Communication regarding Beneficial Owners of Companies, Private Legal Entities, Trusts, and Similar Entities Now Underway

The measure by the Ministry of Enterprises and Made in Italy, published in the Official Gazette no. 236 on October 9th, has finally made the system for reporting data and information about the beneficial ownership of the following entities operational:

• legal entities with juridical personality;
• private legal persons;
• trusts and similar legal institutions.

as previously outlined in our newsletter titled "The Beneficial Owners Register Becomes a Reality... but with Regulated Access"(1), which is referenced for the comprehensive analysis of the regulatory framework and the premises discussed herein.

The aforementioned measure has established, at each territorial Chamber of Commerce, the Register of Beneficial Owners and has also specifically identified the information subject to reporting, the parties subject to this obligation, as well as the methods of transmission.

The reporting obligation, introduced through Articles 3 and 4 of Ministerial Decree No. 55/2022, pertains to data suitable for identifying the so-called Beneficial Owner for each of the three categories of entities, defined as "a natural person or natural persons to whom, ultimately, the direct or indirect ownership of the entity or its control can be attributed" (2).

With specific reference to legal entities with juridical personality, such as LLCs, corporations, partnerships, and cooperative societies, whose Beneficial Owner (3) is identified as "the natural person who has direct or indirect ownership of a share exceeding 25%" (4) the reporting obligation covers:

1. identifying data, citizenship, and the extent of ownership in the share capital of the natural person or natural persons identified as the Beneficial Owner(s);
2. methods of exercising control, if the Beneficial Owner is not identified based on the extent of ownership;
3. ultimately, the powers of legal representation, administration, or management of the entity exercised by the natural person identified as the Beneficial Owner, in cases where the latter cannot be identified using the previous methods.

The obligation to obtain the above information rests with the administrators of the company, who may request it from the Beneficial Owner(s) or retrieve it from the accounting records, shareholder register, communications related to the ownership structure or control of the entity, as required by current regulations, as well as from communications received from shareholders and any other information at their disposal.

As for the obligation of digital transmission and signature of the communication, this responsibility falls, alternately and in order, on the legal representative, one of the administrators, the liquidator, or the liquidation commissioner, or even the judicial commissioner, and in case of their inaction, on an auditor, provided that the company has such a control body.

Regarding private legal persons (5), such as associations, foundations, and other private institutions, whose Beneficial Owner is cumulatively identified as the natural person (6) holding one of the following roles: i) founder, if alive; ii) beneficiary; iii) holder of legal representation, management, and administrative functions, the communication must include:

1. identifying data, citizenship, and the tax code of the natural person identified as the Beneficial Owner;
2. the name of the entity;
3. the registered office and, if different from the registered office, the administrative office of the entity;
4. The Certified Electronic Mail address.

Information regarding foundations is obtained, digitally signed, and transmitted by the founder if alive, or by the individuals with authority over the representation and administration of the entity, and these individuals will also act for recognized associations.

Lastly, in the case of Trusts and similar legal institutions, the following are affected:

• Trusts with a tax code established or residing in Italy and those not residing in Italy but producing income in Italy;
• institutions that, in terms of structure and functions, have legal effects equivalent to those of trusts.

For i) Trusts, the Beneficial Owner is identified as the natural person holding one of the following roles: a) settlor; b) trustee; c) guardian; d) beneficiary; e) individual exercising control over the trust or assets contributed to the trust through direct or indirect ownership or other means. The communication includes:

1. Identifying data, citizenship, and the tax code of the natural person identified as the Beneficial Owner;
2. The name of the Trust;
3. The date, place, and details of the trust instrument.

The obligation to report is to be fulfilled by the beneficiary, and specifically for Trusts resident in Italy but established abroad, the submission must be made to the Rome Chamber of Commerce.

With regard to ii) "similar legal institutions" to trusts (i.e., fiduciary mandates (7)), which must be registered in the special section of the Companies Register if established or residing in Italy, whose Beneficial Owners are represented by the settlor and the beneficiary but not the trustee, the communication, similar to what is stipulated for trusts, must include:

1. Identifying data, citizenship, and the tax code, in the case of an Italian citizen or a foreign citizen residing in Italy, of the natural persons for whom beneficial ownership is claimed;
2. The tax code, name of the similar legal institution, the date, place, and details of the instrument establishing the legal institution;
3. If applicable, the natural persons filling one of the following roles: (i) guardian; (ii) other individuals on behalf of the trustee; (iii) individual(s) exercising control over assets contributed to the similar legal institution through direct or indirect ownership or other means.

In cases where these roles are filled by a legal person, it will be necessary to indicate the related Beneficial Owner, a natural person, using one of the options available in the electronic forms with the prefix "Beneficial Owner Of..."

The obligation to prepare, sign, and transmit the communication, in this latter case, rests with the individuals who exercise rights, powers, and faculties equivalent to those of the beneficiary in a trust. It should be noted that, for each case, only one fiduciary mandate can be reported, and its details or the number or code assigned to the mandate by the fiduciary company must also be indicated. The territorial jurisdiction in this specific case is determined based on the registered office of the fiduciary company to which the mandate refers.

The communication of the Beneficial Owner, which is considered a self-declaration by the administrator or the fiduciary, is provided on a specific form, to be digitally signed through the "Comunica" platform by the obligated party, and to be sent to the Business Register Office of the Chamber of Commerce for registration and data storage.

It is worth noting that the digital signature of the communication cannot be delegated by the obligated party to any professionals hired for this purpose. Professionals can, at most, provide information and qualified consulting services and handle the electronic transmission of the communication.

The obligation must be fulfilled by existing companies, entities, and trusts by the strict deadline of December 11, 2023. For companies and entities newly formed, after the entry into force of this decree, the transmission of the required data must occur within 30 days of registration in the respective registers (for trusts, within 30 days of formation). All parties subject to this communication requirement must also annually confirm the data and information transmitted, with the additional provision that companies required to prepare and submit financial statements to the Business Register may do this simultaneously with the filing of their financial statements.

Regarding penalties for failure to meet the reporting obligation by the obligated parties, leading to a failure of the communication, the territorially competent Chamber of Commerce may apply an administrative penalty under Article 2630 of the Civil Code (ranging from € 103 to € 1,032 and applied to each administrator). However, in the case of reporting within 30 days after the prescribed deadlines, the penalty is reduced to one-third.

Finally, it should be noted that the reporting of Beneficial Owner data is of particular importance considering the free access to the Register's data, available to the Ministry of Economy and Finance, regulatory authorities in the relevant sector, the Financial Intelligence Unit, the Anti-Mafia Investigation Directorate, the Finance Guard, the National Anti-Mafia Directorate, the Judicial Authority, and tax evasion enforcement authorities.

In summary, this is the regulatory framework, but there are numerous complex issues associated with it, including, but not limited to, trusts with unidentified and indefinite beneficiaries, fiduciary designations, and the right to object to access to data by the beneficial owners. These issues require professional expertise.

Avv. Roberta Melissano

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(1) https://carmini-law.com/il-registro-dei-titolari-effettivi-diventa-realta-ma-con-accesso-regolamentato.

(2) Article 20 of Legislative Decree No. 231/2007

(3) While still acknowledging that multiple Beneficial Owners may exist within the same entity.

(4) It is specified that, if this condition is not satisfied by any individual, the following criteria will be considered, in order:

1. Control of the majority of votes exercisable at the ordinary general meeting;
2. Control of sufficient votes to exert a dominant influence at the ordinary general meeting;
3. Existence of contractual constraints to exert a dominant influence on the company;
4. Possession of powers of legal representation, administration, or management of the company.

(5) Whether or not they are registered with the R.E.A., provided that they have acquired legal personality through registration in the register of legal entities, established at the Prefectures, Regions, and Autonomous Provinces.

(6) Or natural persons.