Check your UBO: from September 2020 obligation to register
Category: Administrative law
From 27 September 2020, certain entities incorporated in the Netherlands are obliged to register their Ultimate Beneficial Owners (UBO’s) in a ‘UBO Register’.
In a nutshell, the obligation creates a centralized register of information on UBO’s of certain entities incorporated in the Netherlands. The centralised UBO Register will be administered by the Dutch Chamber of Commerce (in Dutch: Kamer van Koophandel).
This obligation adopted by the Dutch Senate was enacted following the amended 4th European Anti-Money Laundering Directive (2018/843). As a result, all EU member states were required to implement national legislation reflecting the amendment. Accordingly, the Trade Register Act 2007 (Handelsregisterwet 2007), the Anti-Money laundering and terrorist financing (prevention) Act (Wet ter voorkoming van witwassen en financieren van terrorisme) and the Economic Offenses Act (Wet op de economische delicten) were revised.
Wwft: registration enhances transparency The main objective of the obligation is to create transparency. The register will provide important information on who the ultimate controllers are of entities established in the Netherlands. This, in turn, allows individuals and organizations to make better informed decisions about who to do business with. Broadly speaking, this fits into the ultimate regime of the legislation which seeks to prohibit individuals hiding their financial and economic crime behind corporate veils.
So which entities are affected by the obligation?
The registration obligation is compulsory for the following entities:
- unlisted BV’s (private limited liability companies) and NV’s (public limited liability companies);
- other legal persons: foundations (stichtingen), associations (verenigingen), mutual insurance companies (onderlinge *waarborgmaatschappijen*) and cooperatives (coöperaties);
- private partnerships (maatschappen), general partnerships (vennootschappen onder firma), and limited partnerships (commanditaire vennootschappen);
- shipping entities (rederijen);
- European public limited companies (SEs) and European cooperative societies (SCEs) having their registered office in the Netherlands;
- European economic partnerships; and
- Dutch-qualified Public Benefit Organizations (Algemeen Nut Beogende Instelling (ANBI)
- Those entities which are exempt from the obligation are single-individual businesses (eenmanszaken), legal entities governed by public law (publiekrechtelijke rechtspersonen), churches (kerkgenootschappen), associations with limited legal capacity that don’t conduct a business (verenigingen met beperkte rechtsbevoegdheid die geen onderneming drijven), owners’ associations (verenigingen van eigenaars), certain types of historical legal entities and foreign legal entities with a main office or branch office in the Netherlands.
Who classifies as a UBO?
The formal definition of a UBO can be found in Anti-Money Laundering and Terrorism Financing (prevention) Act (Wwft) and in secondary legislation such as the Wwft Implementation Decree 2018 (Uitvoeringsbesluit Wwft 2018). Breifly, these definitions define a UBO as a (natural) person:
- who owns more than 25 percent of the shares in an entity;
- with more than 25 percent of the voting rights; or
- persons who have ‘actual’ control of the company.
- Importantly, even if an individual holds less than 25% of the shares or voting rights in a particular entity, they can also be classified as a UBO if such persons have ultimate ownership or control of a company in any another way. As a result, all managing directors and managing partners will be regarded as a pseudo-UBO.
- In addition, if the ultimate ownership of, or control over, a company is held indirectly (for example through another legal entity such as a trust office foundation, or any other structure of legal persons) it is the natural person(s) with the ultimate ownership interest or control who are to be regarded as the UBO.
What UBO information must be registered?
The entities described above are required to submit the following information on all their UBO’s. A part of this information will become publicly accessible in the Dutch Trade Register while all other information will only be accessible to the Financial Intelligence Unit (FIU) and specific regulatory authorities such as the Dutch Financial Supervisory Authority (AFM).
Publicly accessible UBO-information
- Surname and last name;
- Month and year of birth;
- Country of residence;
- Nature and extent of the economic interest held by the UBO (voting rights or ownership interests, ranging from: up to 25%; 25% to 50%; 50% to 75%; and 75% to 100%);
- Not publicly accessible UBO-information
- Citizen Service Number (Burgerservicenummer, ‘BSN’) and foreign tax identification number (TIN);
- Date of birth;
- Country and place of birth;
- Copy of passport or ID;
- Documentation supporting (i) the conclusion that the individual qualifies as UBO and (ii) the nature and size of the beneficial interest held.
- In order to access the publicly accessible information, it is important to note that this will be monitored. The general public will need to register for access to the information as well as pay a fixed fee. Furthermore, it has been stated that the identity of the persons who access the register will be registered by the Chamber of Commerce and it will be visible to UBO’s how many times their information has been consulted.
When do I need to register the UBO-information?
Existing entities must register their UBOs with the Chamber of Commerce by the end of March 2022, while newly established entities in the Netherlands will have to do so upon their first registration in the trade register. The registration of UBO-information will be a prerequisite to the incorporation process with the Chamber of Commerce.