Final Beneficial Owner Registration and Update of Basic Information of Commercial Companies (PART 1)

On August 20, 2020, Law No. 1035, “Law of Reform to Law No. 698 ‘General Law of Public Registries’ and to the Commercial Code of the Republic of Nicaragua,” was approved and published on August 25 of the same year in La Gaceta, Official Gazette.

Through this reform, the “Registry of Ultimate Beneficial Owners of Commercial Companies” was created as part of the National System of Public Registries (SINARE). Its main objective is to ensure transparency regarding the information of the ultimate beneficial owner and the natural persons who exercise control over the national or foreign legal entities that are partners in a Nicaraguan company.

Subsequently, on November 25, 2020, the Operational Regulations of the Registry of Ultimate Beneficial Owners of Commercial Companies were issued, defining the concept of Ultimate Beneficial Owner.

Who Is the Ultimate Beneficial Owner?

The Ultimate Beneficial Owner [2] is understood as the natural person or persons on whose behalf an action is carried out or who own and/or control a company, taking into account the following criteria:

• Ownership Criterion: Holding a percentage equal to or greater than 25% of the company’s share distribution.
• Control Criterion: Possession of the legal instrument granting control over the company. Example: General Power of Attorney for Administration or broad general power of attorney, etc.
• Senior Management Position Criterion: The ability to make and enforce significant decisions within the company. Example: The President of the Board of Directors.

When Should I Declare My Ultimate Beneficial Owner?

According to the reform and regulations, all commercial companies are required to declare all information related to their Ultimate Beneficial Owner. This declaration must be made under any of the following circumstances:

• At the time of incorporation and registration of a new commercial company.
• Within no more than thirty (30) days after registration in the Commercial Registry of a new company, provided that such information was not included in the articles of incorporation.
• For commercial companies already registered as of the publication date of Law No. 1035, the declaration must be made according to the following cycles:
  • Companies whose trade names begin with the letters A through H: from April 19 to October 18 of the current year.
  • Companies whose trade names begin with the letters I through Z: from October 19 of the current year to April 19, 2022.
  • Regardless of the established deadlines, commercial companies that wish to make their declaration and/or update before the start of their cycle may do so without any inconvenience.

It is important to note that, to register a company’s ultimate beneficial owner, the company’s basic information must first be updated.

[1] Article 3, Subsection 5, Law No. 1035, Law of Reform to Law No. 698 “General Law of Public Registries” and to the Commercial Code of the Republic of Nicaragua.
[2] Article 2.1, Subsection (b), Operational Regulations of the Registry of Ultimate Beneficial Owners of Commercial Companies.

PROCESS FOR UPDATING BASIC INFORMATION

What Is Basic Information of a Commercial Company?

The Operational Regulations of the Registry of Ultimate Beneficial Owners define “Basic Information” as all the information that must be included in the articles of incorporation of commercial companies in accordance with the Commercial Code and declared in the Commercial Registry[1]. Both Law No. 1035 and the Operational Regulations of the Registry of Ultimate Beneficial Owners establish that this information must be updated either ordinarily (once a year) or extraordinarily whenever there is a change.

This process shall be carried out as follows:

1. Hold a general shareholders’ meeting of the company in which it is agreed to update the basic information.
2. Submit the registration of the notarized minutes of the shareholders’ meeting where the decision to update the company’s basic information was made.
3. Pay the corresponding fees.
4. Retrieve the duly registered documents.

PROCESS FOR DECLARATION AND/OR UPDATE OF THE ULTIMATE BENEFICIAL OWNER

Once the company’s basic information has been updated, the registration of the Ultimate Beneficial Owner follows. The process of declaration and/or update of the Ultimate Beneficial Owner is practical, streamlined, and secure, and will be carried out through a digital platform similar to the Movable Collateral Registry by the company’s Legal Representative or by the person [2] designated by the company for this purpose.

This person must necessarily have the following powers:

• Declare and update information on the Ultimate Beneficial Owner.
• Access the Ultimate Beneficial Owner Registry through the website.
• Complete the forms related to the company’s basic information regarding the Ultimate Beneficial Owner.
• File the declaration of the Ultimate Beneficial Owner within the timeframe established by the regulations.
• Attach the digital format of the Ultimate Beneficial Owner Declaration and supporting documents, as well as perform the following actions related to the registry.
• Request a business profile, file and process review and appeal petitions, request extensions and suspensions of deadlines established in the Operational Regulations of the Registry of Ultimate Beneficial Owners.

[1] Article 2.1, paragraph (k), Operational Regulations of the Registry of Ultimate Beneficial Owners of Commercial Companies.
[2] Article 2.1, paragraph (p), Operational Regulations of the Registry of Ultimate Beneficial Owners of Commercial Companies.

This process shall be carried out as follows:

1. Register the Special Power of Attorney in favor of the person responsible for submitting the declaration.
2. Create and activate the account of the authorized user.
3. Activate the Business Profile, which will be linked to the company name or trade name represented by the authorized user.
4. Complete the Declaration Forms, which must include specific details about the natural person designated as the Ultimate Beneficial Owner and the commercial company.
5. Select the identification criterion for the Ultimate Beneficial Owner.
6. Validate the information provided.
7. Submit the Ultimate Beneficial Owner Declaration Certificate and obtain the unique and permanent number assigned to the declared Beneficial Owner.
8. Request the payment quotation for printing the Ultimate Beneficial Owner Declaration Certificate.
9. Make the corresponding payment.
10. Obtain the Certificate with its respective QR code and barcode, to which the corresponding fiscal stamp must be affixed.

The declaration and/or update of the Ultimate Beneficial Owner may be ordinary or extraordinary; ordinary updates are to be made once every twelve months, while extraordinary ones must be made whenever any change occurs that modifies or amends the articles of incorporation or affects the identification of the Ultimate Beneficial Owner.

As we can see, the processes for declaring and/or updating the Ultimate Beneficial Owner and basic company information have been adapted to today’s digital reality, making them faster, more practical, and simpler for the general public. Above all, they ensure transparency and accuracy in the information of every Nicaraguan commercial company.

It is worth noting that failure to comply with these requirements may lead to serious consequences, which will be discussed in detail in a subsequent article.

Wendy Martínez

Associate Lawyer.