In the past weeks, the Dutch government and the European Commission have published several documents with regard to the implementation of the UBO-register. These publications provide more information on the definition of an UBO, the public access to the UBO-register and the proposed implementation of the register. In this update we discuss the most important consequences.
In 2015 the European Commission published the 4th Anti-Money Laundering Directive (2015/849) on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Part of this directive is the implementation of a register with the Ultimate Beneficial Owner (‘UBO’) of every legal entity registered in a Member State. A proposed amendment to the 4th Anti-Money Laundering Directive has been published by the European Commission on 19 April 2018. Later in the year the amended Directive will be published.
Changes in the Directive
The proposed amendment to the Directive includes, among others, amendments with regard to the implementation of the UBO-register. The following amendments are most relevant:
- The UBO-register should be accessible to the public in all Member States. Only in exceptional circumstances an exemption can be made to exclude information on an individual UBO in the register.
- All Member States should implement an UBO-register for trusts. This register will not have public access.
- The UBO threshold will not be lowered from 25% to 10% of the ownership of a legal entity.
The consequences of the amended Directive are limited for the implementation of the Dutch UBO-register.
The most important change for the Dutch UBO is the obligation of the implementation of a Dutch UBO-register for trusts. Previously, the Dutch Minister of Finance was of the opinion that there was no need for a Dutch UBO-register for trusts because the trust is unknown in Dutch law. The Dutch UBO-register for trusts will be dealt with in a separate legislative process from the legislative process of the UBO-register for legal entities.
The obliged public accessibility of the UBO-register is of little consequence for the implementation of the Dutch UBO-register since the Dutch Government has always intended to make the UBO-register available to the public.
Postponement to 2019
The final legislative proposal for the Dutch UBO-register was due to be sent to Parliament in the first half of 2018. As a result of proposed changes in the (amended) Directive, the Dutch Minister of Finance has announced that no legislative proposal will be sent to Parliament before 2019. Part of the reasoning is that the Minister wants to anticipate on the amended Directive. We note that as a consequence the Dutch government has not met the imposed deadline of 26 June 2017.
Clarification of the Dutch UBO-definition
A draft Dutch Anti Money Laundering and Terrorism Financing Decree (the “Decree”) has been published by the Minister of Finance on 6 April 2018. In this Decree the Dutch definition of a UBO for client identification purposes is clarified. The definition of an UBO for the purpose of the UBO-register will materially correspond with the UBO definition for client identification, although minor differences may occur.
A definition of specific individuals to be considered as UBO’s is given in the Decree. This list is not exhaustive, individuals with a different relevant interest in a company that is not mentioned in the list may also be considered to be a UBO. Furthermore it is stated that legal entities may have more than one UBO.
BV and NV
Individuals with a – direct or indirect- interest of more than 25% of the share capital, voting rights or ownership interest, in a Dutch BV of NV are considered to be a UBO. The individual will also qualify as a UBO of the BV or NV if the ownership interest is held through depository receipts issued by a Dutch foundation (Stichting Administratiekantoor).
The Dutch Foundation is not considered a trust or similar entity and is therefore to be included in the “regular” Dutch UBO-register according to the Dutch Minister of Finance. Individuals with a – direct or indirect – interest of more than 25% or individuals who can exercise more than 25% of the voting rights with regard to amendments in the articles of the foundation, or individuals with effective control over the foundation are considered to be a UBO of the foundation.
For a limited partnership (the Dutch CV), the UBO’s are: the individuals with a – direct or indirect – interest of more than 25% in the partnership, individuals who can exercise more than 25% of the voting rights with regard to the amendments of the agreement of the partnership or with respect to the execution of the agreement other than through deeds of management, or the individual that can exercise the effective control of the partnership.
Uncertainty about the UBO
In case no individual with an interest of 25% of more in a legal entity, foundation or limited partnership can be identified, or if there is a reasonable doubt about the identified UBO’s, the senior managing officials of the entity will be considered as UBO’s. It is not clear whether the senior managing officials of a legal entity should also be considered as UBO in case there are no individuals with more than 25% interest in a legal entity.