As of January 10, 2020, all European Union member states must have implemented the UBO register. Companies established in EU member states will be required from this date to register their owners or the persons controlling the legal entity in the UBO register.(1) This is the result of the Fourth European Anti-Money Laundering Directive. The purpose of the register is to combat financial-economic crime, such as money laundering, corruption, tax evasion, fraud and/or terrorist financing. The Netherlands is not going to meet this date. The bill making the UBO register mandatory in the Netherlands is still pending before the Senate. The government now wants the UBO register to go into effect next spring. In this article, we would like to bring you up to date on the current state of affairs.
authors: Jan-Berend Möller & Vince Ouwersloot
The UBO register will make transparent who, in short, is "pulling the strings" on legal entities incorporated in EU member states. The UBO registers will be mutually accessible through cooperation between member states. During the oral hearing of the bill in the House of Representatives , an amendment was introduced which further expanded the registration requirement. Thus, now also denominations will have to register their UBOs in the register.
The Dutch UBO register will become part of the Trade Register of the Chamber of Commerce (KvK). Part of the data in the register will become public. This will allow (legal) persons and organizations to make better informed decisions about with whom they will/want to do business.
Institutions that are required to conduct customer due diligence under the Money Laundering and Terrorist Financing (Prevention) Act (Wwft) are required to report errors they find in the register to the Chamber of Commerce.
The abbreviation UBO stands for ultimate beneficial owner, or "beneficial owner. In other words, the UBO is the natural person who ultimately owns or controls a company or other legal entity.
As a UBO qualifies any natural person who:
directly or indirectly holds more than 25 percent of the (bearer) shares, voting rights within a legal entity;
has an economic interest of more than 25 percent within a legal entity, for example, through the right to distribution of profits, reserves or liquidation distribution;
directly or indirectly otherwise ultimately owns or ultimately controls the legal entity; in other words, has effective control over it through other means. Examples include the power to appoint or remove a majority of the members of the company's management or supervisory body.
If a natural person does not qualify as UBO based on this definition, someone from the managerial staff must be designated as "pseudo-UBO". For BVs and (non-listed) NVs this will usually be a (statutory) director, for partnerships this will be one of the partners. The same registration obligation applies to the pseudo UBO as to a real UBO.
In principle, any legal entity (BVs, NVs, CVs, partnerships, foundations and associations) established in the Netherlands or belonging to a foreign company with a principal or secondary establishment in the Netherlands is required to register its UBOs in the Dutch UBO register.
Listed companies (and wholly-owned subsidiaries thereof) are exempt from UBO registration, as they are already subject to disclosure obligations from stock exchange supervision. Unincorporated associations are also exempt.
The UBO registration requirement will therefore apply to:
BVs and (unlisted) public limited companies;
other legal entities; foundations (including a foundation administrative office), associations (with full legal capacity and associations without full legal capacity conducting a business), mutual associations and cooperatives;
partnerships: partnerships, general partnerships and limited partnerships;
shipping companies;
European limited liability companies (SEs);
European cooperative societies (SCEs); and
European economic partnerships;
Denominations.
The registration requirement will not apply to listed companies, sole proprietorships, legal entities under public law, associations of owners and some historical legal entities (guilds, foundations, hofjes etc.).
In addition, UBOs of foreign companies are not included in the register. Foreign legal entities with headquarters outside the Netherlands but which have branches in the Netherlands ("branch offices") must register UBOs in the country of incorporation.
Records of a UBO becoming publicly available:
first name and last name;
month and year of birth;
nationality;
residential state;
nature and extent of the UBO's economic interest. The exact size of the interest will not be transparent, nor will monetary amounts be included in the UBO register. Categorical ranges will be used (25-50%, 50%-75% and 75%-100%).
The public part of the UBO register is searchable only by the name of the company or legal entity. Thus, searching by the name of the UBO is not possible.
BSN/foreign tax identification number (TIN);
birthday;
country and place of birth;
residential address;
The copy of a valid ID;
The copy of documentation substantiating why an individual has UBO status and demonstrating the nature and extent of the economic interest held by the UBO.
However, the non-public information must be registered and maintained in the Netherlands and can only be viewed by some (government) agencies and financial institutions.
There will be a fee for requesting data from the registry.
The UBO register is publicly accessible. Anyone can look up (limited) UBO data in the Trade Register. By linking all national UBO registers, data of UBOs of legal entities established in the Netherlands will also be visible to foreign interested parties.
Safeguards are in place to protect the privacy and personal privacy of UBOs. The register complies with data protection requirements and the General Data Protection Regulation (GDPR).
In exceptional circumstances, a UBO may request the Chamber of Commerce to have all or part of the public data blocked. In such a request, the UBO should state that exposure of the data would result in a disproportionate risk to him/her, a risk of fraud, blackmail, kidnapping, extortion, harassment, violence or intimidation or if the UBO is a minor or otherwise incapacitated by will. During the time the foreclosure request is pending, the information will not be publicly available. For the time being, the chances that such a request for shielding will succeed are estimated to be low, given the extent to which data are already currently shielded.
The possible shielding of data has a limited effect. Authorities such as the Openbaar Ministerie, the police, the tax authorities and the Financial Intelligence Unit can view all data at any time.
Recently, when the bill was being debated in the House of Representatives, an amendment was passed to build additional safeguards into access to the UBO register to enhance the security and privacy of beneficial owners.
Specifically, this means that persons wishing to request information from the UBO Register must identify themselves in advance. The Chamber of Commerce registers the applicant's personal data used in the identification and may register the applicant's Citizen Service Number. In the event of any misuse of data obtained from the register, the CoC can retrieve this data and the data in question can be used in a possible criminal investigation. This creates a higher threshold for abuse of the register.
In addition, the UBO obtains the ability to obtain an insight, upon request, into the number of times his/her data has been provided, this excluding disclosures to investigative agencies, among others.
Violation of the obligation to register and maintain the details of the UBO in the UBO register is subject to various sanctions. For example, violating the obligation to register may result in a prison sentence of up to six months, community service or a fine of up to
€20,750. In addition, the minister can impose an order under penalty or an administrative fine.
The planned implementation date of Jan. 10, 2020, will not be met. The government now anticipates the introduction of the regulation for spring 2020. As of the implementation date, for newly established registration holders, the declaration of UBO information will take place simultaneously with the registration in the trade register and registration of the UBO will be a condition for the provision of a Chamber of Commerce number.
A transitional arrangement has been included for existing companies. Within the first 18 months after implementation, the Chamber of Commerce is going to write to all registration holders in phases, asking them to register their UBO.
In anticipation of the introduction of the regulation, it is recommended that you already find out who the UBOs are within your company and record the data regarding the UBOs present in your own administration in advance, so that at the time of the introduction of the regulation the registration with the UBO register will run smoothly.
(1) Directive (EU) 2015/849 and 2018/843
