Business Law Articles
By Ynze Kliphuis, LL.M.
Russell Advocaten, B.V.
In the Netherlands, two registers will be implemented to combat money-laundering and tax avoidance, the UBO-register and the central register of shareholders. As a consequence, everyone can see who owns a company.
Currently, it is difficult or impossible to find out who the main shareholders of private and non-listed companies are. A shareholder is only registered in the trade register and therefore public if a company has only one shareholder. This will change in the near future.
On the basis of European legislation, a public register for so-called Ultimate Beneficial Owners will be introduced, the ‘UBO-register’. According to this legislation, a UBO is considered to be any natural person who ultimately owns or controls a legal entity through direct or indirect ownership of more than 25% of the shares or voting rights. Regarding companies with an increased risk in money laundering, the threshold is 10%.
The register – which will be included in the trade register – will contain the following information regarding the UBO:
- Month and year of birth
- State of residence
- Nature and scale of economic interest held.
In principle, this information will be public and the UBO-registers of the different European countries will ultimately be linked. There will be a separate register for trusts, which is accessible for authorities with a legitimate interest only (such as banks, insurance companies, notaries and lawyers that are required to perform client investigations).
In a legislative proposal, the Netherlands makes use of the opportunity to include even more information about the ultimate beneficial owner in the UBO-register, namely:
- BSN (citizen service number)
- Day, place and country of birth
- Residential address.
These details will not be public in the Netherlands, but it is questionable whether it will remain that way after linkage with UBO-registers of other countries that maintain a broader disclosure regime.
Transparency versus Privacy
On the one hand, the UBO-register is a means to combat money-laundering and gain insight in the cash flow, ownership and control of undertakings. On the other hand, due to its openness (in part), the use of personal data in the UBO-register is in conflict with the privacy of the persons registered. The users of the personal data will therefore have to observe the privacy rules of the General Data Protection Regulation: Data may only be processed if necessary for the purpose of a legitimate interest. Data which are not relevant for this, such as sex, religion, race and property, may not be requested.
Central Register of Shareholders
Previously, we published a blog about a legislative proposal that make it mandatory for you, as a shareholder, to register with a central register of shareholders. This register aims at combatting money-laundering and fraud within companies, too. The register will be included in the trade register of the Chamber of Commerce. However, the legislative proposal is still pending and the date of implementation is still unknown.
Registration of Issue and Trading of Shares
Finally, there is a legislative proposal that aims at the identification of the (still) anonymous shareholders of NVs. After the implementation of the legislation, bearer shares can only be issued or traded via an intermediary who registers the identity of the shareholder. This legislative proposal has not entered into force yet either.
What Does This Mean for You as a Shareholder?
Currently, you, as a shareholder, are not required to register with the central register of shareholders or the UBO-register. This will change in the near future. Which register you will have to register with, depends on the scope of your interest in the undertaking. Naturally, we will keep you informed of the developments regarding the legislative process and will be happy to answer your questions. Please contact us.