Executive Approved Package of Identifying Real Beneficiaries in Armenia

Executive Approved Package of Identifying Real Beneficiaries in Armenia

At the meeting of the Government of the Republic of Armenia on April 22, the package of draft laws was approved (question 42), which proposes to expand the scope of organizations with the obligation to identify real beneficiaries in Armenia.

The package of draft laws proposes making amendments and supplements to RA Law “On State Registration of Legal Entities, Separate Subdivisions of Legal Entities, Institutions and Individual Entrepreneurs”, RA Subsoil Code, Law on Energy, Law on Procurement, RA Criminal Code, RA Criminal Procedure Code, RA Code on Administrative Offenses, Law on Combating Money Laundering and Terrorist Financing.

The package consolidates "Real Beneficiary" definition set out in Law on Combating Money Laundering and Terrorist Financing, which is introduced within the EITI, and the definition of “Real Owner” applied in RA Law “On State Registration of Legal Entities, Separate Subdivisions of Legal Entities, Institutions and Individual Entrepreneurs” since 2020 proposing to use the concept of "real beneficiary" in all cases with common criteria.

At the same time, for legal entities entitled to or seeking such a right for the purpose of geological prospecting of metal ores or extraction of metal ores, more stringent grounds and disclosure requirements for being considered "real owners" are preserved.

With this legislative package, it proposes to expand the scope of identifying real beneficiaries in Armenia. It is proposed to apply the requirement of declaration of real beneficiaries for legal entities operating in the regulated sphere of public services, as well as providing audiovisual media service, starting from September 1, 2021, for all other legal entities from January 1, 2022, and only for companies with limited liability participants as well as non-profit organizations from January 1, 2023.

The changes proposed by the package also address some of the gaps in the field of metallurgical mineral extraction from February 2020, which have been identified by stakeholders as a result of analysis by EITI stakeholders, and the need to bring them in line with international standards.

The following will be carried out:

• Listed stock trading companies will provide complete data on real beneficiaries if the shares of the legal entity are listed in a regulated market where the criteria for identifying real beneficiaries do not correspond to the criteria set by the legislation of the Republic of Armenia.

• In the field of metal mining, the real beneficiary will be the person who has received a gratuitous benefit from the legal entity for at least 15% of the profit received by the legal entity during the year preceding the reporting year. According to the current law, the 15% profit is calculated from the income.

• The official who carries out the general or current management of the legal entity's activities will be the real beneficiary if the natural person is not the real beneficiary on other grounds.

• It is proposed to establish liability in RA Administrative and RA Criminal Codes for submitting false or incomplete information in the RB declaration to all legal entities submitting the RB declaration.

Translation by EcoLur

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April 22, 2021 at 18:29