News Update Corporate M&A
Registration of ultimate beneficial owners
25 September 2020
13 January 2022In the below memo we discuss the UBO register for legal entities. Important is that existing legal entities must register their UBO(s) ultimately on 26 March 2022. This deadline is approaching fast.
Additionally, the Dutch Senate approved the Act implementing registration of ultimate beneficial owners of trusts and comparable legal constructs. This Act obliges trusts and comparable legal constructs to register information about their UBO('s) in a register kept by the Chamber of Commerce (the “Trust Register”). It is not yet clear when the Trust Register will be implemented.
25 September 2020On 7 July 2020, the Act implementing registration of ultimate beneficial owners of companies and other legal entities (the "Implementation Act") was published in the Dutch Government Gazette. This Act, which applies to all legal entities (except listed companies and their direct and indirect full subsidiaries), obliges them, as of 27 September 2020, to register information about their ultimate beneficial owner(s) (“UBO") in a register kept by the Chamber of Commerce (the "UBO Register").
What is UBO?A UBO is any natural person who is the ultimate owner of a company or who exercises control over a company or other legal entity. For legal entities, this will be any natural person who holds more than 25% of the shares, the voting rights or the ownership. A natural person who holds a beneficial interest of less than 25% in a company, but exercises control over it through other means, is also considered a UBO.
If a company or legal entity does not have a UBO, a pseudo UBO must be assigned. For the purposes of the Implementation Act, a pseudo UBO refers to the board of directors under a company’s articles of association (i.e. all directors, irrespective of their legal authority). If a legal entity has been appointed as director, each natural person on the board of that legal entity is considered a pseudo UBO.
Registration in and access to the ubo registerThe UBO register will include the following information about the UBO:
a. the citizen service number (burgerservicenummer); b. a tax identification number (if the UBO is not resident in the Netherlands); c. name, month and year of birth, state of residence, nationality; d. date, place and country of birth; home address; and e. the nature of the UBO's beneficial interest (shares, voting right, ownership) or the UBO's control exercised through other means and the percentage (in bandwidths of >25-50%, 50-75%, and >75%) and a substantiation.
On registration, the legal entity must provide documentation to enable verification, e.g. an energy bill, register of shareholders, organisation chart, deed of incorporation, etc.
The public will only be able to access the UBO Register information referred to at c. and e. above. There will be a fee to do so. The other information is only accessible to the Dutch Financial Intelligence Unit (FIU) and other competent authorities.
Registration in the UBO Register is mandatory, although the entity concerned may request that certain information about the UBO is shielded from the public. This request will only be granted if the UBO is (a) under police protection, (b) a minor, or (c) placed under guardianship.
When must a UBO be registered?Existing legal entities must register their UBOs within eighteen months from 27 September 2020, i.e. on or before 27 March 2022. Legal entities that are incorporated after 27 September 2020 must register their UBO within one week of incorporation. The Chamber of Commerce will only assign a CoC number if the legal entity simultaneously registers the UBO. Any change to the initial UBO registration must be registered within one week of the change.
EnforcementLegal entities will be given the opportunity, in principle, to correct any errors in the UBO registration. Minor offences are punishable with a maximum fine of EUR 21,750. In addition, an order subject to a penalty for non-compliance may be imposed. If criminal action is taken, the legal entity (and/or its directors) risk a maximum term of imprisonment of six months, community service or a maximum fine of EUR 21,750. If intent is proven, it faces a maximum term of imprisonment of two years.
Other obligations under the implementation actAlthough most of the attention focuses on the UBO Register, the Implementation Act also imposes some other obligations on legal entities and creates a specific obligation for foundations. For example, under the Implementation Act, legal entities must, as of 8 July 2020, collect and regularly update information about their UBOs. UBOs must disclose information about themselves to the legal entity. The information legal entities must collect about their UBO is the same information that must be included in the UBO Register. Foundations are additionally required, as of 8 July 2020, to keep an internal register of beneficiaries that have received a distribution of less than 25% of the capital available for distribution.