The long awaited Luxembourg act of 13 January 2019 pertaining to the register of beneficial owners (the Act) has just been published in the Official Journal on 15 January 2019. It will enter into force on 1st March 2019.
All the amendments which had been introduced in the bill n° 7217 in the second semester of 2018 have been adopted as such.
The main provisions of the Act can be summarised as follows.
1. WHO IS AFFECTED?
The obligations apply to all entities registered with the Luxembourg trade and companies register pursuant to article 1, points 2 to 15 of the law of 19 December 2002 on the trade and companies register and the accounting and annual accounts of undertakings, as amended. It will therefore apply to commercial companies with legal personality such as, amongst others, sociétés anonymes (public limited liability companies) and sociétés à responsabilité limitée (private limited liability companies), other legal entities such as, amongst others, sociétés en commandite spéciale (special limited partnerships) as well as investment funds in the form of a fonds commun de placement (mutual funds) (together, the Affected Entities).
The Act also imposes obligations upon the beneficial owners themselves.
2. WHAT ARE THE NEW OBLIGATIONS?
The legal representatives of the Affected Entities must:
(i) obtain and hold information on the beneficial ownership of the Affected Entity including their first names, last name, nationalities, date and place of birth, country of residence, address, identification number, and the nature and extent of the beneficial interests held (as well as relevant supporting documentation). That information must be accurate and up to date at all times;
(ii) file the above information as well as supporting evidence with the Luxembourg Business Registers acting as manager of the register of beneficial owners known as the Registre des bénéficiaires effectifs (the RBE). By derogation, listed companies whose securities are admitted to trading on a regulated market must only file the name of the relevant regulated market. The list of documents to be provided as supporting evidence and how to electronically file will be determined in a grand ducal regulation which is not yet available.
In addition to these initial steps, the legal representatives will then have to:
(i) update such filing within one month upon becoming aware of any event that would make such information inaccurate or obsolete;
(ii) upon simple request, within three days, provide access to all information listed above on their beneficial owners to the national authorities (amongst others the State prosecutor, the investigating judges, the financial intelligence unit, the Commission de surveillance du secteur financier (the financial sector regulator), the Commissariat aux assurances (the insurance regulator) as well as the tax authorities);
(iii) upon duly justified request, within three days, provide the first names, last name, nationalities, date and place of birth, country of residence of their beneficial owners, and the nature and extent of the beneficial interests they each hold to certain professionals as defined in the Act (e.g. credit institutions, lawyers, notaries etc.) in connection with the performance of customer due diligence measures; and
(iv) indicate the place where the above information will be kept for five years after the Affected Entity has been removed from the Luxembourg trade and companies register.
In parallel, the beneficial owners of an Affected Entity themselves must provide all necessary information about them (as listed under 2. (i) above) to that Affected Entity.
The information that national authorities or certain professionals can request from the Affected Entities are also accessible to them in the RBE.
3. WHO CAN ACCESS THE INFORMATION IN THE REGISTER?
Any person, whether or not residing in Luxembourg, may request access to the following information held in the RBE: the first names, last name, nationalities, full date and place of birth, country of residence and the nature and extent of the beneficial interests held by the beneficial owners of an Affected Entity. To get access to that information, neither a legitimate interest nor a prior authorisation by a competent organ is required. National authorities have unrestricted access to all information listed under 2. (i) above for their missions.
In exceptional circumstances, where granting access would expose the beneficial owner to a disproportionate risk, a risk of fraud, kidnapping, blackmail, violence or intimidation, or where the beneficial owner is a minor or otherwise incapable, an Affected Entity or a beneficial owner may request an exemption whereby the access will be restricted to the national authorities, credit and financial institutions, public notaries and bailiffs only for as long as the circumstances so justify and up to three years (exemption which can be renewed upon duly motivated request).
4. WILL THERE BE PENALTIES?
The Act provides for criminal fines ranging from EUR 1,250 to EUR 1,250,000 against the Affected Entities if they fail to obtain, hold and provide, when required by law, information on the beneficial owners or, if they have voluntarily provided inaccurate, incomplete or obsolete information on their beneficial owners.
Failure by a beneficial owner to provide the necessary information may also trigger a criminal fine ranging from EUR1,250 to EUR1,250,000.
5. WHEN WILL THE NEW OBLIGATIONS ENTER INTO FORCE?
The Act provides for a 6 months transition period after its entry into force. Affected Entities and their beneficial owners must therefore comply with the provisions of the Act before 1st September 2019.