New regulations (the “Regulations”) came into operation on 15 November 2016, giving effect to part of the Fourth Anti-Money Laundering Directive (the “Directive”). The full Directive is required to be transposed into Irish law by 26 June 2017. When the Directive is fully implemented companies will be required to maintain registers of beneficial ownership of their shares and the information relating to beneficial ownership will also be held in a central register which can be accessed by certain government authorities.
The Irish government has decided to implement the Directive in two steps and the Regulations provide for the first step which requires that certain Irish corporates must:
- take "all reasonable steps" to obtain and hold "adequate, accurate and current" information in respect of their beneficial owners,
- create and keep a new beneficial ownership register (“BOR”); and
- keep the information contained in the BOR up to date
The implementation of these provisions at this time will allow companies to obtain the information on beneficial owners in advance of the wider requirement to submit such information to a central register, when this is established on implementation of the remainder of the Directive next year.
What companies are affected?
The Regulations apply to every "relevant entity" which is defined as all corporate or other legal entities incorporated in the State, including companies and other body corporates, but excluding (a) companies or bodies corporate listed on an EU "regulated market" and who are subject to disclosure requirements consistent with EU law, and (b) companies or bodies corporate which are subject to "equivalent international standards" which ensure "adequate transparency of ownership information".
Who is a Beneficial Owner?
Beneficial owners are natural person(s) who ultimately own or control the company either through direct or indirect ownership of a sufficient percentage of the shares or voting rights or through control by other means. A percentage of 25% plus one share held by a natural person is stated to be evidence of direct ownership, and a shareholding of over 25% held by a corporate entity under the control of a natural person(s), or by multiple corporate entities which are under the control of the same natural person(s), is stated to be an indication of indirect ownership.
What information must be obtained?
Companies must take "all reasonable steps" to obtain the following information about each beneficial owner:
- the name, date of birth, nationality and residential address; and
- a statement of the nature and extent of the interest held by such beneficial owner.
The company must then enter this information into its BOR, together with the date of entry onto the BOR and the date a beneficial owner ceased to be a beneficial owner.
In the event that (1) there is no natural person identified or (2) there is any doubt that any natural person so identified is a beneficial owner, the company is obliged to enter the same details (name, date of birth, nationality etc.) of the senior managing officials of the relevant entity into the beneficial ownership register. Senior managing officials are defined to include a director and a chief executive officer.
To assist companies in obtaining the correct information regarding beneficial ownership, the Regulations permit companies to give notice to any person which it has reasonable cause to believe has knowledge of the identity of a beneficial owner, seeking information from that person as to the identity of any beneficial owner or the identity of any other person likely to have knowledge of a beneficial owner and requesting them to supply details and to state whether or not the particulars are being supplied with the knowledge of such person(s). The recipient of such a notice must comply within one month from the date of the notice.
Beneficial Ownership Register
Companies are required to:
- Create a BOR.
- Keep the information in the BOR up to date, by giving notice to the natural persons whose particulars are recorded in the BOR if the company learns of a change in beneficial ownership or other particulars, or has reasonable cause to believe that the change has occurred.
- Give notice to any natural person, where the company has reasonable cause to believe that he or she is a beneficial owner, requiring him or her to respond within one month as follows:
o stating whether or not he or she is a beneficial owner of the company;
o confirming or correcting any details set out in the notice, and
supplying any details that are missing.
What if I am a Beneficial Owner?
In certain circumstances, the beneficial owner must notify the relevant entity in writing of:
- his or her status as beneficial owner, confirming the date on which they became a beneficial owner and certain personal details (date of birth, nationality, residential address etc.); and
- the occurrence of a change in their status as beneficial owner on in their particulars as stated in the BOR.
The circumstances referred to above are where a person knows or ought reasonably to know that he or she is a beneficial owner and the relevant particulars are not stated in the BOR, and if the person has not received a notice from the company seeking his or her particulars. The beneficial owner must comply with this provision within one month of becoming beneficial owner.
A company which fails (i) to take all reasonable steps to obtain and hold adequate, accurate and current information in respect of its beneficial owners, or (ii) to give the notice referred to above to a natural person believed to be a beneficial owner of it, or (iii) fails to keep its BOR up to date, will commit an offence, and be liable, on summary conviction, to a Class A fine (a fine not exceeding €5,000).
It is also an offence for a natural person to (i) fail to notify the company that he or she is a beneficial owner, where relevant; or (ii) to fail to comply with a notice served on it by a company. In any such case, the penalty on summary conviction is a Class A fine.
Companies should immediately create a register of beneficial ownership, which can be in any form, and review their records to try to identify whether their legal (registered) shareholders are also the beneficial owners. If not, or if this is not clear, companies are required is to take "all reasonable steps" to obtain the required information and to enter it on a BOR.