Companies and a wide range of other entities will have to disclose information about their ultimate beneficial owners (UBOs) in a public central register. This UBO register, mandated by the (fourth) EU anti-money laundering directive and intended to prevent abuse of the financial system, will have far-reaching consequences for the privacy of, among others, major shareholders of Dutch public and private limited liability companies (NVs and BVs). Although various organisations in the Netherlands urged that the directive be implemented conservatively for privacy reasons, their plea was to no avail. According to a recent announcement by the Minister of Finance, the Netherlands has opted to make the register accessible to the public instead of only accessible to certain categories such as persons with a legitimate interest (see our previous newsletter on this subject).
However, four protective safeguards will apply: (i) a record will be kept of all parties consulting the register, (ii) consultation will require the payment of a fee, (iii) only some of the information in the register will be accessible to the public and (iv) if there is a risk of (for example) kidnapping or blackmail – to be evaluated on a case-by-case basis – some or all of the information may be screened off. The fourth safeguard will not apply if the party seeking information is a credit or other financial institution or a civil-law notary.
Consequences for you as UBO
A UBO is, simply put, an individual (a natural person) who, formally or de facto, has control over the relevant entity. Factors which can be indicative of control are an ownership interest of more than 25% (e.g. ownership of more than 25% of the shares in a company), the right to exercise more than 25% of the voting rights or the right to remove the managing directors. If the relevant individual(s) cannot be identified based on these factors, one or more of the entity's top-level executives may be treated as its UBO(s).
The following information about a UBO will be accessible to the public: name, month and year of birth, nationality, country of residence, and nature and extent of beneficial interest. Other information, such as his/her address and citizen service number (BSN), will only be accessible to the Dutch Financial Intelligence Unit and certain other authorities, on request and subject to a confidentiality obligation.
The UBO register will most likely be administered by the Chamber of Commerce. Entities whose UBOs must be disclosed in the register are required to submit the prescribed information themselves and UBOs are required to cooperate in this. Parties obliged to consult the register (such as credit or other financial institutions, auditors and civil-law notaries) and competent authorities will be required to inform the Chamber of Commerce of any discrepancies they discover. The register must be implemented no later than 26 June 2017, but it is not yet known whether the prescribed information should be provided instantly or that a transitional arrangement will apply.
The outlines sketched above must still be fleshed out in legislation. The Minister of Finance has announced that interested parties will have an opportunity to provide input through an online consultation procedure. Certain organisations such as the DDMA Privacy Authority are likely to respond critically.
Draft bill introducing central shareholders' register
The Netherlands has decided to establish a central shareholders' register (CAHR) in addition to the UBO register. A draft bill for this purpose is now in the consultation phase. Both registers will contain information about shareholders but will differ in focus and content. See our previous newsletter on this subject. Development of the UBO register has priority because it is mandatory under EU law and because, according to the Minister of Finance, it is not feasible from a practical and a financial point of view for both registers to be set up at the same time.