Companies and other entities incorporated since 27 September 2020 must register information on their ultimate beneficial owner(s) in the Commercial Register of the Dutch Chamber of Commerce within a week after their incorporation. Existing companies and entities have 18 months (until 27 March 2022) to do so. In two news items we explain the consequences of this obligation for your organisation. Below we will briefly explain the UBO register.
1. When are you a UBO?
The ultimate beneficial owner, also known as the UBO, is the person that ultimately (co-)owns or controls a company or other entity. The UBO is always a natural person, living in the Netherlands or abroad. In order to determine which natural persons are UBOs, the type of legal entity must first be determined. Each type of legal entity has its own UBO-criteria:
- private limited company (B.V.) / public limited company (N.V.):
the natural person who i) directly or indirectly holds more than 25% of the shares, ii) directly or indirectly holds more than 25% of the votes, iii) directly or indirectly holds more than 25% of the economic interest, or iv) exercises (effective) control over the entity;
- foundations (stichtingen), associations (verenigingen), cooperatives (coöperaties), societates Europaeae (SEs) and mutual benefit associations (onderlinge waarborgmaatschappijen):
the natural person who i) directly or indirectly holds more than 25% of the ownership interest, ii) can directly or indirectly exercise more than 25% of the votes in decision-making about amending the articles of association, or iii) exercises (effective) control over the entity;
- limited partnership (C.V.), commercial partnership (V.O.F.), professional partnership (maatschap) and shipping companies:
the natural person who i) directly or indirectly holds more than 25% of the economic interest in the entity, ii) can directly or indirectly exercise more than 25% of the votes in decision-making on amending the (formation) agreement other than by acts of management, insofar as the formation agreement requires a majority of votes for such decision-making or iii) exercises (effective) control over the entity; and
the natural person who is appointed by the church’s constitution as the church’s legal successor in case of dissolution of the church.
If an entity meets one or more of these criteria, the natural person concerned is considered a UBO. If the shares of a Dutch entity are held by a foreign entity, Dutch law will determine who qualifies as indirect UBO of the Dutch entity. Who the UBO of a foreign entity is however, needs to be determined by the law that is applicable to the concerned entity.
2. What if it is not possible to trace a UBO?
Sometimes no natural persons appear to meet the above-mentioned criteria, as would be the case with a Public Benefit Organisation-foundation (ANBI-stichting). In that case a ‘pseudo-UBO’ is appointed: the ‘senior managing official’, in other words: upper management. In such a case, the managing director under the articles of association of a Dutch legal entity is always a pseudo-UBO, regardless of whether the director is authorised to represent the entity. In a limited partnership (C.V.), a general partner can be qualified as pseudo-UBO.
3. What information of the UBO will be registered?
The following details of the UBO have to be registered in the Commercial Register:
- Name, date of birth, place and country of birth, nationality, home address and country of residence;
- Nature (shares, voting rights or ownership interest) and scope of the economic interest;
- BSN (Dutch social security number) or foreign tax identification number (TIN);
- Copy of a valid identity document;
- Copies of documents that show the nature and scope of the economic interest, such as a shareholders’ register or deed of incorporation.
The UBO register has a public and a non-public part. For reasons of privacy, not all data listed above are publicly accessible, though they are accessible for investigative authorities.
Who is responsible for providing the data and its accuracy?
Existing entities are obliged to register the UBOs that are considered a UBO on the date of registration (ultimately on 27 March 2022). Entities that are incorporated on or after 27 September 2020 are obliged to register their UBO within one week after their incorporation. The entity itself is responsible for a correct, complete and actual representation of its UBOs. This means that the board of directors or the persons charged with day-to-day management of the entity are responsible for this.
If an entity is in violation of its UBO registration obligations, this can qualify as an economic offense committed by the entity. As a sanction, high administrative penalties or an order subject to a penalty can be imposed. The entity may also face criminal prosecution. The UBO-registration should therefore be checked each time changes are made to the structure and governance of an entity, to see if it is necessary to register changes – for example when there is change in (share) ownership or voting rights.
In Labré’s next news item we will discuss the following items:
4. Who has access to the UBO register?
5. Shielding public details and exceptions to the registration obligation
6. Reporting obligations for certain institutions and advisors
7. Consequences in practice
8. Tips, trick and ‘open doors’