On June 23, 2020, the bill "Implementation of registration of beneficial owners of companies and other legal entities" (the UBO-register) was adopted by the Senate. The UBO-register is a register in which certain personal data are recorded of the ultimate interested parties (UBOs) of Dutch companies and other legal entities (registration requirements).
author: Pleuni Visser
The introduction of a UBO register is one of the measures included in the (amended) Fourth EU Anti-Money Laundering Directive. Now that the bill has been passed by the Senate, the law will soon enter into force.
This article further explains the consequences of the entry into force of the Dutch UBO register. Incidentally, this UBO register is a different register than the separate UBO register for trusts and mutual funds. The bill for that register has not yet been submitted.
Existing registrants will have 18 months from the law's entry into force to register their UBO(s) with the Chamber of Commerce (CoC). Assuming the law still enters into force in June 2020, the registration period will end in December 2021. During these first 18 months, the CoC will write to all registrants in a phased manner requesting the registration of their UBOs. At the time of registration, those obliged to register must register the UBOs that qualify as UBOs at the time of registration. Thus, the registration requirement has no retroactive effect. Therefore, it is not necessary to register the persons who qualified as UBOs between the time the law entered into force and the first registration. However, if the UBOs have been registered and the UBO changes thereafter, this change must be reported to the Chamber of Commerce immediately.
For newly established registrars, the declaration of UBO information, after the entry into force of the law, will take place simultaneously with the registration in the trade register and, in addition, registration of UBOs is a condition for the provision of a Chamber of Commerce number.
Among others, the following companies incorporated in the Netherlands and other legal entities are required to disclose UBO information with the Chamber of Commerce:
BVs and NVs;
Foundations, associations, mutual societies and cooperatives;
Partnerships, general partnerships and limited partnerships; and
Denominations.
Foreign legal entities are not required to register UBO information in the Netherlands, even if they have a main or branch office in the Netherlands. Listed NVs subject to certain disclosure requirements and their 100% (indirect) subsidiaries are also not required to register for the Dutch UBO register. This also applies to (indirect) 100% subsidiaries of foreign listed parent companies, which are subject to certain disclosure requirements.
Companies not (or no longer) established in the Netherlands and belonging to a partnership, general partnership, limited partnership or shipping company established in the Netherlands must (re)register in the Dutch trade register and, as a result, also register their UBOs in the Dutch UBO register.
An implementation decree (Wwft Implementation Decree 2018) specifies for each type of registrar which category of natural persons is 'in any case' considered UBO. It is explicitly indicated that this is not an exhaustive enumeration and that with respect to one registration holder, multiple UBOs may exist.
The following briefly describes, for the NV, BV, foundation and limited partnership, which natural persons are considered UBOs under the Executive Order in each case:
For NV and BV: UBOs are the natural persons who directly or indirectly hold more than 25% of the shares, voting rights or ownership interest in the company, or who ultimately own or control the company through other means. When no UBO can be ascertained or there is doubt as to which individuals are UBOs of a company, the management is considered the UBO. If a sufficient ownership interest is held through the intervention of a foundation trust office (STAK), the natural person (certificate holder) continues to qualify as UBO. However, the natural person does not automatically also qualify as UBO of the STAK.
For foundations, the UBO concept for so-called "other legal entities" is followed. UBOs of a foundation are the natural persons who directly or indirectly hold more than 25% of the ownership interest in the foundation, who directly or indirectly can exercise more than 25% of the votes in decision-making regarding amendments to the articles of association of the foundation, or can exercise actual control over the foundation. If no UBO can be identified or there is doubt as to which natural persons are UBOs of a foundation, the board of directors is considered the UBO.
For limited partnerships: UBOs are the natural persons who directly or indirectly hold more than 25% of the ownership interest in the partnership, who can directly or indirectly exercise more than 25% of the votes in decision-making with respect to amendment of the agreement underlying the partnership or with respect to the performance of that agreement other than by acts of management to the extent that that agreement requires majority voting, or the ability to exercise effective control over the partnership. When no UBO can be ascertained or there is doubt as to which natural persons are UBOs of a limited partnership, the general partners are considered UBOs.
An ownership interest in the foregoing cases exists if a natural person is entitled to receive distributions from the assets of the relevant registrant, including the profits or reserves, or to the surplus after liquidation. If the management or managing partners of an entity are registered as such as UBO, this will be explicitly stated in the UBO register.
Registrars are required to provide information of each UBO. Some of this information is publicly accessible in the trade register. Another part of the information to be supplied is only accessible to competent authorities and the Financial Intelligence Unit.
First name and last name;
Month and year of birth;
Nationality;
Residential state;
Nature and extent of the UBO's economic interest (in ranges from more than 25% to 50%, from 50% to 75% and from 75% to 100%).
Citizen service number / foreign tax identification number (TIN);
Day of birth;
Country and place of birth;
Residential address;
Copy of valid identity document;
Copy of document(s) substantiating why a person has UBO status and showing the nature and extent of the economic interest held by the UBO.
The UBO information remains visible in the UBO section of the trade register for a period of 10 years after the deregistration of the company or other legal entity.
Interested parties can view the publicly accessible UBO information subject to registration and the payment of a fee. In addition, the identity of those consulting the register is recorded by the Chamber of Commerce using a means of identification. In doing so, the Chamber of Commerce may record the citizen service number. UBOs are given insight into how often their information is consulted. Consultations by competent authorities and the Financial Intelligence Unit are excluded. It is still being investigated whether the UBO register can be set up in such a way that categories of consulters can be distinguished, so that UBOs can, upon request, obtain insight into how often their information has been provided per category of consulter (government, notary, bank, etc.).
A UBO may request the shielding of publicly accessible UBO information if the publication of his or her information exposes the UBO to a disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation. This shielding is interpreted very restrictively for the Dutch UBO Register; UBOs are only eligible for shielding if a UBO is a minor or otherwise incapacitated or if the UBO in question is protected by the Openbaar Ministerie or by the National Coordinator for Counterterrorism and Security. In the event of foreclosure, the UBO register will continue to state the nature and extent of the economic interest of the (foreclosed) UBO.
The registration process will be set up so that it will be possible to indicate immediately upon registration whether a ground for blocking is invoked, specifically mentioning minority. Requests for foreclosure will always immediately result in the UBO's data being blocked. The foreclosure will be lifted only upon a final denial of the request after completion of formal objection and appeal procedures. UBOs who expect that the publicity of the register will entail a disproportionate risk may report in advance to the police or the Openbaar Ministeries Office. It will be assessed on a case-by-case basis whether there is such a threat or predictable threat that government security is necessary.
Registration agents are subject to the obligation to register UBO information. Registrants must ensure that the information in the UBO register is accurate and complete at all times. UBOs are subject to a cooperation obligation. This cooperation obligation means that the UBOs must provide all relevant information so that the registration holders can fulfill their registration obligation.
Competent authorities and Wwft institutions (such as banks, lawyers, notaries, accountants and tax advisors) are subject to a feedback obligation. This feedback obligation means that they are obliged to report to the Chamber of Commerce any discrepancy they find between the information in the UBO register and the UBO information in their possession. In doing so, competent authorities are only required to make a feedback if appropriate and to the extent that this requirement does not unnecessarily interfere with their duties.
Violation of the obligations described above is considered an economic crime and can be enforced with both criminal and administrative sanctions. It is also possible to impose an order for periodic penalty payments as a "remedial sanction. If the offense is committed intentionally, it can result in imprisonment for up to two years, community service or a fine.
Simultaneously with the UBO register, a new recordkeeping requirement for foundations is being introduced. As a result, the board of a foundation will be required to record in its own, non-public, register all beneficiaries who receive a distribution of 25% or less of the distributable amount in a given financial year. Beneficiaries of a foundation who receive a distribution of more than 25% must be registered as UBO in the trade register pursuant to the entry into force of the UBO register. The board of a foundation must maintain in its own register the names, addresses and the amount distributed of beneficiaries to whom a distribution was made in a given year.
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