THE UBO-REGISTER IS ON ITS WAY: DO I NEED TO REGISTER?

The UBO-register has been on its way for quite a while now. After the apparent delay and much later than in other countries, it is finally obligated to register UBO’s in the Netherlands as well. In this blog, I will describe who needs to register what, when and how this needs to be done. But first, I will shortly discuss the purpose of the register.

A short summary of the obligations will follow at the end of this blog. The most important is that you have until ultimately 27 March 2022 to comply with the obligation to register. While this might sound far away, it might be there before we know it.

Why an UBO-register?

On the basis of Article 30 of the fourth European anti-money laundering Directive (hereafter: the “Anti-money Laundering Directive”), the Netherlands is obligated to set up and maintain a central register including information about the ultimate beneficial owner(s) (in short “UBO(‘s)”) of companies and other legal entities incorporated in the Netherlands.

The purpose of the UBO-register is to prevent the use of the financial system for money laundering and the financing of terrorism. The UBO-register should make more transparent who eventually “pulls the strings” in companies and other legal entities incorporated in the Netherlands, so that these persons can no longer hide behind these entities. Regarding that the UBO-register is publicly accessible, persons and organisations will also be able check with whom they are doing business and whether they want to do so.[1]

The UBO-register will be maintained by the Netherlands Chamber of Commerce (CoC). Around 1,5 million companies and legal persons registered in the commercial register are required to register information regarding their UBO(‘s) with the CoC. This is possible as from 27 September 2020 and needs to be done within 1,5 years from that date.

Who is an UBO?

An UBO is the natural person(s) who ultimately exercises control in a company or legal entity through ownership or through other means (art. 1, paragraph 1 Money Laundering and Terrorist Financing (Prevention) Act). In short, it concerns the natural person who meets one or more of the following characteristics:

  • has a(n) (in)direct interest of more than 25% in the capital of the entity;
  • has more than 25% of the voting rights in the general meeting;
  • is the beneficiary of more than 25% of the assets; and/or
  • has effective control.

If no UBO can be designated on the basis of these characteristics, it is necessary to register the natural person that:

  • has the authority to dismiss director(s); or
  • is a member of the senior management

as the UBO of the company or legal entity.

Who needs to register the UBO(‘s)?

The following entities need to register their UBO:

  • Private limited companies and public limited companies that are not listed on the stock exchange (besloten vennootschappen en naamloze vennootschappen die niet-beursgenoteerd zijn);
  • European Companies (SEs);
  • European Cooperative Societies (SCEs);
  • European Economic Interest Groupings (EESVs) which, according to their statutes, have their statutory seat in the Netherlands;
  • Co-operatives (coöperaties);
  • Mutual insurance associations (onderlinge waarborgmaatschappijen);
  • Associations with full legal capacity (verenigingen met volledige rechtsbevoegdheid);
  • Associations with limited legal capacity operating a business (verenigingen met beperkte rechtsbevoegdheid maar met onderneming);
  • Foundations (in Dutch: stichtingen);
  • Partnerships (personenvennootschappen): professional partnerships, general partnerships, limited partnerships (maatschappen, v.o.f. en C.V.);
  • Shipping companies (rederijen);

The obligation to register UBO(‘s) rests with the entities.

Registration is not mandatory for the UBO(‘s) of:

  • Private limited companies and public limited companies listed on the stock exchange (beursgenoteerde besloten en naamloze vennootschappen);
  • 100% subsidiaries of listed companies;
  • Company owned by a natural person (eenmanszaken);
  • Associations of owners (verenigingen van eigenaars);
  • Legal entities in incorporation;
  • Associations with limited legal capacity not operating a business (verenigingen met beperkte rechtsbevoegdheid die geen onderneming drijven);
  • Legal entities under public law (publieke rechtspersonen);
  • Other legal entities under private law, including historical legal entities (such as guilds and courtyards (gilden en hofjes));

What is registered?

First of all, the following information relating to the UBO(‘s) must be registered in the UBO-register:

  • surname and first name;
  • birth month and year;
  • nationality;
  • country of residence;
  • nature and extent of the economic interest held by the UBO (25-50%, 50%-75% or 75-100%).

This information is publicly accessible and thus, everyone may request this information from the CoC as of 27 September 2020 against payment of € 2,50.

Furthermore, the following additional information needs to be registered:

  • date, place and country of birth;
  • address;
  • the citizen service number (BSN) if granted, and – if granted by the state of residence of the UBO – a foreign tax identification number (TIN);
  • copy of the documentation on the basis of which the identity of the UBO was verified (passport / ID);
  • copy of the documentation substantiating why the natural person qualifies as an UBO and demonstrating the nature and extent of the economic interest held by the UBO.

This additional information will only be accessible for the competent authorities (such as DNB and AFM) and the Financial Intelligence Unit (FIU), in the context of carrying out their duties and obligations under the Anti-money Laundering Directive.

This information about the UBO will remain available for up to ten years after deregistration of the company or other legal entity incorporated in the Netherlands.

Exceptions to public disclosure

In order to protect the personal privacy of the UBO, an UBO may request the CoC to have all or part of its public data protected due to exceptional circumstances. The protection does not apply to the nature and extent of the economic interest, as this is not directly traceable to the natural person.

In case of a request to protect/shield (certain) information to the CoC, the UBO must prove that:

  1. public disclosure exposes him/her to a disproportionate risk;
  2. public disclosure exposes him/her to the risk of fraud, abduction, blackmail, extortion, harassment, violence or intimidation;
  3. he/she is under age;
  4. he/she is legally incompetent (e.g. a person placed under guardianship or under administration).

The decision of the CoC on this request is an ‘order’ within the meaning of Article 1:3 of the General Administrative Law Act (in Dutch: Algemene wet bestuursrecht or Awb) against which objection may be made or appeal may be lodged. Until the order is final (after objection and appeal), the information regarding the UBO is not publicly available. Protected information will however, remain accessible to credit and financial institutions, notaries, other competent authorities and the FIU.

What if the information is not registered timely?

The company or legal entity is obligated to request and keep the data stated above from its UBO(‘s). The entity also needs to ensure that the information in the CoC is correct and complete at all times. Failure to comply with the obligation to register in the UBO-register may be sanctioned under both administrative and criminal law.

The Economic Enforcement Bureau (in Dutch: Bureau Economische Handhaving or BEH), part of the Dutch Tax Authorities, is responsible for the enforcement of the obligation to (timely) report and register the UBO-information stated above. The BEH may impose an order subject to a penalty and/or an administrative fine in case of noncompliance. Acting contrary to the obligation under the Trade Register Act further qualifies as an economic offence within the meaning of the Economic Offences Act. A violation may be sanctioned with detention for a maximum of six months, a community order or fine.

The UBO is also obliged to cooperate in providing the information necessary for registration. Failure to comply with this obligation also is an economic offence within the meaning of the Economic Offences Act and violation of this obligation may be sanctioned as well.

Summary

As from 27 September 2020 the above mentioned companies and legal entities need to register their UBO(‘s) at the CoC within 1,5 years. They will need to request information from their UBO(‘s). The surname and first name, birth month and year, nationality, country of residence and nature and extent of the economic interest of the UBO will be publicly available. Some additional information (such as complete birth date, address, BSN and TIN) also need to be registered. This information is available for competent authorities and FIU only.

In exceptional circumstances, the CoC can be requested to protect (certain) information of the UBO. The applicant must prove that it concerns an “exceptional situation”. It is possible to lodge an objection and appeal against the order of the CoC on this request. Any protected information will however, remain accessible for competent authorities and FIU.

Failure to comply with the obligation to register the information above in the UBO-register may be sanctioned under both administrative and criminal law (e.g. with a fine). Thus, please make sure that the required information regarding your UBO(‘s) is obtained from the UBO(‘s) and registered in time and to register any changes in the information about the UBO(‘s) with the CoC afterwards.

 

[1] See: Explanatory Memorandum, § 3.1.2, via https://zoek.officielebekendmakingen.nl/kst-35179-3.html

Attorneys and Tax Advisors

Huan Tan

Huan Tan

+31 (0)88 30 300 31 tan@benvalor.com