On 6 April 2018 the Dutch Minister of Finance published an updated draft decree which contains the new definition of ultimate beneficial owners (UBOs) of companies and other entities (Uitvoerings-besluit Wwft 2018, the Decree). The Decree was sent to the Upper Chamber (Eerste Kamer) and the Lower Chamber (Tweede Kamer) of the Dutch parliament by way of a so-called preliminary scrutiny procedure ('voorhangprocedure'). A previous draft of the Decree raised quite some concerns, a number of which we flagged in our previous newsletter. Thankfully, the updated draft addresses several of the key concerns. The definitions in the Decree will also apply to the Dutch UBO register. In this update we summarize the new definitions of UBOs for several types of entities that are commonly used in the Netherlands.

New Definitions

BVs and NVs

  • The UBOs of a Dutch BV (private limited liability company) and a Dutch NV (public limited liability company) are in any event the natural persons who ultimately own or control the entity through direct or indirect ownership of more than 25% of the shares, voting rights or ownership interest in that entity, or by other means, such as the right to appoint or dismiss the majority of the members of the administrative, management or supervisory body of the entity.
  • Listed companies and 100% subsidiaries of listed companies are exempted.

Foundations, associations and cooperatives

  • The UBOs of a Dutch stichting (foundation), vereniging (association) and coöperatie (cooperative) are in any event the natural persons who ultimately own or control the entity through (i) a direct or indirect ownership interest of more than 25%, (ii) the ability to directly or indirectly exercise more than 25% of the votes in relation to an amendment of the articles of association, or (iii) the ability to effectively control the entity.
  • As a result of the aforementioned definition, it will no longer be required to designate each holder of a depositary receipt issued by a foundation which is a stichting administratiekantoor (STAK) as UBO of the STAK; the threshold of more than 25% now also applies to holders of depositary receipts. The new definition takes away some of the key concerns regarding the use of a STAK, and regarding foundations which are active in the non-profit sector and charity foundations.

Partnerships

For a Dutch maatschap (private partnership), CV (limited partnership) or VOF (general partnership) - the UBOs are in any event the natural persons who ultimately own or control the entity through (i) a direct or indirect ownership interest of more than 25%, (ii) the ability to directly or indirectly exercise more than 25% of the votes in relation to - in brief - an amendment of the partnership agreement, or (iii) the ability to effectively control the partnership.

Timeline

  • During the preliminary scrutiny procedure ('voorhangprocedure'), the Upper Chamber and the Lower Chamber have four weeks to propose amendments to the Decree. We currently expect that the Decree and the corresponding amendment to the Dutch Money Laundering and Terrorist Financing Prevention Act (Wwft) will become effective by the summer of 2018, perhaps as early as 1 June 2018.
  • The Dutch UBO register will be implemented separately by means of an amendment to the Dutch Trade Register Act 2007 ('Handelsregisterwet 2007') and a governmental decree. We currently expect that the UBO register will not be operational before 2019.

Belgium & Luxembourg

  • Belgium does not yet have an operational UBO register. The specific modalities of the information that will be collected, the management of, access to and the use of the UBO register, as well as the modalities with respect to the verification of the information and the operation of the UBO register have to be defined by the King by Royal Decree. A first draft of this Royal Decree was adopted by the Council of Ministers on 30 March 2018 and is currently under review by the privacy commission. Once the privacy commission will have made its comments on the draft, the Council of Ministers will amend it accordingly and adopt the Royal Decree. The expectation is that the Royal Decree will be adopted by June 2018.
  • Luxembourg will implement its UBO register by means of Bill 7217 relating to beneficial ownership and a central UBO register and Bill 7216 relating to a central register for trusts. Both of these Bills were deposited in December 2017 and are currently being discussed. The timeline for adoption of these Bills remains unclear.

Next steps for enterprises and UBOs

  • Entities should now analyse who their UBOs are, to prepare for registration in the UBO register. We recommend doing so now, so as to complete the analysis before the UBO register is established in the country where your enterprise is based.
  • The identification of UBOs and in particular the registration of personal details of UBOs in the UBO register will affect the privacy of UBOs. If you require further guidance or would like to discuss potential measures in relation to this topic, please feel free to contact us.

We are continuously monitoring the developments in the Netherlands and in other European countries and will keep you updated.