Topicality | 3 September 2020
Under the Fourth Anti-Money Laundering Directive, among other things, EU Member States must ensure that legal entities incorporated within their territory obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held. This information is to be kept in a central register – a UBO register.
As regards timing, the Fifth Anti-Money Laundering Directive ((EU) 2018/843) required implementation of the register by 10 January 2020. The Netherlands, however, was late in implementing this register, and was recently referred to the EU Court of Justice for failing to meet that deadline. The Dutch Senate approved the ‘Act on the registration of ultimate beneficial owners of corporate entities and other legal entities’ (the UBO-register) on the 23rd of June. Therefore the ultimate beneficial owner (UBO) register in the Netherlands will go live only as of 27 September 2020.
The UBO-register is a register that contains certain personal details of ultimate beneficial owners (UBOs) of Dutch corporate entities and other Dutch legal entities and is facilitated by the Dutch chamber of commerce (trade register). Foreign entities generally do not have register their UBO.
An UBO is defined as the natural person who is the ultimate owner or has a decisive vote in the respective legal entity or enterprise. Below we will outline which individuals, under the Decree, must in any event be considered an UBO for the different Dutch entities:
- NV & BV:
The UBOs are considered to be natural persons ultimately controlling the company through a direct or indirect ownership of more than 25% of the shares, voting rights or ownership interest. Or control via other means, for example the right to appoint or dismiss the majority of the members of the management board (irrespective of the percentage of shares held by such person) or to exercise decisive control over the legal entity.
- Other legal entities (foundations and cooperatives):
The UBOs are considered to be a natural person who holds directly or indirectly more than 25% of the ownership interest, who can directly or indirectly cast more than 25% of the votes when adopting a resolution to amend the articles of association of the legal entity, or who has the ultimate control over the legal entity.
- Partnerships (in Dutch: CV, VOF and maatschappen):
UBOs are the individuals who directly or indirectly have more than 25% ownership interest in the partnership, who directly or indirectly can exercise more than 25% of the voting rights regarding changes of the limited partnership agreement or regarding the execution of that agreement other than through acts of management to the extent that decision making by majority vote is required in that agreement, or who can exercise effective control over the limited partnership.
The register – which will be included in the trade register – will contain the following information regarding the UBO:
- Month and year of birth;
- State of residence; and
- Nature and scale of economic interest held.
In principle, this information will be public and the UBO-registers of the different European countries will ultimately be linked. There will be a separate register for trusts, which is accessible for authorities with a legitimate interest only (such as banks, insurance companies, notaries and lawyers that are required to perform client investigations).
The following information will not be public, this is only accessible by competent authorities like the Public Prosecutions Department, the Tax Authorities and the Financial Intelligence Unit:
- BSN (citizen service number);
- Day, place and country of birth; and
- Residential address.
Furthermore, entities that are required to submit UBO information are obligated to ensure that the information in the UBO-register is adequate, accurate and current. UBOs have an obligation to comply and provide all relevant information which is necessary for entities to meet their UBO-requirements. The competent authorities and qualifying institutions are also obliged to report a mismatch to the Chamber of Commerce.
Violation of the obligations will be considered an economic offence which can be sanctioned by criminal or administrative sanctions. Besides, a penalty for non-compliance may be imposed as a ‘remedial sanction’. If there is proof of intent of the violation then the criminal sanctions could include imprisonment for a maximum period of two years, a community punishment or an administrative fine.
The UBO-register is a means to combat money-laundering and gain insight in the cash flow, ownership and control of undertakings. But, due to its openness (in part), the use of personal data in the UBO-register is in conflict with the privacy of the persons registered, because of the disclosure of information to the general public. Therefore, several measures have been taken to further guarantee the privacy of UBOs. For example: The public can only access the publicly accessible UBO-information with a valid registration and in exchange for a fixed fee. The identity of the persons who access the UBO-register will be registered at the Chamber of Commerce and it will be visible to UBOs how often their information has been consulted. Besides, not all information is publicly accessible as mentioned above.
Also, there is an exception if access to the UBO information exposes the UBO to a disproportionate risk of fraud, abduction, blackmail, extortion, harassment, violence or intimidation, or if the UBO is a minor or does otherwise not have the legal capacity to act for its own account.
Do you want more information regarding the UBO-register? Please do not hesitate to contact us and we will be happy to help you.