity?

The market economy in our country is developing, new terms and concepts are appearing that we have not encountered before. Therefore, in order to be “on the crest of the wave”, you need to constantly expand your “economic vocabulary”. This is necessary not only for professionals, but also for ordinary citizens. After all, we all have something to do with finance.

The definition of the concept of beneficiary is somewhat different depending on which area it relates to - banking, general finance, legal, etc.

However, this term can also be defined in general terms. In simple words, a beneficiary is a person in whose favor certain actions that generate profit are carried out (for example, opening a bank account, transferring funds, opening a letter of credit, trust management of property, etc.).

Beneficiary: definition of the term

A beneficial owner - this is enshrined in the legislation of the Russian Federation - is recognized as an individual who directly or through third parties owns more than 25% of the capital of a legal entity or has the ability to exercise control over the actions of this legal entity (Article 3 of the Law “On Combating Money Laundering” dated 07.08.2001 No. 115-FZ).
The law also provides for the status of the beneficial owner of an individual (by default, this is the same individual, unless there is reason to believe otherwise). See also “The procedure for identifying a client in a bank according to Law 115-FZ.”

Example

The authorized capital of Salut LLC belongs 70% to Lux LLC, 20% to V. S. Petrov and 10% to A. V. Stepanov. At the same time, Stepanov owns 100% of the authorized capital of Lux LLC. Thus, Stepanov is the beneficial owner of Salyut LLC, despite the fact that de jure his share in this organization is 2 times less than Petrov’s share.

Thus, the status of beneficial owner is a legal category, and its characteristics are prescribed at the level of industry-wide legal norms. However, what position can a beneficiary occupy in the business management structure? Let's consider how the key positions in the company of the founder and general director correlate with the status of the beneficial owner - this is important from the point of view of a more detailed understanding of the role of beneficiaries at various levels of legal relations.

Nominal account for social payments: pros and cons

“Nominal” replaced the guardianship account. It has positive and negative sides.

Pros:

1. Guarantees. The money is protected by an insurance agency, and the guardianship authorities monitor the status of the account.
2. The ability to manage funds or use it as a deposit - interest is charged on the balance (not with all banks).
3. Ease of use. To transfer money between cards and accounts, you can use a mobile application (not all credit institutions can boast of it).

Minuses:

1. Opening an account only at your place of residence.
2. This aspect creates a lot of inconvenience for parents (guardians) who have a disabled child. Due to the presence of the disease, they often have to travel to different cities and go abroad for rehabilitation.
3. Cash withdrawal - in the office.
4. Guardians spend money on various activities with the ward, using the services of private specialists at home - this cannot be confirmed with receipts. Problems often arise when reporting to the board of trustees.
5. Expenses are controlled by banks and guardianship authorities.

Nominal accounts began to be used recently, and they are still “raw”. The special bank deposit requires minor improvements, and we are confident that adjustments will be made in the near future.

Is the beneficiary the founder or the CEO?

Fundamentally, it does not matter what position a person holds in a business - founder, director or co-owner. The main thing to establish the status of the beneficial owner is the compliance of the person’s role in the business with the criteria defined in Art. 3 of Law No. 115-FZ. He can be the actual owner (without having a legally secured share in the business - we will consider the features of this status later in the article) and at the same time the general director, or de facto make key decisions in the management of the organization, while the director will be another person.

Of course, in general, the beneficial owner is the founder of the company (or one of them). But it is possible that he will be the person who subsequently purchased the required share of the authorized capital. There are common cases when the beneficial owner of a legal entity is the founder of the company that owns the main share of the relevant legal entity.

Example

Citizen Lvov A.E. owns 55% of the shares in PJSC Victoria, which, in turn, owns 70% of the shares in PJSC Almaz. In fact, Lvov does not directly own Almaz shares, but is an indirect participant in this company. The share of his indirect participation will be 0.55 × 0.70 = 0.385, or 38.5%. Consequently, Lvov has a dominant participation (more than 25%) in the capital of PJSC Almaz and meets the criteria of the beneficial owner of this company.

So, the concept of a beneficiary is enshrined in law. But can we say that the status of beneficial owner is the same concept as implied by another common term - “actual owner”?

Opening an account in the Moscow Industrial Bank

In the Moscow Bank, as in other credit companies, a nominal account is opened for crediting funds to a minor or an incapacitated citizen. Although the term of the contract has no restrictions, the rights of the guardian (trustee) may be limited.

An account is opened without depositing a minimum amount, and a minimum balance is not provided. The bank guarantees the protection of funds, but interest is not charged.

Reference!

To deposit money into a bank account, the client must show documents confirming that the contributed funds belong to the beneficiary’s social income.

Moscow Industrial Bank allows termination of the agreement at any time. The remaining funds will be transferred to another account opened for the ward.

Are the beneficiary and the actual owner (legal entity or individual) the same thing?

The concept of “actual owner” at the level of legislation of the Russian Federation, in turn, is not fixed. In some sources of law it is given in the same context as the term “beneficial owner” (for example, in the letter of the Ministry of Finance of the Russian Federation dated 04/09/2014 No. 03-00-РЗ/16236). Is it possible to identify them in this regard?

In principle, this is legal, and the reason for this is given by the definition of beneficial owner given in Law No. 115-FZ. This regulation states that a beneficiary may correspond to a person who has the ability to influence decisions made by a legal entity (even though he may not own any shares in the authorized capital of the company).

It is quite acceptable to call the “actual owner” a person who, for one reason or another, is the beneficial owner of an individual. Moreover, in this case it is legitimate to talk about some “pure form” of actual ownership, since the legislation does not provide for the allocation of the authorized capital of an individual. For example, the beneficiary (actual) owner of an individual can be called the recipient of funds indicated by the individual in his will.

Thus, the status of beneficial owner is a legal category that can be identified with the concept of “actual owner,” and this identification is best applied in the context of control over the actions of a legal entity or an individual. In the context of ownership of the authorized capital of a legal entity, it is better to use only the term “beneficial owner”.

Other banks

Opening social accounts is also possible in other credit companies:

1. RaiffeisenBank. The bank regulates outgoing payments and monitors the targeted spending of money in favor of the beneficiary.
2. RNKB. The financial institution offers many advantages: prompt opening of nominal accounts in rubles, unlimited validity period and no minimum minimum balance.
3. MTS Bank. An account is opened at a bank office only in national currency. Replenishment is in non-cash form. Duration: until the contract is closed. The rate is 0.01%.

Which companies must keep records of beneficiaries?

Obligations for accounting of beneficiaries are assigned to legal entities other than:

• state or municipal structures;
• international organizations;
• by issuers of shares within the framework of organized trading (when disclosing information on securities in the prescribed manner);
• foreign issuers of shares as part of trading on a foreign exchange (if the exchange is included in the list determined by the Bank of the Russian Federation);
• foreign subjects of legal relations that do not have the status of a legal entity and do not provide for the presence of beneficiaries and the position of a general director.

Organizations are obliged to know their beneficiaries and, if necessary, take measures to obtain information about them listed in subparagraph. 1 clause 1 art. 7 of Law No. 115-FZ, update this information annually, store the received data for at least 5 years.

In addition, information about the beneficiaries of the company may be disclosed in its reporting - in the manner prescribed by law (clause 7, article 6.1 of law No. 115-FZ). The procedure for disclosing information is defined in PBU 4/99 “Accounting statements of an organization”, PBU 11/2008 “Information about related parties” and in the recommendations to auditors contained in the Appendix to the Letter of the Ministry of Finance of Russia dated January 29, 2014 N 07-04-18/01 ( Letter of Rosfinmonitoring dated July 29, 2019 N 01-04-05/17015). In particular, information about such persons is disclosed in the notes to the balance sheet and income statement.

Participation of the beneficiary (beneficiary) in insurance and inheritance

The beneficiary (beneficiary) in insurance is the persons who receive insurance payments upon the occurrence of an insured event (under previously concluded insurance contracts).

In this case, the beneficiary not necessarily the person or owner of the property insured in accordance with these contracts.

For example, when receiving a mortgage loan, the property that becomes the property of the borrower is insured, and the beneficiary in the event of damage or destruction of the property that is the subject of the pledge will be the lender . At least until the borrower fulfills the terms of the loan agreement.

The beneficiary of insurance payments can be determined by the insured person himself. For example, in life insurance, the beneficiary of the insurance may be the spouse of the insured person.

In inheritance cases, the beneficiary may change depending on the will of the testator or due to the death of the persons specified in the will. Thus, property can be bequeathed to a relative, to whom the testator entrusts guardianship of minor children.

Or the will indicates the brother of the deceased, but if he dies before receiving the inheritance, the brother’s heirs (heirs by right of representation) will actually receive the property.

Thus, when distributing the inheritance, the beneficiaries will be the persons specified in the will and persons entitled to inheritance by law.

Which firms must disclose their beneficiaries?

Legal entities, as well as individual entrepreneurs, are required to provide information about beneficiaries upon request (Clause 6, Article 6.1 of Law No. 115-FZ, Clause 10 of the regulations approved by Decree of the Government of the Russian Federation of March 19, 2014 No. 209):

• to Rosfinmonitoring;
• to the Federal Tax Service.

In addition, when contacting an organization or individual entrepreneur that manages funds, the legal entity and individual entrepreneur provide information about their beneficial owners - this is also their legal obligation, provided for in paragraph 14 of Art. 7 of Law No. 115-FZ. The scope of this information is defined in paragraph. 2 subp. 1 clause 1 art. 7 of Law No. 115-FZ.

ConsultantPlus experts explained step by step how companies record and disclose information about beneficiaries. Get trial access to the K+ system and upgrade to the Ready Solution for free.

The form of information about beneficial owners is not approved by law. But it should include:

• Full name of beneficial owners;
• citizenship;
• Date of Birth;
• passport data (or information from another identification document);
• residence address;
• TIN.

A sample form for completing the certificate can be downloaded below.

Failure by a company to provide information about beneficial owners to the specified government agencies is a reason for applying sanctions against it under Art. 14.25.1 Code of Administrative Offenses of the Russian Federation. Namely, a fine for officials in the amount of 30,000-40,000 rubles, for legal entities - 100,000-500,000 rubles.

Participation of the beneficiary in the bank guarantee

In banking, the service of providing a bank guarantee is currently widespread.

When concluding a transaction between two parties , the institution providing such a guarantee guarantees the fulfillment of obligations under the transaction by one of the parties or for the performance of the contract as a whole.

The transaction thus becomes tripartite, with the participation of:

• guarantor (organization providing the guarantee);
• beneficiary (the party to whom, for example, a monetary reward should be paid for fulfilling the terms of the transaction or certain services are provided);
• principal (the party applying for a bank guarantee).

Who are the principal and beneficiary in a bank guarantee - differences and features

The principal and the beneficiary are completely opposite sides of the legal relationship. In this case, the beneficiary will be the creditor, but the principal will be the debtor, where a third party (guarantor) assumes responsibility for failure to fulfill obligations.

Guarantees of fulfillment of the terms of the contract may also be provided in order to ensure:

• making payments in specific situations;
• return of advance payments;
• execution of work under various contracts and tenders, including government ones. A bank guarantee is provided by the contractor to confirm his own financial solvency;
• movement of goods through customs;
• return of funds provided under lending agreements.

Despite the name, in practice such guarantees can also be provided by insurance companies and commercial organizations at the request of the principal. This circumstance is classified as a legal conflict in the Russian Federation.

On the one hand, the issuance of guarantees legally relates to banking operations, and on the other hand, limiting the circle of persons acting as guarantors of the fulfillment of contractual obligations is contrary to international practice and unreasonably narrows the scope of use of this financial instrument.

For performing services classified by the Russian legislator as banking operations, an insurance company may be fined or its license may be revoked, despite the seemingly natural ability of insurance companies to insure a commercial transaction by providing guarantees.

The beneficiaries of the existence of such a conflict may be banking institutions that actively lobby for their own interests and currently have in Russia a virtual monopoly on the right to act as a guarantor in contracts. The cost of a bank guarantee varies from 2 to 10% of the amount of the guarantee payment.

The beneficiary of bank guarantees directly is the party to whom the guarantor pays compensation in the event of the principal’s failure to fulfill its obligations under the concluded transaction.

Results

A beneficial owner is a founder or director, one of the owners or the actual owner of the company (even if de jure he does not own any shares in the authorized capital of the organization), who has the ability to at least control the activities of the relevant business entity. In this case, the organizational and legal status of this entity does not matter - it can be either a legal entity or an individual entrepreneur.

To legally determine the status of beneficial owner, it is necessary that an individual owns at least 25% of the authorized capital of the organization. Firms and individual entrepreneurs are required to inform Rosfinmonitoring, the Federal Tax Service, and organizations managing funds about their beneficiaries upon request.

You can learn more about the specifics of the work of financial control authorities (which, in particular, have the authority to request information about their beneficiaries from legal entities and individual entrepreneurs) in the articles:

• “Auditors will report all suspicious transactions to Rosfinmonitoring”;
• “Bodies exercising financial control in the Russian Federation (list)”.

Sources:

• Law “On Combating the Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorism” dated 07.08.2001 N 115-FZ
• Code of Administrative Offenses

You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

Withdrawal and spending of funds

All money that is in the nominal account can be spent in the interests of the ward. But uncontrolled spending of funds is prohibited: every year the guardian submits a report to the guardianship authority. In it he writes down the amounts spent on:

• purchasing products;
• purchasing clothes, shoes and other goods necessary for the ward;
• expenses for small needs.

Attention!

To be able to confirm expenses at any time, it is advisable to keep all receipts.

If a certain amount needs to be transferred simultaneously or periodically to another bank account, the guardian must write a standing order.

Are there organizations without beneficiaries?

Organizations that do not have beneficiaries can be various non-profit associations, since their goal is not to make a profit .

As for commercial organizations, then, of course, if there is profit, then there are also persons receiving income. However, it is often not possible to identify the ultimate beneficiary.

Therefore, despite the fairly broad powers and capabilities of banking institutions and government agencies to identify the actual beneficiaries, existing schemes for concealing the true owners of a business make it possible to keep the identity of the final beneficiary secret , especially in cases of trust management of a business or property.