Mandatory transparency about the ultimate beneficial owner(s) of the enterprise

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The new legally required transparency as to the ultimate beneficial owners of an enterprise is an important additional action point in the M&A practice after completion of an acquisition (“post-closing action”).

  • What?

Belgian Companies, (international) non-profit organisations, foundations, trusts and legal entities that are comparable to trusts, have the following new obligations under the Belgian “Law of 18 September 2017 on the prevention of money laundering and terrorism financing and on the restriction of the use of cash”:

  • The Law adds to the Belgian Companies Code (Articles 14/1 and 14/2) and to the Belgian NPO and Foundations Law[1] (Articles 58/11 and 58/12) the obligation to obtain and hold adequate, accurate and current information about the so-called “ultimate beneficial owners” of the enterprise.
  • The Law also provides for the creation of a central register of ultimate beneficial owners (UBO register). The aforementioned enterprises must record in this UBO register information about their ultimate beneficial owners, and inform the ultimate beneficial owners of this legal obligation and the registration. The specific scope and requirements are regulated in the Belgian Royal Decree of 30 July 2018 (entered into force on 31 October 2018).
  • By whom?

The directors, members of the management committee (“directiecomité”) or persons participating in the actual management of the aforementioned enterprises, are responsible for taking the necessary steps for the compliance with these new obligations.

In case of non-compliance, the said persons can be sanctioned with an administrative fine of 250 euro up to 50,000 euros. The directors of companies, (international) non-profit organisations or foundations can also be criminally sanctioned with a fine of 400 euro up to 40,000 euro.

  • About whom?

The obligations concern the collection, maintenance and registration of information about the ultimate beneficial owners (UBOs) of the enterprise. This is the natural person who is the ultimate owner of or who has control over the enterprise. A person can have direct or indirect (via one or more intermediary legal entities) ownership or control, whether alone or together with others. An enterprise can have one or more ultimate beneficial owners.

For each type of enterprise, the law sets out the criteria to determine which person(s) is/are the ultimate beneficial owner(s). For companies, for example, the following persons qualify as ultimate beneficial owner:

  • Each natural person who directly or indirectly holds a sufficient percentage of the voting rights or ownership interest in the company;
  • An interest of more than 25% of the voting rights, the shares or the capital of the company is an indication of the aforementioned sufficient percentage.
  • An interest of more than 25% of the shares or capital held by a company controlled by (i) one or more natural persons, or (ii) several companies controlled by the same natural person(s), is as an indication of the aforementioned sufficient indirect interest on the part of this/these natural person(s).

For specific examples: see the “FAQ” document available on the website mentioned below under “Questions?”.

and

  • Any natural person who controls a company through other means (e.g. shareholders’ agreement, the power to appoint or dismiss the majority of the members of the executive, management or supervisory body, veto rights);
  • In the absence of identification of the above persons (after exhausting all possible means to discover this) or in case of doubt about this: each natural person who belongs to the senior management of the company.

For non-profit organisations on the other hand, the following qualify as the ultimate beneficial owner:

  • the members of the board of directors;
  • the persons authorised to represent the non-profit organisation;
  • the persons entrusted with the daily management;
  • the persons in whose main interest the non-profit organisation was established or operates;
  • any other natural person who exercises final control over the non-profit organisation through other means.
  • Who is this intended for?

In general, the UBO register provides broad access to a large range of users. The main objective of this new set of rules is to obtain transparency.

The aforementioned Royal Decree lists the following categories of users having access to the data on the ultimate beneficial owners of a company, registered in the UBO register.

  • “the competent authorities”:

This category includes, among others, the tax authorities and other public institutions. They have free access to all the data that have been registered on the ultimate beneficial owners.

  • “the entities subject to obligations with regard to vigilance in relation to their clients”:

 This category covers a large number of persons/entities that have access to the registered details within the context of their specific obligations pursuant to the Law on the prevention of money laundering. This group of users includes, among others, financial institutions (banks, insurers, investment companies, leasing companies, …), bailiffs, lawyers, etc. They will have access to all the data that have been registered on the ultimate beneficial owners, but they will be charged an administrative cost.

  • “each citizen”:

In practice, this implies that every person will be able to access the register to consult the data on the ultimate beneficial owners of a company. Unlike the categories listed under 1) and 2) above, “citizens” will only be granted access to a restricted part of the information that has been registered. As such, the following data will not be visible: the first name, the day of birth, the full residential address and the national registration number of the ultimate beneficial owner. The following data, however, will be visible: the last name, the month and year of birth, the country of residence, the nationality, the size of the interest (e.g. the percentage of the number of shares held by that person), the data concerning the intermediary companies if any (e.g. holding structure). The “citizen” will also be charged an administrative cost to access these data. Finally, this category of users will only be able to search the ultimate beneficial owners of a specific company by the company’s name or registered number. This implies that a “citizen” is not allowed to start a search on a person’s name to identify all of the companies that he is the ultimate beneficial owner of.

According to the aforementioned Royal Decree, the data on the ultimate beneficial owners of a non-profit organization (“vzw”) however, may be accessed by the following categories of users:

  • “the competent authorities”

Same as above.

  • “the entities subject to obligations with regard to vigilance in relation to their clients”:

 Same as above.

  • “any other person or organization with a legitimate interest”

Other persons/entities than the ones listed under the categories 1) and 2) above, may access the data on the ultimate beneficial owners of a non-profit organization provided that they send a well-grounded request to the Treasury Administration in which they demonstrate their “legitimate interest” to consult the requested data. This legitimate interest will be considered in view of the objective of this new rules, i.e. the fight against money laundering/terrorism financing. In this case, the threshold is significantly higher than the one granting “citizens” the right to access the data on the ultimate beneficial owners of a company. However, in contrast to “citizens”, these persons or entities are not only able to do a search on the name/company number of the non-profit organization in question, but also on the name of a natural person/ultimate beneficial owner. The access rights will be restricted to a part of the information that has been registered on the ultimate beneficial owners. As such, the following data will not be visible: the first name, the day of birth, the full residential address and the national registration number. The following data, however, will be visible: the last name, the month and year of birth, the country of residence, the nationality and the way in which this person has an interest in the non-profit organization.  This category of users will also be charged an administrative cost to access the requested data.

  • “any other person submitting a written request to the Treasury Administration with regard to the (international) non-profit organization ‘(i)vzw’, foundation, trust, fiduciary or similar legal entity exercising control over a company, ‘vzw’, ‘(i)vzw’ or foundation”:

These persons may be granted access, provided that they send a specific request to the Treasury Administration in which they demonstrate that the involved entity exercises control over a company, ‘vzw’, ‘(i)vzw’ or foundation. In this case, it is also possible to do a search on the name of a natural person/ultimate beneficial owner, but only the data listed under 3) above will be accessible. In addition, they will also be charged an administrative cost to consult the register.

  • When?

On the initiative of the management body, the information concerning the ultimate beneficial owners of the enterprise must be registered within a month from the moment this information is known or changed. The information in the register must be verified, and updated if necessary, at least once a year.

In principle, the information had to be registered for the first time no later than 30 November 2018. The FPS Finance (“FOD Financiën”) has however announced that it allows enterprises to register the information before 31 March 2019 (meaning: no sanctions will be imposed until 31 March 2019).

  • How?

You can register (or change) the information about the ultimate beneficial owners of the enterprise using the online portal MyMinFin or MyMinFin Pro, under the Applications tab. To connect to the online application, you will need your electronic identity card or another authentication method approved by the FPS Finance (such as token, Itsme or a mobile app). Management may also appoint a proxy holder to handle the practical aspects of registration (for example the enterprise’s accountant).

  • Questions?

In addition to the said Royal Decree, the FPS Finance has also published other very useful information about the new UBO obligations on its website (https://finance.belgium.be/en/register-beneficial-owners). A FAQ document answers the most frequently asked questions, and a user manual is also available that can help you with registration.

 

This blog post has been updated on 2 April 2019 and 23 September 2019: see link and link.

 

Kim Van Herck and Margaux Van Hove, intui attorneys

kim.vanherck@intui.be / margaux.vanhove@intui.be

http://www.intui.be

 

[1] Belgian Law of 27 June 1921 concerning the non-profit organisations, the foundations and the European political parties and foundations.