On August 25, 2020, Law No. 1035, Law of Reforms to Law No. 698, General Law of Public Registries and the Commercial Code of the Republic of Nicaragua, was published in the Official Gazette Number 158, with the purpose of creating the Registry of Final Beneficiary of Commercial Companies.
Despite the fact that the Law includes the list of legal documents required to complete the registration process, according to article 1 of the Law, the Special Registry Commission will issue the specific Regulations for the Registry of the Final Beneficiary of Commercial Companies. Therefore, although it is essential to proceed with the obtaining and preparation of the required documents, we must await such Regulation that, as reported by the National Directorate of Registries of the Supreme Court of Justice, will establish the procedures and mechanisms for self-management of the information of the Mercantile Societies, user account, access code, terms and cycles for the declaration and updating of the information.
However, Law 1035, also includes in its article 36 (modification to article 155 “Mandatory Registration and Sanctions” of Law No. 698) that commercial companies incorporated before the entry into force of the law, must update the basic information and the final beneficiary according to the cycles indicated by the National Registry Office for such purposes.
In relation to this, the General Directorate of Registries issued an Informative Circular, indicating that Commercial Companies could use the period prior to the operation of the Final Beneficiary Registry, to develop internal organization processes they deem convenient, having to register in the corresponding Mercantile Registry the changes and modifications that the Company has suffered, in accordance with the provisions of Article 156 of Law No. 698, General Law of Public Registries.
Article 156 of Law 698 clearly indicates the acts and contracts that must be registered, but we must emphasize that the process of updating data not only includes the proper registration of the acts and contracts indicated in article 156 of Law 698 as applicable considering the operation of the Company, but also, it entails that the Company must comply with the presentation before the Registry of a Public Deed of Update-Modification of the Company’s Data in which the current address is stated, general law of the legal representative with specific address and current shareholding composition.
In particular, updating the current shareholding composition implies registering in the Mercantile Registry the changes of shareholders that have occurred in the company, from its constitution to the present date. It is highly probable that only the shareholding composition of the company corresponding to the time of its constitution is registered in the Mercantile Registry, and the reason for this is because, previously, there was no legal obligation to register changes of shareholders in the Mercantile Registry occurred during the life of the company, however, as of this reform it is mandatory to record this information.
If the registration in the Mercantile Registry of the changes of shareholders that occurred in the company from its constitution to the present date is not completed, at the time of declaring and updating the information of the company in the Registry of Final Beneficiary, the registration will not proceed, since the information of the current shareholders of the company will not coincide with the one in the Mercantile Registry.
In accordance with the law, commercial companies that fail to update their information, may not register any document in the Registry, or take advantage of its legal effects; Unregistered mercantile companies will not have legal personality and judges will not process lawsuits filed by subjects that, having to be registered in the Registry, do not file the corresponding certification.
The same provision defines that the Registrars are competent to impose the corresponding sanctions in case of non-compliance with the provisions contained in this Law and its Normative. The National Registry Office will know and resolve remedies (appeal).