For many individuals operating in asset associations (foundations, non-profit organizations providing generally beneficial services, non-investment funds, and other special-purpose asset associations), it may be confusing whether they are also considered final beneficiaries. The conditions under which natural persons are subject to legislation on the ultimate beneficiary in asset associations are described in this article.
Pursuant to Act No. 315/2016 Coll. on the Register of Public Sector Partners and on amendments to certain acts (hereinafter referred to as the “RPVS Act”), which defines the conditions under which the entity concerned is considered a public sector partner with an obligation to register in the Register of Public Sector Partners in accordance with this Act and other related legal regulations, A public sector partner may be any entity with legal personality - it may be a natural person, a natural person - entrepreneur, a legal entity, including an association of assets. Since asset pooling is not a very common or frequently used term for the general public, the purpose of this article is to briefly explain to the general (but also professional) public what is meant by asset pooling and how the ultimate beneficiary of asset pooling is identified under Act No. 297/2008 Coll. on the protection against the legalization of proceeds from criminal activity and on the protection against terrorist financing and on amendments to certain laws (hereinafter also referred to as the “AML Act”).
According to Section 9(e) of the AML Act, “an association of assets is a client that is a foundation, a non-profit organization providing services for the public benefit, a non-investment fund, or other special-purpose association of assets, regardless of its legal personality, which manages and distributes financial resources.”
For the purposes of the RPVS Act and also within the meaning of the AML Act, the following are therefore considered to be associations of assets: foundations (their status is governed by Act No. 34/2002 Coll. on foundations and on amendments to the Civil Code, as amended), non-profit organizations providing services of general interest (their status is regulated by Act No. 213/1997 Coll. on non-profit organizations providing generally beneficial services, as amended), non-investment funds (their status is regulated by Act No. 147/1997 Coll. on non-investment funds and amending Act of the National Council of the Slovak Republic No. 207/1996 Coll. as amended) and other special-purpose associations of assets, regardless of their legal personality, which manage and distribute financial resources (however, if they do not have legal personality, they cannot be registered as public sector partners in the register of public sector partners).
Within the meaning of the RPVS Act and the AML Act, an authorized person in the process of identifying the ultimate beneficiary of a public sector partner, including asset pools, is obliged (among other things) to disclose the ownership structure of the public sector partner (including the management structure) and to include it in the verification document of the public sector partner. The result of the process of identifying the ultimate beneficiary of a public sector partner that is an asset pool is to determine which natural person(s) are the ultimate beneficiaries of the asset pool. The definitions of which natural persons are considered to be the ultimate beneficiaries of an asset pool and their defining characteristics are set out in Section 6a of the AML Act.
Within the meaning of Section 6a of the AML Act, quote:
"(1) The ultimate beneficiary is any natural person who actually controls or supervises a legal entity, a natural person who is an entrepreneur, or an asset pool, and any natural person for whose benefit these entities carry out their activities or business; ultimate beneficiaries include, in particular,
a) in the case of a legal entity that is not an association of assets or an issuer of securities admitted to trading on a regulated market subject to disclosure requirements under a specific regulation, equivalent legislation of a Member State of the European Union or another state, which is a party to the Agreement on the European Economic Area (hereinafter referred to as a “Member State”) or equivalent international standards, a natural person who
1. has a direct or indirect share or a total of at least 25% of the voting rights in a legal entity or its registered capital, including bearer shares,
2. has the right to appoint, otherwise establish or dismiss the statutory body, management body, supervisory body or control body of a legal entity or any of its members,
3. controls a legal entity in a manner other than that specified in points 1 and 2,
4. has the right to economic benefits of at least 25% from the business of the legal entity or from its other activities,
b) in the case of a natural person who is an entrepreneur, a natural person who has the right to economic benefits of at least 25% from the business of the natural person who is an entrepreneur or from its other activities,
c) in the case of an association of assets, a natural person who
1. is the founder or establisher of the association of assets; if the founder or establisher is a legal entity, a natural person under point a),
2. has the right to appoint, otherwise designate or dismiss the statutory body, management body, supervisory body or control body of the property association or a member thereof, or is a member of a body that has the right to appoint, otherwise designate or dismiss these bodies or their members,
3. is a statutory body, management body, supervisory body, control body or member of these bodies,
4. is the recipient of at least 25% of the funds provided by the asset association, if the future recipients of these funds have been determined; if the future recipients of the asset association's funds have not been determined, the group of persons who have a significant benefit from the establishment or operation of the asset association shall be considered the ultimate beneficiaries.
(2) If no natural person meets the criteria set out in paragraph 1(a), the members of the senior management of that person shall be considered the ultimate beneficiaries; a member of the senior management shall be considered to be a statutory body or members of a statutory body.
(3) The ultimate beneficiary is also a natural person who does not meet the criteria under paragraph 1(a), (b) or (c) of the second and fourth points, but who, together with another person acting in concert or in concert with them, meets at least some of these criteria.
It follows from the above definition that the legislator has defined separately in Section 6a(1)(c) of the AML Act the group of natural persons who may be considered as ultimate beneficiaries in an asset pool. This also follows from the fact that asset pools as such do not have a “standard” ownership structure like other legal entities (most often commercial companies). For this reason, it is almost impossible to identify their ultimate beneficiaries under Section 6a(1)(a) of the AML Act – these associations do not have share capital, the voting procedure of their bodies is different, and economic gain is not the purpose of their establishment or activities – as a rule, this is, for example, support for a public benefit purpose, the fulfillment of a generally beneficial purpose, or the provision of generally beneficial services, from which the profit must be used in its entirety to ensure generally beneficial services (it may not be used for the benefit of the founders, members of bodies, or employees).
In the process of identifying the ultimate beneficiary of a public sector partner that is an asset association, it is necessary to take into account the fact that the ultimate beneficiary of any entity is ALWAYS a natural person who actually actually controls or supervises the asset pool (or other entity), and any natural person for whose benefit the asset pool (or other entity) carries out its activities (or business). At the same time, such a person may be, for the asset pool, any of the persons referred to in § 6a(1)(c) of the AML Act (including several persons, each separately meeting certain criteria specified in this provision), but it may also be a person not listed in Section 6a(1)(c) of the AML Act, provided that it is a natural person who actually (i.e., de facto) controls or supervises the association of assets.
Pursuant to Section 5(1) of the RPVS Act, a public sector partner is obliged to provide the authorized person with cooperation for the purposes of this Act, i.e. z. provide it with all information, supporting documents and documents proving the status of the ultimate beneficiary to the natural persons concerned and proving the legal relationships and legal regulation of the functioning and organization of the asset pool, as well as the management or administration or possibilities of disposing of the assets of the asset pool (extracts from the relevant registers, founding documents, founding documents, statutes, organizational rules, foundation deeds, etc.). The public sector partner, together with the authorized person, is responsible for the proper identification of the ultimate beneficiary of the public sector partner. The authorized person is obliged to act impartially and is obliged to obtain all available information on the subject of the entry in the register with professional care and to evaluate it. The authorized person is not bound by the instructions of the public sector partner - i.e., any instructions from the public sector partner as to who to identify as the ultimate beneficiary are irrelevant (especially if they contradict the law) - the authorized person must always identify the ultimate beneficiary within the meaning of the AML Act.
We reiterate that when identifying the ultimate beneficiary in an asset pool, it is always necessary to determine which persons are those who actually control or supervise the asset pool or on whose behalf the asset pool performs its activities. The ultimate beneficiary of a public sector partner is always a natural person who meets the definition criteria set out in Section 6a(1) of the AML Act, and if no such natural person exists, the members of its senior management (statutory body) are considered to be the ultimate beneficiaries of that person. Section 6a(1)(c) lists examples of persons who could meet the criteria set out in Section 6a(1) for an asset association:
- the founder or establisher of the asset association;
- a natural person who has the right to appoint, otherwise establish or dismiss the statutory body, management body, supervisory body or control body of the asset association or a member thereof, or who is a member of a body that has the right to appoint, otherwise establish or dismiss these bodies or their members (however, this right must belong individually to a specific person, whether natural or legal, this is not the right of a specific body of the asset association);
- statutory body, management body, supervisory body, control body or member of these bodies;
- a recipient of at least 25% of the funds provided by the asset association, if the future recipients of these funds have been determined; if the future recipients of the asset association's funds have not been determined, the group of persons who have a significant benefit from the establishment or operation of the asset association is considered to be the ultimate beneficiary.
The determination of who is the ultimate beneficiary of these persons for the asset association is to be made by the authorized person only after a proper evaluation of all available information and after an individual assessment of the internal organization of relations and the competences of the individual bodies within the asset association.
This must always be assessed individually, especially if the founders (establishers) are not entities that control or supervise the asset association or on whose behalf the asset association carries out its activities (even if, for example, the founders had the power to propose members of the statutory body, e.g. members of the administrative board). the founders had the competence to propose members of the statutory body, e.g. members of the administrative board). In other cases, after assessing the powers conferred on them by the founding document or, for example, the statutes, the ultimate beneficiary of the asset association may be a natural person who is a statutory body, management body, supervisory body, control body or member of these bodies (e.g. board of directors, director, management, auditor, etc.).
The procedures for identifying the ultimate beneficiary in an asset association may also be controversial if, for example, the founders are public administration entities – whether or not they can be identified as ultimate beneficiaries. The registration of statutory bodies of municipalities or towns (as founders) as such is not excluded. They could be identified as ultimate beneficiaries, for example, if they enjoyed a certain economic advantage through the participation of a public administration entity in a public sector partner (if they were recipients of at least 25% of the funds provided by the asset association). However, this would also depend on the assessment (and fulfillment) of other relevant facts.
