In the last week, the subject of declaring the beneficial owner was one of the most discussed in the business world. Although the obligation for all companies to declare their beneficial ownership has been postponed by one year, at the Competition Council we continue to frequently identify who really has control over the undertakings, particularly when we analyze economic concentrations.

Sometimes, the actual transfer of control over an undertaking, even if the beneficial owner is not declared or the changes are not registered with the Public Services Agency, may be considered an economic concentration. If such a situation is not notified to the Competition Council, the risks are significant – sanctions may reach up to 10% of the annual turnover. Not from net profit, but from the annual turnover!

The identification of the beneficial owner, even if not explicitly stated, is essential for determining actual control in the context of merger. This connection is based on the idea that the true power of decision and influence over an undertaking may belong to a person or entity that is not necessarily visible in the official structure of the property.

Competition authorities analyse the ownership structure and economic influences to detect who actually exercises decisive influence over undertakings, thereby preventing transactions that could distort competition.

Some important aspects in relation to this:

  • The beneficial owner is the person who exercises final control over an undertaking, regardless of whether this control is exercised directly (e.g., by shares or shareholding in the share capital) or indirectly (for example, through other persons, entities, contracts or other arrangements which enable decisive control to be exercised);
  • In determining economic concentrations, the identification of the beneficial owner helps to understand who makes strategic decisions or affects the activity of the undertaking;
  • Final control over an undertaking, both indirect and de facto, refers to situations where influence over an undertaking is exercised by someone who does not officially hold the control package. Examples include: contractual agreements (e.g., management or consulting agreements); economic dependence (e.g., long-term trade relations). The beneficial owner may be the real source of influence in such cases, even if he is not the official holder of the rights.

Relevance in the analysis of economic concentrations: In order to determine whether an operation is an economic concentration, the authorities must identify who exercises decisive influence over the undertaking. Companies may use intricate legal structures to conceal the ultimate beneficial owners. Identifying them is crucial for a proper assessment of the transaction.

If you have any questions regarding your transaction, including whether it constitutes an economic concentration and whether it needs to be notified to the Competition Council, we encourage you to contact us for advice. You can reach us via email at office@competition.md or by phone at (022) 27-07-83, 076060173.