On April the 4th 2022, Notary and Commercial Code reforms were introduced by Law 1113 – Law of Reforms and Addition to the Law of Notaries and the Commercial Code of the Republic of Nicaragua, They were published in La Gaceta (the Official Gazette of the Government of Nicaragua) which made it law from that date.
The Notary and Commercial Code reforms amend certain articles in relation to the Notary Law and one contained in the Commercial Code. Open his link for the complete Law 1113 from Public Registries.
In simple terms it requires a third party to check (and prove they checked) that the corporation in question requiring a notarized document or a government service is current with the requirements of the Final Beneficiary Declaration law.
It’s not unusual in Nicaragua to find that before obtaining municipal or state services, that a department may ask you to prove solvency or compliance with what may seem to be an unconnected requirement.
Notary Law Reforms:
There are four reforms to the Law of Notaries that a Notary must consider prior to notarizing any documents for a corporation in order to ensure that business is current with their filings in relation to their Final Beneficiary Declaration.
Commercial Code Addition:
Law 1113 also changes Article 121 of the Commercial Code (as it pertains to the 2020 Final Beneficiary Law). It requires public sector institutions and municipalities to obtain the certification of declaration or update of the final beneficiary issued by the registry prior to processing licenses, permits or if that corporation wishes to do business with the state. It also requires the same of any business in a civil action when they are commencing a court action.
What is a “Final Beneficiary Declaration?”
The global Financial Action Task Force (FATF) is a money laundering and terrorist financing watchdog that has set down rules and requirements for countries to monitor and prevent anyone registering a business for illegal means such as money laundering or terrorist financing. FATF requires sufficient information to be able to make a determination as to who really controls the legal entity in question.
The Financial Beneficiary may be a the person or persons who registered the corporation, however, the more complicated the ownership structure or where there is a chain of ownership, the more difficult it is to establish who is in control and who is benefitting, hence the requirement to self-report those details.
NOTE: This would also apply to those Ex-Pats who have their Nicaraguan property registered to a Nicaraguan S.A. (a Corporation).
Check out this Nica-Biz article; Do You Own a Corporation in Nicaragua? (Important Changes)
