Content
- Who are beneficiaries?
- Why is beneficiary information necessary?
- What types of beneficiaries are there?
- How to identify beneficiaries?
- Rights and obligations of beneficiaries
Who are beneficiaries?
Beneficiaries are individuals or legal entities that benefit from various types of assets, including property and businesses. These individuals can be company participants or passive investors who own shares or receive dividends. It is important to note that the term "beneficiary" is used in different contexts, including inheritance cases, but this article will focus on business aspects.
Within companies, beneficiaries can be major shareholders, business partners, and investors who do not participate in management but are interested in profit. Additionally, family members of the owners can also become beneficiaries, especially when assets are passed on through inheritance. According to Russian legislation, specifically law No. 115-FZ "On combating the legalization (laundering) of proceeds from crime," a beneficiary is considered to be a person who owns more than 25% of a company or controls its activities.
Why is beneficiary information necessary?
Information about beneficiaries is extremely important for ensuring transparency and honesty in business. Knowing who the actual owners of the assets are helps to:
- Reduce the risk of illegal activities — transparency in the beneficiary structure helps prevent the use of assets to finance criminal activities.
- Comply with legal norms — most countries require the disclosure of information about ultimate beneficiaries for tax control and to prevent offenses.
- Maintain trust with investors and partners — understanding that a business is managed lawfully and transparently fosters investment attraction.
Beneficiaries also play an important role in financial planning and capital distribution, which is particularly relevant for international companies.
What types of beneficiaries are there?
Although the term "beneficial owner" is used in legal documents, several types of beneficiaries can be identified:
- Primary beneficiary — an individual who actually controls the business and receives the majority of the benefits from its operations. This person may not be listed in registration documents but exercises actual control over the company.
- Ultimate beneficiary — an individual controlling more than 25% of the company but not owning the majority of the business. Such a beneficiary may influence management and receive dividends.
- Conditional beneficiary — an individual entitled to benefit from the assets upon the occurrence of certain conditions. This may relate to options granted to employees.
- Revocable and irrevocable beneficiary — beneficiaries can be revocable, whose rights can be changed without consent, or irrevocable, whose rights are protected and cannot be changed without their consent.
How to identify beneficiaries?
Companies are required to identify and disclose information about beneficiaries, which can be a challenging task, especially for large organizations. This process is usually carried out by internal compliance departments or independent auditors. If a company does not provide data about beneficiaries, regulatory authorities may initiate an investigation.
Methods of identifying beneficiaries include:
- Analyzing the corporate structure to understand who actually controls the company.
- Reviewing documents about owners, shareholders, and other individuals with voting rights.
- Conducting interviews with owners to clarify the status of beneficiaries.
Rights and obligations of beneficiaries
Beneficiaries have certain rights and obligations that help regulate their participation in business:
| Rights | Obligations |
|---|---|
| Receive profits from assets. | Provide information about themselves upon request from authorities. |
| Influence the management of the company and participate in shareholder meetings. | Pay taxes on received income. |
| Dispose of income at their discretion. | Prevent illegal use of assets. |
| Sell their share in the company. | Notify the company of changes in their share. |