Corporations that failed to disclose their ultimate beneficial owners (UBOs) within the prescribed deadline, and which got slapped with heavy fines as a result, will see these fines scrubbed and replaced by a far smaller one-time penalty, MPs decided on Tuesday.
Under a directive issued by the Registrar of Companies last year, all companies should have filed their updated UBO data by December 31, 2023. Companies not complying began being fined €200 on January 1, 2024, and €100 per every continuing day of non-compliance.
The directive also set an annual ceiling for the fines at €20,000. However, this maximum amount applied to each of the declared officers of a non-compliant company so that the aggregate fines imposed could be far larger than the €20,000.
Following a host of complaints raised by the business community, the December 31 deadline was later extended to the end of March 2024.
In parliament on Tuesday, MPs and officials heard that to date €14 million in fines has been imposed, of which €600,000 has been paid.
Legislators complained of “crippling fines”.
Akel MP Costas Costa cited one example of a family business – trading in dairy products – which got slapped with €80,000 in fines for not disclosing their UBOs on time. In particular, four company officials had separately been fined €20,000 each.
“We need to come up with a definitive solution,” said Disy’s Averof Neophytou. “On the one hand we need to enforce compliance, but on the other hand we cannot financially wreck people and businesses.”
Lawmakers now propose that the fines already imposed be cancelled and replaced by a one-time penalty ranging from €200 to €250.
The Registrar of Companies appeared to be on board with the proposed arrangement, as was the bar association.
Registrar Irini Mylona said that, in consultation with the finance ministry and the attorney-general’s office, a “political decision” would be made to cancel the fines and impose a flat non-compliance penalty of up to €250 per company.
But the question remained of what to do with fines going forward, for the new reporting period that is already underway.
MPs from various parties have drafted a joint legislative proposal where the annual cap of €20,000 would be reduced to anywhere from €2,000 to €10,000 – the final number to be determined. And this new ceiling would apply to any given non-compliant corporation as a whole.
However the Registrar opined that this amount would be an inadequate deterrent for non-compliance.
The finance ministry and the Registrar are meantime working on a government bill that would see the maximum annual fine reduced to €10,000. But this cap would apply separately for, say, the directors and the company per se, so that the aggregate amount in fines could be far higher than the €10,000.
Officials said the government bill should be ready to be tabled to parliament by March next year.
Given this, MPs said they would go ahead and take their own legislative proposal to the plenum.
