The exception provided in Section 18.²(6) of the AML/CTF Law, which exempts certain entities from providing information on the beneficial owner (BO) to the Register of Enterprises of the Republic of Latvia (Register), does not apply in cases where the BO cannot be ascertained for objective reasons. However, it does apply when the information on the BO has already been disclosed in accordance with the requirements of a regulated market. This interpretation of that provision is also based, inter alia, on Article 3(6) of Directive (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC and paragraph 87 of European Parliament recommendation of 13 December 2017 to the Council and the Commission following the inquiry into money laundering, tax avoidance and tax evasion. This recommendation provides, among other things, that for a joint stock company, other than one listed on a regulated market, the disclosure requirements must be consistent with Union law or subject to equivalent international standards that ensure adequate transparency of ownership information. The Financial Action Task Force (FATF) Recommendations also require that adequate, accurate, and up-to-date information on the BO be available to enable competent authorities and other legal entities to access it[1].

The framework for financial instrument market making is contained in the Financial Instruments Market Law (FIML). Pursuant to Section 1(1), Clause 21 of the FIML, a major holding is defined as a directly or indirectly acquired holding that comprises five percent or more of the voting capital of the issuer. A qualifying holding is a holding acquired directly or indirectly by one or several persons acting in concert on the basis of an agreement and representing 10 percent or more of the share capital or voting rights of shares or stocks of a commercial company, or making it possible to exercise a significant influence over the financial and operational policy of the commercial company (Section 1(1), Clause 21 of the FIML). Conversely, a person obtains an element of control if:

1. this person has decisive influence in the commercial company on the basis of participation;
2. this person has decisive influence in the commercial company on the basis of a group of companies contract;
3. other relationships between this person and the commercial company exist - analogous to the relationships referred to in Sub-clause "1" or "2" of this Clause;

Under Section 61 of the FIML, a person shall notify of the proportion of his or her voting rights when, as a result of acquiring, disposing of shares, increasing or decreasing equity or any other events, it reaches, exceeds or becomes less than 5, 10, 15, 20, 25, 30, 50, or 75 per cent. If the Republic of Latvia is the home Member State for a joint-stock company, a person shall also notify of the proportion of his or her voting rights when as a result of acquiring, disposing of shares, increasing or decreasing share capital or any other events it reaches, exceeds or becomes less than 90 per cent. The notification obligation also applies to persons who have indirectly acquired an indirect holding, for example, by entering into an agreement with a shareholder that obliges them to agree on a long-term policy for the exercise and conduct of voting rights in relation to the management of the specific issuer Section 61, Clause 1 of the FIML).

A notification must be submitted to a joint-stock company and concurrently to Latvijas Banka without delay, but not later than within four trading days after the day on which the person:

1. finds out about the acquisition or disposal of voting rights, or a possibility to exercise them, or should have found out about it based on the circumstances, regardless of the day on which the acquisition or disposal of voting rights, or the possibility of exercising voting rights, becomes effective. For the purposes of this Clause, it is assumed that a person learns about the acquisition, disposal of voting rights, or a possibility to exercise them no later than within two trading days after the transaction day;
2. is informed of an event that causes the proportion of voting rights of the person to reach, exceed, or fall below the proportion of voting rights specified in Section 61, Paragraph one or two of this Law.

The joint-stock company must, not later than within one trading day from the day of receipt of the notification referred to in this Section, distribute it according to the procedures laid down in Section 64.² of this Law (61.³(3) of the FIML), including sending it to the official centralized storage system for regulated information.

In addition, it should be noted that uniform standards for the disclosure of holdings by listed joint-stock companies have been established only at the level of the EU and the EEA[2]. If the shares of the last "chain" joint-stock company are listed outside the EU or the EEA, the legal entity cannot rely on the provisions of Section 18.²(6) of the AML/CFT Law, as there is no single, common legal framework outside the EU or the EEA. The regulations may differ from those applicable to the Member States of the EU and the EEA (e.g., disclosure of voting rights, understanding and characteristics of the regulated market). In particular, the exemption from the obligation to provide information on BOs under Section 18.²(6) of the AML/CFT Law applies to legal persons whose shares in the final joint-stock company of the "chain" are listed in a Member State of the EU or the EEA. However, if the shares of the ultimate (final) joint-stock company of a legal person are listed on a stock exchange outside the EU or the EEA, the information on the BOs of the legal person must be submitted to the Register in the usual manner. This means the legal person must indicate its ownership structure or provide a statement that the BO cannot be identified according to the definition of BOs in the AML/CFT Law, if applicable, along with the reasons.

The above applies both to the registration of new information on the BO and to the confirmation that the previously registered information on the BO has not changed. In particular, if a legal person has previously registered in the Register a statement that its BO is a stockholder in a joint stock company whose stock is listed on a regulated market, and the manner of exercising control over the legal person stems only from the status of the stockholder, but, when applying for the change, notes in the application form that the registered information on the BO has not changed, the State notary of the Register, upon verification of the "chain" of legal entities and upon finding that the shares of the final joint stock company are listed outside the EU or the Member States of the EEA, shall be entitled to require the legal entity to update the information on its BO in accordance with the above.

^{[1] FATF Guidance. Transparency and beneficial ownership. October 2014. Available: https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/Guidance-transparency-beneficial-ownership.pdf}

^{[2] According to Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC. Available: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014R0596}