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    New details UBO-register in legislative proposal

    The register of ultimate beneficial owners ("UBO") of companies and other legal entities incorporated in the Netherlands is finally taking shape. On 31 March of this year, the draft legislative proposal for implementation of the UBO-register was published for consultation purposes by the Dutch Ministry of Finance. The legislative proposal regulates the introduction of a public UBO-register containing details of UBOs of entities incorporated in the Netherlands and registered with the Chamber of Commerce (“CoC"). Entities registered with the CoC will be obliged to provide this information to the CoC themselves.

    What will the UBO-register mean for you? And when will personal data of UBOs be disclosed? In this news report, we will summarize the essence of the draft legislative proposal for you.

    Who is a UBO?

    According to the legislative proposal, a UBO is the ultimate beneficial owner of a company or other legal entity that was incorporated in the Netherlands. Whether a person is regarded as UBO depends on his or her capital interest in or control over a company or other legal entity. Under existing legislation, a person can be a UBO, for example, if he or she holds an interest of more than 25 percent in the capital of a company or is able to exercise more than 25 percent of the voting rights in the general meeting of a company. Because the UBO-registration obligation will apply to various legal forms, it is not always clear who the UBO is. The Dutch Ministry of Finance will therefore still publish a separate regulation on how the UBO is determined per legal form.

    What is the UBO-register?

    The UBO-register is an initiative of the European Union and has the aim to include the UBOs of companies and other legal entities (see list below) incorporated in the Netherlands in a central register and make this register open to the public. With this European transparency measure, the EU seeks to prevent money laundering and terrorist financing. All EU Member States need to introduce a UBO-register in their national legislation before 26 June 2017.

    The UBO-register will make the following data of UBOs publicly accessible:

    • name
    • month and year of birth
    • nationality
    • state of residence
    • nature and amount of the economic interest of the UBO.

    For privacy reasons, the interest of the UBO will not be stated in an exact number but in ranges of 25, 50, 75 and 100%.

    In addition, the following information will only be accessible to competent authorities, such as the police, the Dutch tax authorities, the Dutch Fiscal Intelligence and Investigation Service and the Netherlands Authority for the Financial Markets:

    • BSN (citizen service number) or foreign tax identification number ('TIN');
    • home address
    • date of birth; and
    • country and place of birth.

    Which entities will be subject to the UBO-registration obligation?

    The Netherlands will only register UBOs of entities that are obliged to register with the CoC. This means that the following entities will be obliged to provide the CoC with information regarding their UBO:

    • private limited liability company (bv)
    • public limited liability company (nv)
    • foundations
    • associations with full legal capacity
    • shipping companies
    • partnerships
    • general partnerships
    • limited partnerships
    • cooperatives
    • mutual insurance associations
    • European economic interest groupings
    • European public limited liability companies (SEs)
    • European cooperative companies (SCEs); and
    • associations without full legal capacity that are listed in the trade register.

    It is being investigated whether mutual funds within the meaning of section 2, third paragraph of the Corporation Tax Act 1969 shall also be subject to the UBO-registration obligation.

    Trusts are exempted, because the legislator indicates that the Dutch law does not provide for trusts or similar legal structures. Other EU Member States will possibly open a UBO-register for trusts.

    One-man businesses, legal entities under public law, churches and associations of owners are also exempt, because the Dutch legislator believes that the risk of money laundering or terrorism financing is low among these legal entities and businesses. Foreign legal entities with a main establishment or branch establishment in the Netherlands will also be exempt, because these legal entities have not been incorporated in the Netherlands.

    In order to ensure that the UBO-register remains as accurate and up-to-date as possible, entities subject to the registration obligation must ensure that their information about the UBO is always correct and complete. In addition, institutions defined in the Money Laundering and Terrorist Financing (Prevention) Act, such as banks, civil-law notaries, lawyers and trust offices, will in the future be obliged to notify the CoC if they have serious doubts about the correctness of the UBO-information filed with the CoC. This so-called 'notification obligation' will only enter into force, however, once the initial registrations in the UBO-register have been completed.

    If entities subject to the registration obligation violate the aforementioned UBO-registration obligations, they may be guilty of an economic offence. This can result in high penalties and/or criminal proceedings.

    UBO-register and privacy

    Because of the potential impact on the privacy and safety of the UBO, the Ministry of Finance has set the following restrictions on access to the UBO-register:

    1       Users are registered by the CoC;

    2       Users pay a cost-effective fee for inspection;

    3       Users see only limited UBO-information;

    4       Information about a minor UBO or a UBO who is exposed to a risk of fraud, kidnapping, blackmail, violence or intimidation, will on request be limited to the nature and amount of the economic interest held by the UBO.

    The legislative proposal stays as close as possible to the current system of the CoC for requesting information such as extracts and annual accounts. The fee for inspection will only be cost-effective. It is also possible for a UBO to object to disclosure of his data.

    When?

    The implementation of the new legislation should be finalized no later than 26 June 2017, but this target date does not seem realistic. The legislative proposal discussed here is currently available on the internet for consultation purposes and comments can be submitted until 28 April 2017. After the processing of any comments and the legislative process in the First Chamber and the Second Chamber, the UBO-register will still have to be implemented by the CoC. Therefore, expectations are that the UBO-register will not become effective until at end of 2017. Dutch entities subject to the registration obligation will have 18 months after the effective date to comply with the UBO-registration obligation.

    We will keep you informed of further developments in relation to the UBO-register. If you want more information or need advice about your position as possible UBO in the UBO-register, please do not hesitate to contact one of the following contacts.