Companies and other legal entities need to register at least one UBO. A company’s owners or executives are known as UBOs (Ultimate Beneficial Owners). The UBO register, a portal used for owner registration, aids in the prevention of financial and economic crimes like corruption, tax fraud, and money laundering. It is evident who receives money from the register. So, it is impossible for someone to use a corporation as a cover for any potential financial crimes.
A natural person is deemed to be a beneficial owner by the Financial Action Task Force (FATF) if they fulfil any of the following requirements:
- Owns 25% of the stock or capital of an entity
- Has at least 25% of the voting rights in a body
- Is the legal guardian of a customer who is a minor
- Has legal authority over the client
- Is a corporation stockholder who holds anonymous bearer shares
- Is a corporate director hired intentionally to hide a true owner
Additionally, if your enterprise is a subsidiary of a holding company, the UBO is the holding company’s owner.
The FATF advises service providers to gather several fundamental pieces of information, including ‘at a minimum’ specifics about the company’s ‘legal ownership and control structure,’ to ascertain beneficial ownership. The FATF also emphasised the necessity for service providers to be able to identify UBOs swiftly and effectively, stressing the importance of ‘the widest possible range of international cooperation.’
There is a requirement for numerous organisations to register their UBOs starting on September 27, 2020. It is illegal for a company to use unregistered business objects (UBOs).
UBO Registration Compliance in Different Jurisdictions
Globally, UBO registries are used to keep track of who owns and controls legal entities. However, specific compliance procedures vary greatly from country to country, which is challenging for multinational corporations.
Bolder Group provides full UBO compliance services, including registration, to keep these procedures effective wherever you conduct business.
UBO in the US
The US approved the Corporate Transparency Act in 2020, requiring businesses all around the nation to publish beneficial ownership information to the government. Due to administrative hiccups in 2021, the bill was not set to take effect on 1 January 2022, as originally planned. However, the act is expected to become law at some point this year, and industry experts anticipate the publication of an update to this regulation by 2022, though the exact date is open to interpretation.
UBO Reporting Requirements
The Corporate Transparency Act fits best into the registry approach category when compared to the FATF’s Best Practices on Beneficial Ownership for Legal Persons. The FinCEN requires the following information:
- The complete legal name of a beneficial owner
- The birthdate of a beneficial owner.
- The current residential or commercial street address of a beneficial owner
- A unique identification number issued by the government and allocated to that beneficial owner from a valid form of identification (such as a passport, driver’s license, or other document issued by a U.S. state).
The registry will not be accessible to the public, but police enforcement and financial organisations may access the data (with customer consent).
The definition of a beneficial owner under the Act is clear: A beneficial owner is any natural person who, directly or indirectly, through any agreement, arrangement, understanding, connection, or other arrangements:
- Has significant controlling influence over a corporation or limited liability business;
- Possesses at least 25% of the ownership stake in a corporation or limited liability company;
- Receives significant financial advantages from a corporation’s or limited liability company’s assets.
The punishment for providing inaccurate or fraudulent UBO information is up to $10,000 in fines and two years in prison.
UBO in The Netherlands
As of 27 March 2022, more than 1.5 million organisations in the Netherlands are mandated to register their UBOs.
Dutch legal entities required to register UBOs
UBO registration in Holland depends on the type of business entity. The following organisations must register UBOs:
- unlisted private companies and unlisted public limited companies
- associations with full legal capacity
- associations with limited legal capacity but with business activity
- mutual insurance companies
- partnerships: professional partnerships, general partnerships and limited partnerships
- shipping companies
- European limited liability companies (SE)
- European cooperative societies (SCE)
- European economic interest groupings that have their registered office in the Netherlands according to their statutes (EEIG)
UBO registration is also essential for denominations and churches. When this becomes feasible—which is yet uncertain—the churches will be notified.
Organisations without registration duty
If you have one of the following organisations, you are exempt from registering your UBOs:
- sole proprietorships/sole traders
- listed private companies and listed public limited companies
- 100% subsidiaries of listed companies
- owners’ associations
- legal structures in formation
- associations with limited legal capacity and without commercial activities
- legal entities under public law
- other private bodies, including historical legal entities such as guilds and courtyards
UBO registration must be maintained in each EU member state. Your UBO is registered with the Chamber of Commerce (KVK) in the Netherlands. The UBO register must have at least one UBO entered by each organisation that must register. Registering requires authorisation from a signatory inside your organisation. When new businesses register with the Chamber of Commerce or a civil-law notary, they must also register as UBOs.
When it comes to foreign UBO registration, you must add a foreigner to the UBO registry if they have an interest in your Dutch firm as indicated. It doesn’t matter if they are a Dutch citizen or not, or whether they reside in the Netherlands or elsewhere.
On foreign legal entities, the ultimate beneficial owners of foreign corporations with only branch offices in the Netherlands are not required to be registered there. An Ltd. or GmbH should file their UBOs with the local UBO registry.
If you need personalised advice on UBO registration in the Netherlands, you may contact Bolder Launch for a free consult.
UBO registration in Luxembourg
A law enacted on 13 January 2019, went into effect in Luxembourg on 1 March 2019, introducing new disclosure requirements with respect to ultimate beneficial owners of legal organisations. By means of this statute and in compliance with EU law, Luxembourg has established a national register for UBOs, imposing requirements and obligations on any legal body operating under Luxembourg law.
Data entered in the UBO Register
The UBO Register requires the following information from each UBO:
- Full name
- Date and place of birth
- Country of residence
- Private or professional address
- National (Luxembourg or foreign) identification number (as applicable)
- Details of the nature of, and the extent of, the beneficial interest held in the relevant entity
Board of manager members may occasionally be recognised as UBOs. Despite the Luxembourg Chamber of Commerce’s criticism, the Law does not explicitly say that the information contained in the UBO Register is to be restricted to the members of the board of managers for investment funds with a corporate nature.
The following entities (the “Obliged Entity”), who are listed in the Luxembourg Trade and Companies registry, will have information about them in the UBO Register.
- Almost all commercial companies, such as private limited liability company (Sàrl), public limited company (SA), partnership limited by shares (SCA)
- General corporate partnership (SNC), common limited partnership (SCS), special limited partnerships (SCSp), cooperative company (Coop), European company (SE)
- Economic interest groupings
- European economic interest groupings
- Civil law companies
- Non-profit organisations
- Pension savings associations (ASSEP)
- Agricultural associations
- State and municipal public institutions (établissements publics)
- Mutual insurance associations
In contrast to the original version of the Bill, the Luxembourg lawmaker expanded the list of the Obliged Entities by including mutual funds (Fonds Commun de Placement, FCPs) and branches of foreign entities (commercial or civil companies, economic interest and European economic interest groupings subject to other European regulations).
The UBO Register covers publicly traded firms that are listed on a regulated market in Luxembourg, another member state of the European Economic Area, or in a different third country with comparable international criteria. Only the market on which they are listed must be disclosed by these businesses.
Bolder Group as your UBO service provider
UBO registries are used by jurisdictions across the world to keep track of who is the ultimate beneficiary and to assemble and manage their knowledge of who controls local legal organisations.
Global UBO compliance, like registration, is extremely challenging due to the enormous variations in the specific compliance procedures across different jurisdictions, including legal definitions, information requirements and reporting deadlines.
Regardless of where you are, Bolder Group can handle all your UBO compliance responsibilities. We have thirteen locations across the globe and more than 200 in-house professionals in corporate secretarial management and worldwide governance. We gather, store, manage and register the data required to satisfy the unique legal specifications of any number of different countries using our own strong UBO services platform.
As a leading fund administration and compliance service provider, we assist our clients in safe international investment and business operations. No matter how many borders you operate over, we have the business-critical support you need to expand, run, and grow everywhere while staying in compliance.
Contact our experts today to know more about our regulatory compliance solutions and business support services.