Parliamentary Trade Committee Proposes Cancellation of Beneficial Owner Fines, Introduction of €250 One-Time Fee

The Parliamentary Trade Committee is leaning toward a resolution to cancel fines previously imposed for delays in submitting beneficial owner information. A one-time fine of €250 would replace these penalties, shared equally between the legal entity and its advisers. The government has responded positively to this proposal and is considering changes to the law to provide "significant reductions" in the existing fines.

During the committee session, the ongoing discussion centered around the draft law aimed at reducing the daily and overall maximum financial burden for individuals who fail to submit beneficial owner information for legal entities or trusts.

€14 Million in Fines to Be Written Off

Irini Mylonas Chrysostomou, Commissioner of Companies, revealed that fines amounting to between €13 and €14 million have been imposed so far, of which €600,000 has already been paid. Both Chrysostomou and a representative of the Ministry of Finance expressed support for the proposal to impose a one-time fine of €250. They are also considering halving the maximum fines to €10,000, imposed once per entity, rather than penalizing each director and company individually. However, the discussion on future fines continues, with some MPs suggesting a penalty of €2,000.

"We are examining it within the framework of the group we have created between the Ministry of Commerce, the Ministry of Finance, and the Legal Service, and with a political decision, we have recommended the partial withdrawal of the fines and the imposition of a one-off amount of around €250," said Chrysostomou.

Regarding future fines, a Ministry of Finance representative added, "Our thinking is to reduce the fines significantly, but this fine will be accountable to both the company and the directors."

'Exterminating Penalties' – A Solution Must Be Found

MPs criticized the hefty penalties, with some referring to them as "exterminating penalties" reaching €20,000 per official or administrative fine for each company. MP Kostas Kostas highlighted the case of a small family-owned dairy business that was fined €80,000, or €20,000 per individual involved.

"We have to find a solution. On one hand, we must comply, but on the other hand, we must not destroy people and companies with fines," stated committee chairman Averof Neophytou.

DIKO MP Panikos Leonidou also stressed that fines should only be imposed once on managers and not jointly on secretaries and other officials.

A representative from the Pancypriot Bar Association raised concerns about the timing of the fines, as data updates required by law are scheduled to begin soon. He requested a three-month period for companies to pay the €250 fine.

Consensus Proposal Moving Forward

After the session, DISY MP Nikos Sykas said the discussion ended with a consensus proposal. "Any existing fines will either be deleted, or an amount between €200 and €250 will be imposed, and at a future stage, we will discuss fines for all directors and the company as a whole. Most importantly, those burdened with unaffordable fines will be relieved," he said.

EDEK MP Ilias Myrianthous argued against automatic fines for beneficial owners, as the legislation already includes criminal responsibilities and hefty penalties of up to €100,000. "We are the only country whose legislation is so strict that it automatically fines company officials up to €20,000," he remarked.

On behalf of DIPA, MP Michalis Giakoumis supported the proposed law, adding that if the current fines are enforced, many small and medium-sized businesses would be forced to close. "We will proceed with the law proposal, and when and if the government comes with a specific bill, we will examine it," he said.

Environmental MP Stavros Papadouris also criticized the "automatically imposed exhausting fines." He noted that the proposal will move to the Plenary for further discussion, with agreement from both the Companies Registrar and the Ministry of Finance that the one-time fine for companies will be around €200 to €250.

Final decisions on the proposed law will be made at the next committee session.

By fLEXI tEAM