home
News Other *notaries* *publications* *videogallery* *teises_aktai*

Absence of notary oversight paves way to wrongdoings – Chamber of Notaries

2020.04.01

Permitting state registers to collect data and to change the data of legal persons without the presence of a notary has created an environment for abuse, money laundering and misappropriation of property, claims the Chamber of Notaries of Lithuania.

Such situations stem from legal loopholes where no notarial certification is required for the transfer of less than 25 per cent of shares in a company or where their value does not exceed 14 500 euro. In addition, the media has reported cases, on more than one occasion, of law enforcement investigations and proceedings arising from legal loopholes enabling external modification of register data on shareholders and managers of private and public limited companies. Such abuse has been observed when changing and registering shareholders via the information system of legal entities (JADIS) controlled by the State Enterprise Centre of Registers.

“Economic crises always trigger illegal behaviour, including manipulation of corporate shares. Five years ago Lithuania, for the purpose of financial transparency, introduced the requirement for transactions to be certified by notaries in cases of transfer of more than 25 per cent of shares or their value exceeding 14 500 euros. However, some loopholes remain for minor abuse which sometimes leads to major consequences”, says Marius Stračkaitis, President of the Lithuanian Chamber of Notaries.

According to him, notaries can already submit incorporation and other documents of companies to the Register of Legal Persons electronically via the information system of the legal entities’ electronic registration service (JAREP). Therefore, just some small amendments to legislation and minor technical modifications of the information systems are needed for notaries to gain the right to mandatory registration of changes of shareholders and/or managers of companies.

Notaries have long participated in the process of incorporation of legal persons, and over the last five years they have also taken part in the share transfer process, ensuring the legality and transparency of transactions and preventing money laundering and unjust enrichment.

Pursuant to the law, notaries supply information to the Financial Crime Investigation Service (FCIS) on suspicious transactions and true beneficiaries of transactions. A verified and functional system for such communications is in place. No major amendments to legislation are needed for notaries to begin providing information on suspicious transactions and changes in management.

Mr Stračkaitis says that changes of shareholders and managers are not frequent in business, so notarial supervision would not be costly or time-consuming.

“The procedure of changing a shareholder or manager of a company at a notary’s office or remotely could be completed in the equivalent of a lunch hour, while the costs would not exceed the price of lunch with a colleague. In exchange, however, businesses would receive fundamental guarantees of notarial supervision, legality of acts and security of property”, Mr Stračkaitis said.

Based on the fees for notary services approved by the Minister of Justice, the authentication of information about members of governing and other bodies and persons authorised to enter into transactions on behalf of legal persons (the information and signature of each person) costs 7.24 euros.

 


News Other *notaries* *publications* *videogallery* *teises_aktai*