Business owners: beware of the obligation to register the ultimate beneficial owner in the new UBO register

On June 23, 2020, the Senate adopted the legislative proposal to implement the so-called ‘UBO register’. From the entry into force on July 8, 2020, companies are obliged to investigate who the ultimate beneficial owners of the company are.

The next step was the “launch” of the UBO register. The UBO register was opened on September 27, 2020. In this register, companies must record who the ultimate owners of the company are.

We recommend you to check whether these new obligations also apply to your company. We are of course happy to help you with that.

What is a UBO?

The abbreviation UBO stands for ultimate beneficial owner. The ultimate beneficial owner is the private individual who is the ultimate owner and/or has actual control over a company or other legal entity. A natural person who (directly or otherwise) holds more than 25 percent of the shares or voting rights, qualifies as a UBO. A person who in some other way ultimately owns or has actual control over a company can also be regarded as a UBO.

There may be several UBOs within one company. It may also be the case that no natural person can be appointed as a UBO. In that case, a so-called “pseudo-UBO” must be appointed. In the case of a private limited company, this could for example be the statutory director, and in a general partnership for example one of the partners.

What is the UBO register?

The UBO register provides insight into who is actually in charge of the company, whether or not in the background. Companies must collect information about their UBOs and must register this information in the UBO register. The information must be “up-to-date”; any changes must be registered almost immediately.

Part of the information related to the UBO will be publicly accessible. This allows companies and organisations to make better-informed decisions about with whom they will or wish to do business.

All EU member states must have a UBO register. The Dutch UBO register will be administered by the Dutch Chamber of Commerce.

Why is there a UBO register?

The main purpose of the implementation of the register is to combat financial and economic crime, such as money laundering, corruption, tax evasion, fraud and/or financing terrorism. The introduction of this registration obligation is the result of European regulations EU Anti-Money Laundering Directives.

What is registered?

As stated, the UBO register records who the ultimate beneficial owner of a company is. The following information about the UBO must be registered:

1. The Dutch Citizen Service Number / foreign tax identification number;
2. the name, date of birth as well as country and place of birth;
3. nationality, state of residence and address;
4. the nature and extent of the economic interest held, divided into the classes: more than 25-50%, 50% -75% and 75% -100%.

Certain documents must also be submitted to the Chamber of Commerce, including an identification document of the UBO and documents showing the nature and extent of the economic interest.

Who can view the registered data?

Not all registered data is made public. Most of the registered data can only be viewed by a number of competent authorities and the Dutch Financial Intelligence Unit (the designated organisation in the Netherlands where reporting entities must report unusual transactions).

The public part of the register cannot be searched by the name of the UBO. The public part can only be searched by name of the company or legal entity. In exceptional cases, a UBO can also ask the Chamber of Commerce to shield this public data.

To whom does the obligation to register apply?

The obligation to register will (among others) apply to private limited companies, public limited companies, foundations, associations and general partnerships. The obligation to register will (among others) not apply to listed companies, sole proprietorships and owners’ associations.

Existing companies are given 18 months to register their UBO(s). According to the Minister of Finance, approximately 1.7 million existing companies have to register a UBO due to this new law.

New companies must register their UBO immediately upon registration of the company with the Chamber of Commerce.

“Existing companies are given 18 months to register their UBO(s). New companies must register their UBO immediately upon registration of the company with the Chamber of Commerce.”

Failure to comply

Acting contrary to the obligation to register the (correct) UBO with the Chamber of Commerce, constitutes an economic offense. In that case, you risk a penalty: a fine up to € 21,750 and (in exceptional cases) a prison sentence up to six months. Therefore, it is important to take action in time.

Conclusion

Would you like to know more about the UBO register, or do you want to know whether you qualify as a UBO? Don’t hesitate to contact us.