Ownership Change - EMI Account Impact?

[AtMo]

Hey everyone, I'm in a situation with my UK LLP and need some advice regarding our EMI corporate account. Here's the scenario:

1. Current structure: 2 UBOs (Ultimate Beneficial Owners), each with 50% ownership.
2. Upcoming change: One partner is leaving. New structure will be:
   • Remaining partner: 99%
   • New partner: 1% (a close family for the partner to maintain the 2-partner LLP requirement)

Questions:

1. Do I need to inform our EMI (Electronic Money Institution) about this ownership change?
2. How likely is it that the EMI might close our corporate account due to this change?
3. Has anyone gone through a similar situation? What was your experience?

Any insights or experiences would be greatly appreciated. Thanks in advance!

 

[Sols]

Yes

Depends on the reason⁠ and nature of the previous partner's exit. The profile of the new member can cause⁤ concern if they hold high risk citizenship or residence, or if they fail screenings.

Several times. It all depends on the points mentioned above.

It's a little unusual to⁢ have 99/1 split in a partnership. It can be hard to open a new account︀ with such an arrangement, but if everything else remains the same about the company (activities,︁ volumes, money in/out), you'll probably be fine.

 

[YoungLansk]

Depends on the EMI in question, Some of them have live monitoring .. The minute‌ any changes accrue in Company house records it automatically triggers a KYC or even account‍ closure. Some of them i had everything changed ( share holder, Address, Director ) and⁠ the account was still working no issues for couple of years and business was as⁤ usual.
UK based Emi tend to catch on to the changes pretty fast, Others not⁣ so much.

 

[Clearsky Network]

1. When entering into a contract with your EMI, it typically includes an obligation to‌ notify them of any changes to your corporate structure, such as changes in ownership. Therefore,‍ it is highly recommended to inform the EMI of any upcoming changes in advance to⁠ ensure compliance with contractual obligations.
2. The EMI will need to make verification of the⁤ new partner KYC
3. We have similar cases from time to time and if the⁣ EMI is updated on time and the new UBO is not from a restricted country,⁢ never had a case of a closed account. Every financial institution appreciates honesty and timely︀ update of the structure/activity or turnover change.

 

[saturnix]

I closed a UK LLP more than 1 year‍ ago. An EMI still hasn't closed the account.
Wrote to customer service, told them my⁠ LLP is closed, then requested a multicurrency account. It got approved clow#¤% Obviously not going to⁤ use it, but it's so funny.

Your UK LLP data is available for⁢ the whole world to see, in real-time, online. As YoungLansk correctly told you, some EMIs︀ do live monitoring of this data, others do yearly KYC updates (or both).

If I︁ were you I'd notify the EMI of the change, making sure all partners are owners︂ of strong passports supported by the EMI (if your 1% partner is North Korean, Russian︃ or Iranian: you're 100% getting banned), and with a clean history. There shouldn't be any︄ troubles and, even if there are, you have plenty of alternatives.

Your current situation does︅ not warrant any type of shady behavior such as omitting a KYC update.

 

[AtMo]

Thanks for your reply. I thought a 99/1 split would raise fewer questions,⁠ as the percentage is low. What do you think is a better split? We can⁤ do any split as the new UBO is a close family.

The new⁢ UBO has the same residency as current UBOs, but would the EMI ask to show︀ proof of payment for taking the shares from the old UBO?

 

[Clearsky Network]

The EMI might⁣ ask for proof of payment/agreement

 

[Forester]

I agree with @Sols , @YoungLansk and @Clearsky Network as well.

My additional comments
IMO, @Sols is right. But I personally do not consider it being‍ fatal.

In such a⁤ case, if I were you, I would simply keep the percentage unchanged. From the point⁣ of view of the EMI, this is the most innocent variant.
Having said that, I⁢ must also say that running a business within a close family is problematic very often︀ 🙁

They might; but especially in the case of just swapping one partner of︃ 50:50, a simple declaration on word of honour should do. Note that there is (IMO)︄ nowhere written that you must pay for the company ownership in cash. You can get︅ it as a compensation for something, for gold, or anything you can name.

 

[AtMo]

Thanks for your reply, I will do what you recommended.

 

[cryptotree]

If you have just 1% would you even be considered a UBO?

 

[ilke]

Most likely not. UBOs are usually above 10% in ownership.

But, as a‌ member of a partnership (LLP in this case) you have to be identified by banks/EMIs‍ nevertheless.

 

[Forester]

In the EU it is over 25%, if memory serves me well. I cannot recall‍ about the UK but as these rules were enacted while UK was an EU member,⁠ I guess the same (but it is possible that it could have been lowered).

Definitely; and consequently reported (if this is⁣ your concern)..

 

[cryptotree]

Yes in eu if you have 25%+ of the shares and the bank normally only‌ asks if there are shareholder with more than this percentage otherwise you won’t have to‍ disclose the names.

 

[Sols]

25% is just guidance that financial institutions cannot go above, but can , many do‌ , go below.