Due to EU Directive 2015/849 (the “4th AML Directive”) and its successor, EU Directive 2018/843 (the “5th AML Directive), all EU Member States are held to establish registers of so-called “Ultimate Beneficial Owners” or “UBO’s”. In these registers, the data of individuals being UBO’s of corporate and other legal entities incorporated in the territory of such EU Member State are to be registered. The purpose of this exercise is to increase the prevention of money-laundering and terrorism financing.

The 4th Directive imposed a deadline of being implemented in the EU Member States by 2017. However, it was amended by the 5th AML Directive – which increased the transparency of the UBO register – which has to be implemented in national laws by January 2020.

As of to date, a number of EU Member States has already implemented the UBO register; likewise, these registers are operational in a number of Member States. In this alert, we shall outline the current state of play for the Benelux countries. Thereby it shall be noted that certain differences exist between the three countries, among others in the definitions of UBO.

On a separate note: it might be the case that the same individual is to be registered in various EU Member States, in case he or she is an UBO of multiple companies registered throughout the EU. Also, an entity may have several UBO’s.

Belgium

Belgium adopted on the 18th of September 2017 the Law on the prevention of money laundering and terrorist financing and the restriction on the use of cash implementing, which establishes the Belgian UBO. An Implementing Royal Decree on the operating procedures of the UBO register was published on the 14th of August 2018 in the Belgian Official Gazette, and entered into force on 31 October 2018.

An UBO is defined as the natural person or persons who ultimately own or control the client, the client's agent or the beneficiary of the life insurance contracts, and/or the natural person or persons for whom a transaction is carried out or a business relationship established.

This is further specified for the various types of Belgian legal entities: companies, trusts, (international) non-profit associations and foundations and legal structures similar to trusts.

For companies, the UBO is:

  • the individual or the individuals who own, directly or indirectly, at least 25 % of voting rights, shares or ownership interest in the company;
  • the natural person or persons who exercise control over that company by other means (e.g. shareholder agreement, right to designate a member of the board, right of veto);
  • if none of the persons referred to above can be identified, or if it is not certain that the identified person or persons are the UBO(s), the natural person or persons holding the position of chief executive officer.

The last of the above categories being a residual category, the identification of such person as UBO must be duly documented and justified (e.g. steps taken to identify the first two categories, results from the research carried out,…).

For trusts, the UBO is:

  • the constituent,
  • the trustee(s),
  • the protector,
  • the beneficiary(ies) or, where the persons who will be the beneficiary(ies) of the trust have not yet been designated, the category of persons in whose principal interest the trust was established or operates,
  • any other natural person having ultimate control over the trust by virtue of being the direct or indirect owner of the trust or by other means.

For (international) non-profit associations and foundations, the UBO is:

  • the director(s),
  • the person(s) who are entitled to represent the (international) non-profit association or foundation,
  • the person(s) in charge of the day-to-day management of the (international) non-profit association or foundation,
  • the founder(s) of a foundation;
  • the natural person(s) or, where such person(s) have not yet been designated, the category of natural persons in whose main interest the (international) non-profit association or foundation was formed or operates;
  • any other natural person exercising ultimate control by other means over the (international) non-profit association or foundation.

For legal structures similar to trusts, the UBO is the natural person or persons who hold functions equivalent or similar to those of the persons referred to for trusts.

In addition, it is specified that the natural person or persons for whom a transaction is carried out or a business relationship entered into shall be deemed to be the natural person or persons who benefit or will benefit from that transaction or business relationship and who have, in law or in fact, directly or indirectly, the power to decide on the execution of that transaction or the conclusion of that business relationship, and/or to determine its terms or to consent to them.

The question is then, what data need to be registered in relation to the identified UBO. The answer depends on the information provider concerned.

All information providers must provide the following information on the identified UBO:

  • surname and first name,
  • date of birth (day, month and year);
  • nationality(ies) ;
  • complete residence address ;
  • date on which it became UBO. This may be the most recent date known to the information provider;
  • identification number in the National Register of Natural Persons or the Crossroads Bank for Social Security, and, where applicable, any similar identifier given by the State where he or she resides or of which he or she is a national;
  • the category(ies) of UBOs to which it belongs;

When the information provider is a company, the following additional information must be provided:

  • in the case of UBOs that hold shares or voting rights in the company, whether the UBO is isolated or grouped;
  • whether the UBO is a direct or indirect UBO and, in the case of an indirect UBO, the number of intermediaries and their identification;
  • the extent of the effective interest held in the information provider, including:
    • in the case of a direct UBO and where control results from the ownership of shares or voting rights, the percentage of shares or voting rights held by him in the information provider;
    • in the case of an indirect UBO and where control results from indirect ownership of shares or voting rights in the information provider, the percentages of shares or weighted voting rights held by him in the party responsible for providing information.

In Belgium the UBO register is operated by the Treasury Administration, which is designated by law as the data controller in relation to the processing of the register.

Access to the UBO register differs according to the type of UBO.

Information on UBOs of companies, the register shall be accessible for consultation by:

  • the competent authorities;
  • the taxable entities, only in the performance of their due diligence obligations with respect to the customers. Access for these entities will be charged;
  • any member of the general public for corporate UBOs. This access will be limited to some information and will be charged.

Information on UBOs of (international) non-profit associations, foundations, trusts and legal structures similar to trust, the register shall be accessible for consultation by:

  • the competent authorities;
  • the taxable entities, only in the performance of their due diligence obligations with respect to the customers. Access for these entities will be charged;
  • any person demonstrating a legitimate interest in the UBOs of (international) non-profit associations, foundations, trusts and legal structure similar to trust. This access will be limited to a certain number of number of information and will be charged;
  • any person who submits a written request to the Treasury Administration, for (international) non-profit associations, foundations, trusts and legal structure similar to trust that control a company, (international) non-profit associations or foundation. This access will be limited to a certain number of information and will be charged.

Companies, associations and foundations have until 30 September 2019 to record their ultimate beneficial owner(s) in the register. Not meeting the disclosure requirements shall be subject to administrative fines between EUR 250 and EUR 50,000.

The Netherlands

On the 4th of April this year, the Dutch minister for Finance has presented a draft bill of law on the UBO register.

The definition of the UBO was known already, based on an Implementation Decree for the Dutch Money Laundering and Terrorist Financing (Prevention) Act ("Wwft").

An UBO is defined as a natural person being the ultimate owner or having a decisive say in the legal entity at hand. This is further being specified for the various existing Dutch legal entities.

In case of NV’s and BV’s, UBO’s are the individuals who directly or indirectly hold more than 25% of the shares, voting rights or the ownership interest in the company, or who through other means ultimately own or control the company.

In case of other legal entities (such as foundations), UBO’s concern the individuals who directly or indirectly have an ownership interest of more than 25%; who can exercise more than 25% of the voting rights in respect of changes of the articles of the foundation; or who can exercise effective control over the legal entity.

In case of limited partnerships, UBO’s are the individuals that directly or indirectly have more than 25% ownership interest in the partnership; who directly or indirectly can exercise more than 25% of the voting rights in respect of (i) changes of the limited partnership agreement or (ii) in respect of the execution of that agreement other than through deeds of management to the extent that decision making by majority vote is required in that agreement; or (iii) who can exercise effective control over the limited partnership.

However, if no individual can be identified, or if there is any doubt whether the individual identified is the beneficial owner, the individual or individuals who are part of the senior management will be considered (pseudo)UBO’s. According to the Dutch legislator, these shall be the statutory directors. Or, in the case of a limited partnership, the general partner(s).

The requirement to identify and register the UBO does not apply if the entity at hand is subject to certain publication requirements for listed companies, or if it is a 100% subsidiary of such listed entity.

According to the draft bill of law on the UBO register, the following legal entities are held to publish details of their UBO(s):

  • private or public companies with limited liability (BV/NV), excluding entities that are subject to certain publication requirements for listed companies and their 100% subsidiaries
  • European public companies
  • European economic interest groupings
  • European cooperatives
  • cooperatives
  • foundations (including the so-called “STAK”)
  • associations (including informal associations that operate a business)
  • mutual insurance associations;
  • partnerships
  • shipping companies

The administrative burden and responsibility of registration is with the legal entity at stake and its managing directors.

Also, the explanatory wording to the draft bill of law states that entities that have been de-registered from the Dutch Trade Register (for instance for having migrated to another jurisdiction), will need to register again with the purpose of registering the UBO.

In addition, it has been announced that a separate draft bill of law will be presented for the registration of UBOs of other entities, such as trusts, mutual funds, and other legal arrangements.

The following details of the UBO need to be registered, to be demonstrated with underlying documents:

  • Name
  • Place of birth, date of birth
  • Nationality
  • Personal address, state of residence
  • Tax identification number
  • Character and scope of ownership of the UBO. The scope of ownership will be defined by “ticking” ranges varying from between 25% - 50%; 50%- 75%; 75%-100%.

However, if no individual can be identified, or if there is any doubt whether the individual identified is the beneficial owner, the individual or individuals who are part of the senior management will be considered (pseudo)UBO’s. According to the Dutch legislator, these shall be the statutory directors. Or, in the case of a partnership, the general partner(s).

The Dutch Trade Register shall operate the UBO register for the Netherlands, for currently also keeping the companies’ register. The UBO registers of the various EU member states will be linked to each other.

The UBO register shall be publicly accessible. Although certain data shall not be disclosed to the public, for which only name, date of birth, nationality, state of residence and the character of the ownership shall be fully disclosed. Also, an UBO may object against full disclosure of his or her details. These objections may be honored in case of specific serious circumstances only, such as avoiding disproportionate risks of fraud, kidnapping, blackmailing or in case of the UBO being a minor.

Once the draft bill of law for implementing the Dutch UBO register has entered into force, the respective UBO(s) need to be registered within 18 months. Entities that will be incorporated after the draft bill of law has entered into force, have to register the UBO(s) instantly in registering the newly-incorporated entity. Likely, Dutch civil law notaries will arrange for such.

The UBO register is intended to be operational by 10 January 2020. However, the draft bill first needs to be approved by the Dutch parliament and senate.

Not meeting the disclosure requirements shall be an economic criminal offence and may result in monetary fines or even imprisonment. Also, administrative penalties may be due. In addition, there will be a reporting obligation in case of incorrect UBO registrations – one notifying such incorrectness, is held to report such to the Dutch Chamber of Commerce. Also, the UBO itself is held to render his/her full cooperation.

Luxembourg

Luxembourg is lying ahead of the Netherlands, for having adopted the bill of law on the UBO register on 13 January 2019, which has entered into force on 1 March 2019. As from that date, the Luxembourg business register operates a separate online portal for the UBO register (the so-called “Registre Bénéficiaires Effectives” or “RBE”). Via this portal, information on UBO’s can be deposited and accessed. Information on UBO’s shall be stored for five years after dissolution of a company.

Luxembourg applies the following definitions of UBO:

In the case of corporate entities, an UBO is considered any 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 ownership interest in that entity, including through bearer shareholdings, or through control via other means. A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a natural person shall be an indication of direct ownership. A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership.

If, after having exhausted all possible means and provided there are no grounds for suspicion, no person can be identified as UBO identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), any natural person who holds the position of senior dirigeant shall be identified as UBO. This is the managing director.

In the case of fiducies and trusts, as UBO are considered the settlor; any fiduciaire or trustee; the protector, if any; the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates; or any other natural person exercising ultimate control over the fiducie or trust by means of direct or indirect ownership or by other means;

For other legal entities such as foundations, and legal arrangements similar to trusts, any natural person holding equivalent or similar positions as with a fiducie or trust.

For Luxembourg, all companies being registered (or need being registered) in the Luxembourg companies’ register are held to also register their respective UBO’s.

The following information regarding an UBO needs to be registered:

  • Last name and first name
  • Nationality
  • Place of birth, date of birth
  • State of residence
  • Personal address. It is being noted that also a professional address in Luxembourg may be registered
  • Identification number
  • Character and scope of the beneficial interest.

Also for Luxembourg, listed companies are being exempted from the UBO register, and provided such listed company is subject to certain publication requirements.

Companies are required to file information on their UBO(s) with the RBE within one month following which the company has become aware – or should have become aware – of an event requiring registration. Also certain third persons, like a notary, may arrange for the registration. Registrations can only be done electronically and should be supported by underlying documents, to be verified by the RBE. The UBO’s information shall also be kept at the registered office of the Luxembourg company.

The information in the RBE is publicly accessible, with the exception of the address of the UBO and his/her identification number. Also, the RBE shall keep trace of the requests for access that have been made for a period of 5 years. As an illustration: an online extract of the RBE comes at EUR 5.

The company concerned or its UBO may request the RBE, on a case-by-case-basis, to limit the public’s access to the data. Such limitation may be granted for a maximum period of three years with the possibility of prolongation. The names of companies that have been granted limited disclosure of their UBO’s shall be listed on the RBE’s website (under the so-called “access limitation of article 15”). Authorities shall always have complete access, also to data that are not disclosed to the public.

Late or a lack of registration shall be subject to fines varying between EUR 1,250 and EUR 1,250,000.

The Luxembourg bill of law on the UBO register grants companies registered in Luxembourg a period of six months to arrange for the mandatory filings – thus by 31 August 2019 at the latest.