©2018 by Vanbelle Law

  • Jan Ghysen

Tolerance policy for UBO obligations


Due to the impending deadline for Belgian legal entities to identify and register their UBO’s (Ultimate Beneficial Owner) and the fact that still a lot of moral persons haven’t yet complied, the Belgian Federal Public Service of Finance has decided to introduce a tolerance policy to comply with the UBO obligations until the 31st of December 2019.

The deadline was originally set on the 31st of March 2019, but due to technical difficulties and the fact that it was unclear what was expected exactly of the moral persons, the deadline was pushed until the 30th of September 2019.

The tolerance policy entails that the State will not impose fines for those who haven’t yet complied by the 30th of September. This, however, does mean that once the deadline has passed, the moral persons that haven’t yet registered their UBO’s will be in violation, albeit without being sanctioned for it.

To refresh your memory, we will set out the main aspects of the UBO-Register and the obligations that come with it below.

Origin

On the 20th of May 2015, the Fourth Anti-Money Laundering Directive (Directive 2015/849) was signed by the European Council and the European Parliament. Consequently, the Directive was published on the 5th of June 2015.

Belgium transposed the Directive by the Law on the prevention of money laundering and funding of terrorism, and on the limitation on the use of cash, of the 18th of September 2017. This Law incorporated two new articles into the Belgian Company Code (Art. 14/1 and 14/2 Wetboek van Vennootschappen), which require corporations to provide the State with accurate and current information on the ultimate beneficial owner (UBO).

The Directive requires every Member State to install a central register, which will hold information on corporations and other legal entities, and their UBOs. It will be called the UBO-register.

The Belgian Royal Decree on the operating procedures of the UBO register was published on the 14th of August 2018 and entered into force on the 31st of October 2018.

It is important to note that the obligations with regards to the new UBO regulation not only apply to commercial entities, but apply to every legal entity, including non-profit organizations as well as public or private foundations.

Ultimate Beneficial Owner

The UBO is defined as: “every natural person who is the ultimate beneficial owner of, or has the power of control over the client or the delegate of the client, and/or the natural person for whose account a transaction is executed, or a business relationship is started”.

The Belgian legislator summed up several categories of UBOs according to the legal entity to which they are attached.

There are three categories:

  1. Companies

  2. (International) non-profit associations and foundations

  3. Trusts and similar entities

The following people are considered to be the UBO of a companies:

  1. Natural persons who, directly or indirectly, possess a sufficient percentage of voting rights or ownership interest of the corporation, including bearer shares. An interest kept by a natural person of more than 25% of the voting rights or representing more than 25% of the companies’ capital, is an indication of a sufficient percentage of voting rights or of the ownership interest. In case of indirect ownership, the percentage to be taken into account is the weighted percentage.

  2. Natural persons who control the company through other means (e.g. shareholders’ agreement, veto rights, board member appointing rights, …)

  3. Natural persons who belong to upper management, if – after having exhausted every other possibility and provided that there is no suspicion – these people have not been identified, or if there is reasonable doubt that the identified persons are in fact the UBOs.

The following people are considered to be the UBO of non-profit associations and foundations:

  1. Members of the Board

  2. People with the power to represent the association / foundation

  3. People in charge of the daily management

  4. The founders of a foundation

  5. The natural persons, or – as far as these people have not yet been appointed – the category of persons which are the beneficiaries of the association / foundation

  6. Every other natural person who control the entity through other means

The following people are considered to be the UBO of trusts and similar entities:

  1. The settlor

  2. The trustee

  3. The protector

  4. The beneficiaries, or where the individuals benefiting from the trust have yet to be determined, the category of persons in whose main interest the trust is set up or operates

  5. Any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means.

Which information should be disclosed?

The CEO or controlling body of the aforementioned legal entities should register the following information about their respective UBOs:

  • (Sur)name, date of birth and nationality

  • Land of residence and full address

  • Date on which they became the UBO

  • National number or social security number

  • Whether they are a direct or indirect UBO

  • If they are an indirect UBO they have to disclose their structure (company numbers, registered offices, percentage of shares etc.)

  • The extent of their interest in the entity (e.g. percentage of voting rights / shares)

The value the interest represents, should not be disclosed.

The information must be registered by the 30th of September 2019, as opposed to the original deadline foreseen on the 31st of March 2019. As stated above, the Federal Public Service of Finance has implemented a tolerance policy for legal entities to comply by the 31st of December 2019 at the latest.

In any case, after every change of the UBO’s of a certain legal entity, the change will have to be registered within one month.

Penalties

The CEO’s or controlling bodies can be held personally to pay administrative fines varying from 250,00 EUR to 50.000,00 EUR.

Who can access the registry?

Access to the UBO-register will be granted to the competent authorities in CFT (Counter Financing Terrorism) and AML (Anti Money Laundering) matters, including tax authorities. Lastly, entities having a vigilance obligation in regards to their clients in the context of AML (Know Your Client – KYC), such as banks, notaries, accountants and lawyers, also have access.

Aside from the aforementioned, every citizen will be able to consult the registry and obtain a lot of information on companies without having to prove a legitimate interest.

Researching the UBO of a company will be subject to an administrative fee and can only be carried out using the company registry number. A private person will therefore not be able to look for companies using the UBO’s name. They can however obtain information on the UBO of a company, including the extent of their interest in the company. Because of privacy reasons, the UBO’s first name, address or date of birth, among other information, will not be publicly available.

If you require assistance or advice in regard to these obligations or company matters, foundation or trust in general, at Vanbelle Law we offer expert knowledge in the field, backed with years of experience. Get in touch today!

#UBO