A recent Amendment to the Public Procurement Act seeks to uncover those who are the ultimate beneficiaries of entities signing contracts with the public authorities and aims to make the tender process more transparent. As of 1 November 2015, contracting authorities are prohibited from signing contracts in public procurement with bidders in situations where the concerned entities do not have their ultimate beneficiaries registered in the newly established Register of Ultimate Beneficiaries (the “Register”).
Who is the ultimate beneficiary?
The ultimate beneficiary of a legal person is the natural person who controls the legal person (e.g. through direct or indirect share corresponding to at least 25% of the registered capital of the company). In the event it is not possible to determine such natural person directly, the ultimate beneficiaries are all the members of the statutory body of the entity that controls the legal person.
The Register of Ultimate Beneficiaries
The Register is maintained by the Public Procurement Office (“PPO”) and is publicly available on the PPO’s website. The Register contains information about the registered person and its ultimate beneficiary/ies.
The registration process is free of charge. The request for registration must include the certificate or other document authorising the applicant to supply goods, provide services or perform building works; an affidavit that the ultimate beneficiary/ies was/were not lawfully sentenced for listed criminal offences; and an affidavit that the submitted information about the ultimate beneficiary/ies is true and complete.
Registration lasts for an indefinite period. A registered person may be removed from the Register at his/its own request. The PPO will delete the registered person if a penalty or a ban on participating in public procurement was imposed for submitting false or incomplete information.
Obligations of registered persons and sanctions
A registered person must maintain the information in the Register up to date and notify the PPO of any changes within 60 days.
Failure to register ultimate beneficiaries or to keep the registered information up to date, and submitting false or incomplete information, are sanctioned by a temporary ban to take part in public procurement and /or a monetary penalty.
The contracting authority may terminate a contract with a bidder that did not have its ultimate beneficiaries registered in the Register when the contract was signed, or when a final decision on deletion of the bidder from the Register was made.
Public procurements started before 31 October 2015 will finish pursuant to the old regulation.