Does your Charity have a Register of Beneficial Owners?

New regulations requiring Irish companies to establish and maintain a “Register of Beneficial Owners” came into effect on 15 November 2016. This includes charities that are companies limited by guarantee (“CLG”). Charities that are established as trusts or unincorporated associations do not fall within the scope of the new regulations.

Who is a Beneficial Owner?

The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (the “Regulations”) provide that a “Beneficial Owner” is defined as a natural person who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or other ownership interest in that entity including through bearer shareholdings, or through control via other means. A person who directly or indirectly owns more than 25% of the shares in an entity, or who has an ownership interest of more than 25% in the entity may be deemed to be a Beneficial Owner.

If the Beneficial Owners of a legal entity cannot be identified, the Regulations provide that the relevant entity must instead list its own senior managing officials as the Beneficial Owners on the Register.

Identifying the Beneficial Owner in the case of a charity that is a CLG will not always be straightforward. With most charitable CLGs, its members will have one vote each. If the charity has three or fewer members, those members will be the Beneficial Owners (as those members will each have more than 25% of the voting rights in the CLG).

Where the charitable CLG has more than three voting members, that is likely to give rise to a scenario where the Beneficial Owners of the charity are considered not to be identifiable and the senior managing officials will need to be listed in the Register of Beneficial Owners. The Regulations define the “senior managing officials” as including the directors of the relevant legal entity and the chief executive officer. So it is their details, rather than those of the charity’s members, which will need to be included on the Register.

What information must be contained on the Register of Beneficial Owners?

If the Regulations apply to your charity, in each case you will obliged to take all reasonable steps to obtain and hold adequate, accurate and current information in respect of its Beneficial Owners, including the following:

  • name;
  • date of birth;
  • nationality;
  • residential address;
  • a statement of the nature and extent of the interest held by each such Beneficial Owner;
  • the date on which the beneficial owner was entered in the Register of Beneficial Owners;
  • the date on which that person ceases to be a Beneficial Owner.

You will also have a duty to keep the information on the Register of Beneficial Owners up-to-date, and to take account of any changes in the Beneficial Owners or their relevant details.

Consequence for failing to comply with the Regulations

If a charity fails to comply in maintaining a Register of Beneficial Owners or to take the required steps to identify its Beneficial Owners, the charity is guilty of a criminal offence and liable, on summary conviction, to a fine.

Purpose of the Regulations

The Regulations have been introduced to facilitate Ireland’s impending obligation to have a centralised register of beneficial owners under the Fourth Anti-Money Laundering Directive (“MLD4”) which is due for transposition into Irish law later in 2017.

When MLD4 comes into effect, the Irish Government must ensure that the beneficial ownership information of corporate entities in Ireland is held in a centralised Beneficial Ownership Register (BOR). It is expected that the Companies Registration Office (CRO) will be the entity charged with responsibility for the establishment and maintenance of the BOR. Filing will be done through an on-line portal, there will be no paper forms and there will be no filing fees.

The CRO had indicated that the BOR would likely be in place and ready to be populated from the end of June 2017 and that companies would be given a 3 month period to file without being in breach of the statutory duty to file beneficial ownership details (i.e. September 2017). However, the Department of Finance has recently confirmed that these dates are no longer achievable and that the BOR is now expected to be launched in Quarter 4 2017, with companies being given an extended time-frame to make their filings after the expected Q4 launch of the BOR.

It is still unknown who will be able to access the information held on the central BOR. Currently under the relevant EU Directive, the data will be available to:

  • National competent authorities and financial intelligence units;
  • Entities required to carry out customer due diligence; and
  • Any persons that can demonstrate a legitimate interest.

It is possible, based on suggested changes to the underlying EU legislation, that access to the BOR could be broadened to give the public generally a right to this information. The continued consideration and debates around the issue of public access to the BOR and the privacy implications of such access is one of the reasons for the delay in the implementation of the register. We will keep you updated on this.

In the meantime, if you haven’t already taken steps to establish and maintain information on the beneficial owners of your charity, you should do so now in preparation of a likely 2017 year end filing deadline.