On 4 April 2019 the bill for the implementation of the UBO register was submitted to the Lower House. From January 2020, companies are obliged to register their owners or persons who have control in a so-called UBO register.
This is the result of European rules, the fourth European anti-money laundering directive. The purpose of the register is to combat financial and economic crime, such as money laundering, corruption, tax evasion, fraud and/or financing of terrorism.
What is a UBO?
UBO stands for the Ultimate Beneficial Owner. This is the person who is the ultimate owner or has ultimate control over a company, foundation, association, etc. (a so-called legal entity). It always concerns a natural person. In the bill, the minister indicated per category of entities who qualifies in any case as UBO.
In short, a natural person qualifies as UBO if s/he:
- is directly or indirectly the holder of more than 25 percent of the (bearer)shares, voting rights or ownership interest for example by means of a right to payment of profit, reserves or liquidation payment;
- directly or indirectly in any other way is the ultimate owner or has ultimate control of the legalentity; in other words, s/he has actual control of the entity through other means. For example the power to appoint or dismiss the majority of the members of the management board or supervisory board of the company.
If, under the regulations, no natural person qualifies as a UBO, then one of the management staff members must be designated as a “pseudo-UBO”. For BVs (private limited companies) and NVs (public limited companies) this will usually be a (statutory) managing director; for partnerships this will be one of the partners. The same registration obligation applies to the pseudo-UBO as to a (real) UBO.
What is the UBO register?
The UBO register provides insight into who, whether or not behind the scenes, is pulling the strings of legal entities established in the Netherlands.
All EU member states must have a UBO register and such UBO register has to be in force in all EU member states on 10 January 2020. The UBO registers will be mutually accessible through cooperation between member states.
The Dutch UBO register will become part of the trade register and thus fall under supervision of the Chamber of Commerce. Part of the UBO information will be publicly available. This allows (legal) entities and organisations to make better informed decisions about with whom they are going to do business.
Institutions that are obliged by law (upon the Anti-Money Laundering and Anti-Terrorist Financing Act ( Wwft)) to prevent money laundering and the financing of terrorism by carrying out client investigations are required to report errors that they observe in the register to the Chamber of Commerce.
To whom does the UBO registration obligation apply?
The UBO registration obligation will apply to:
- BVs and (non-listed) NVs;
- other legal entities; foundations (including stichting adminstratiekantoor), associations (with full legal capacity and associations without full legal capacity that run a business), mutual societies and cooperatives;
- Partnerships (personenvennootschappen): partnerships (maatschappen), general partnerships and limited partnerships;
- shipping companies;
- European public limited companies (SEs);
- European cooperative societies (SCEs); and
- European economic partnerships.
In short, the obligation to register will not apply to listed companies, sole proprietorships, public law legal entities, owner’s associations, denominations and some historical legal entities(such as courtyards, farmers’ markets, foundations and guilds).
In addition, UBOs of foreign companies are not included in the register. The same applies to legal entities with headquarters or subsidiaries in the Netherlands. They will have to comply with the regulations in the country where they were established.
What information is public?
The following UBO data becomes publicly accessible:
- first name and surname;
- birth month and year;
- state of residence;
- nature and extent of the UBO’s economic interest. Regarding the extent, the exact interest will not be made available, nor will amounts of money be included in the UBO register. Ranges of more than 25-50%, 50% -75% and 75% -100% will be used.
The following information is thusnot public: BSN / foreign tax identification number (TIN), date of birth, country and place of birth, home address, copy of a valid proof of identity and copy of documentation that substantiates why the person has the status of UBO as well as the nature and the extent of the demonstrated economic interest held by the UBO. However, since this information will only made available to a number of (government) bodies and financial institutions, it must be registered and kept up-to-date in the Netherlands.
The public part of the UBO register can only be searched with the name of the company or legal entity. Searching by name of the UBO is therefore not possible. Costs are involved when retrieving data from the register.
Safeguards have been established to protect the privacy and private lives of the UBOs. The register meets the data protection requirements and the General Data Protection Regulation (GDPR).
In exceptional circumstances, a UBO may request the Chamber of Commerce to have the public data fully or partially shielded. In such a request, the UBO must demonstrate that exposure of the data leads for him/her to a disproportionate risk, a risk of fraud, blackmail, abduction, extortion, harassment, violence or intimidation, or that the UBO is a minor or is incapacitated for action. During the period that the request for public data protection is being processed, the information will not be publicly accessible.
Bodies such as the Public Prosecutor’s Office, the police, the tax authorities and the Financial Intelligence Unit can always view this data.
There are various sanctions for violating the obligation to register and maintain the UBO data in the UBO register. For example, a breach of the registration obligation may result in a prison sentence of up to six months, community service or a fine of up to € 20,750. In addition, the minister can impose a burden under penalty or an administrative fine. Sanctions thus provide compelling reasons to comply with the obligation to register.
Added value of the UBO register?
The UBO register does not enjoy unanimous support. For example, the Royal Notarial Professional Organisation (KNB) believes that the usefulness of the register will be limited. The register will be filled by the entities to be included therein. As a result, the KNB considers it likely that the content of the register will not be reliable. The content could therefore, according to the KNB, only be used as a tool for establishing the identity of UBOs.
The future will have to show whether the UBO register achieves its intended goal. However, the UBO register and the UBO qualification can have far-reaching consequences. Although the UBO register only comes into effect in January 2020, it is good to yet be aware of this register and its implications.
Do you want to know more about the UBO register or confirmation as to whether you qualify as a UBO? Please contact us. We will keep you informed of relevant developments.