The Public Registry of the City of Buenos Aires adopted a new definition of “Ultimate Beneficial Owner”

The General Inspectorate of Justice (IGJ), who is charged with collecting the necessary information to carry out a system for the prevention of money laundering and financing of terrorism, modified the current definition of final beneficial owner and adapted its regulations to the new provisions and definitions handed down by the Financial Information Unit (UIF). The measure was established by General Resolution No. 17/2021 (read a different take on this resolution here). 

New definition of ultimate beneficial owner and definition of the concept of “final control”

Through GR 17/21, the IGJ modified Sections 510, Subsection 6, and Section 518 of Annex A of General Resolution No. 7/15; and, citing UIF regulations, adopted the definition provided by that entity in Section 2 of Resolution No. 112/2021, which defines ultimate beneficial owner as any individual who:

1. owns at least 10% of the share capital or voting rights of an entity and/or any legal structure such as trusts, investments funds and/or a separate asset estate (patrimonio de afectación); and/or
2. is otherwise able to exercise their final control by other means.

According to the cited UIF regulations, “final control” means the control exercised, directly or indirectly, by one or more individuals, through an ownership chain and/or by any other means of control and/or when, due to factual or legal circumstances, these individuals have the power or authority to sway the corporate will of the governing body of the legal entity or structure and/or for the appointment and/or removal of members of the board of directors or similar corporate management body.

GR 17/21 not only modifies the definition of ultimate beneficial owner, but it also extends it, since it expressly refers to Section 2 of UIF Res. 112/21, which establishes that, in the event it is not possible to pinpoint an individual that fits the definition of ultimate beneficial owner, the ultimate beneficial owner will be “the individual in charge of the management, supervision or representation of the legal entity, trust, investment fund, separate asset estate, or of the other legal structure, as applicable.” However, the UIF is entitled to verify and review the reasons that led to the non-identification of the ultimate beneficial owner in accordance with the provisions set forth in the first and second paragraph of the above referenced section of UIF Res. 112/21.

Lastly, the definition of ultimate beneficial owner adopted by the IGJ will be subject to the further amendments that the UIF may provide in the future.

2. Supporting documentation

The IGJ has also established that the chain of ownership must be reported all the way up to the individual(s) who exercise(s) final control. In each case, there is an obligation to submit to the IGJ the supporting documentation, by-laws, share registrations or records of corporate participations, agreements, transfers of shares and/or any other document that proves the chain of ownership and/or control.

3. Exemption to the requirement to individualize the ultimate beneficial owner

To be exempted from the identification requirement, when the obligated subject is a company that makes public offerings or is listed in an authorized local or international market and is subject to transparency and/or disclosure of information requirements, it will have to disclose when it holds a majority stake. This exemption will only apply if the respective information is submitted in a timely manner and matches that required by the UIF to identify the ultimate beneficial owner.

To identify the ultimate beneficial owner, Section 5 of UIF Res. 112/21 requires: full name, ID number, personal address, nationality, profession, marital status, percentage of participation or control over the legal entity or structure, and local tax ID, if applicable. Other information may be requested.

4. How to comply

The entities and/or legal structures obligated to provide information are required to:

1. Complete and submit an online affidavit as outlined in Annex XXVI, available on the IGJ’s website. The IGJ is currently updating the online affidavit template in accordance with the new regulations.
2. Submit a hard copy of the online affidavit mentioned above in the proceedings subject to registration by the IGJ jointly with:

• the holographic signature of the legal representative of the entity filing the affidavit (whether registered or pending registration in the proceedings), jointly with the signature and seal of the professional executing the legal opinion or the civil-law notary intervening in the proceeding; or
• the holographic signature of the ultimate beneficial owner, jointly with the signature and seal of the professional executing the legal opinion or the civil-law notary intervening in the proceeding. In the event the affidavit is executed outside Argentina, the signature must be certified by a civil-law notary or officer with sufficient powers under the law of the place of its issuance and execution.

5. Obligation to file the affidavit

Argentine companies, binational companies and companies incorporated abroad and/or proceedings of registration or amendment of cooperative and trust agreements are all required to file the ultimate beneficial ownership affidavit.

In the case of trusts and/or any other similar national or foreign legal structures, the ultimate beneficial owners of each of the parties to the agreements must be identified. In the case of cooperative contracts (contratos asociativos), the final beneficial owner(s) of the entities that are a party to that agreement must be identified.

6. Timing of compliance and frequency of submission

The original affidavit must be filed each calendar year when the obligated subject is first required to register any proceeding with the IGJ. If no filing is performed during an entire calendar year, the pending affidavits must be filed when the registration of a proceeding is first requested. For these purposes, the period between January 1 and December 31 of each year are considered a calendar year.

Once the original affidavit is submitted, obligated subjects may submit, in the rest of the registration procedures carried out within the same calendar year, a hard copy of the filed affidavit with the signature and seal of the professional executing the legal opinion.

In the case of foreign companies, the filing of the affidavit may also be required when complying with the annual information regime under Sections 237, 251, 254 and concordant sections of RG 7/15.