Obligations on UBO Registration
What are UBO’s
UBOs (Ultimate Beneficial Owners) are the persons who ultimately benefit from, or have a more than 25% interest in an organisation. This organisation might be a private limited company or a commercial or public partnership, E.E.I.G, foundation, shipping company etcetera.
Why to register?
The UBO register is a direct consequence of European regulations and came into effect on 27 September 2020. Its aim is to prevent abuse of the financial systems: for laundering money, for example, and for financing terrorism. The UBO register makes clear who is really in charge of organisations founded in an EU member state, so that persons who engage in financial-economic crimes can no longer hide behind organisations. And because the register is public, it allows you to perform a more thorough check on who your business partners are.
Each organisation is responsible for determining its UBOs, according to the applicable requirements for registration.
Some organisations are not required to register, such as sole traders, companies that operate on the stock exchange, owners associations, legal entities under public law and some specific mentioned private bodies.
Where to register?
Every EU Member State has to keep a UBO register. For example in Malta, the Malta Business Registry (MBR) is the keeper of the UBO register. In the Netherlands, the Netherlands Chamber of Commerce KVK has been appointed. Foreign legal structures are to be registered in their home country, where they are established in.
When and how to register?
When starting a new company, the UBOs are registered directly when registering the company.
Registration for existing organisations is possible online as well as in written. Each country has its own requirements regarding the registration term. For example: registration in Malta is required (and to be confirmed on a yearly basis!), within 42 days after the company’s registration anniversary, by filing the annual return. In the Netherlands, a special term is applicable, and the first registration is to be submitted not later than 27 March 2022.
All changes regarding the UBO must be submitted, usually within 7 or 14 days (depending on the member state of establishment).
What to register and what is public information?
Due to legal requirements, part of the information recorded in the UBO register is public. Everyone may view the following data:
- first and last name
- date of birth
- country of residence
- the type and scope of the UBO's interest
The register must act in full accordance with the GDPR guidelines when handling the UBO's data.
Part of the UBO data is not public. It can only be viewed by the competent authorities, such as the Public Prosecution Service. They use the data for their research into the use of the financial system for money laundering and terrorism financing.
High penalties occur
The powers of the Registrar in matters concerning registration matters have been widened, i.e. if the beneficial ownership information has not been submitted or if the Registrar is not satisfied that the company has provided accurate and up to date information on the beneficial owners.
Furthermore, penalties imposed by the Regulations with respect to incidents whereby the Registrar deems it necessary to update the beneficial ownership information in the register in terms of the Regulations, is being increased and every officer of the company shall be liable to a penalty of not more than one hundred thousand euro. The administrative penalties have also been increased and start from Euro 5,000 (Malta).
In the Netherlands, non-compliancy can ultimately lead to a prison sentence of up to six months, a community service order, or a fine of (currently) € 21,750. In addition, discovery of an incorrect registration may give rise to a criminal investigation into the entity or its UBOs.
It is therefore essential that companies understand and appreciate the remit of their obligations emanating from the BO Regulations so as to ensure full compliance therewith.
The guidance document issued by the Malta Business Registry can be accessed and downloaded from online portal: https://mbr.mt/wp-content/uploads/2020/10/Guidance-document-on-the-Register-of-Beneficial-Owners-of-Commercial-Partnerships.pdf
The guidance document issued by the Dutch Chamber of Commerce (Nederlandse Kamer van Koophandel) is to be downloaded via: https://www.kvk.nl/inschrijven-en-wijzigen/ubo-opgave/