©2018 by Vanbelle Law

Introducing the UBO-Register – A bridge too far?

November 26, 2018

 

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, before it was consequently published on the 5th of June, of the same year.

 

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 an 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

 

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 three categories of UBOs according to the legal entity to which they are attached. These are:

 

  • Companies

  • (International) non-profit associations and foundations

  • Trusts and similar entities

 

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

 

  • 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.

 

  • Natural persons who control the company through other means e.g. shareholders’ agreement, veto rights, board member appointing rights etc.,

  • 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 individuals are considered to be the UBO of non-profit associations and foundations:

 

  • Members of the Board

  • People with the power to represent the association / foundation

  • People in charge of the daily management

  • The founders of a foundation

  • 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

  • Every other natural person who control the entity through other means

 

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

 

  • The settlor

  • The trustee

  • The protector

  • 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.

  • 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 31st of March, 2019, giving all UBOs five additional months to comply with new regulations.

 

Any changes made in the UBO’s details will have to be registered within one month.

 

Penalties?

 

The CEO’s or controlling bodies can be held personally responsible and be obliged 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.

 

Conclusion

 

The EU is playing hard ball after the Panama Papers leak. Tackling illegitimate structures, terrorism and money laundering is a just cause, but we feel that this is going at the cost of people’s privacy. The fact that any private person could simply look up certain details about the UBO, including the extent of their interest in a certain company, is simply baffling in times of GDPR.

 

A company number, which you need to carry out the search is easily discovered, so this requirement does not compensate the loss of privacy, nor does the fact that certain information remains undisclosed (first name, address etc.,). A family name, for instance, is enough to identify a person.

 

We feel that this is very disproportionate as this is of no added value to the war against terrorism, money laundering and fraud. This wouldn’t be the case if the register were only accessible by competent authorities and certain entities held to a vigilance obligation (KYC), as they are bound by professional secrecy.

 

Be that as it may, the register exists and all Belgian entities will have to comply by the end of March, 2019.

 

If you require assistance or advice in regards to these obligations or in regards to your company, foundation or trust in general, we at Vanbelle Law offer years of experience in the field, you’re welcome to contact us and we’ll be happy to assist you.

Please reload

Our Recent Posts

Please reload

Archive

Please reload

Tags

Please reload