EU rules require that member states must keep track of who owns companies and trusts, and make this available to law enforcement authorities when required. In Ireland, companies and industrial and provident societies must report on their beneficial owners by 22 November 2019, with the Registrar of Companies. This article explains the requirement.
The changes are set out in the EU's Fourth Anti-Money Laundering Directive. Article 30(1) of this Directive requires all EU member states to put into national law provisions requiring corporate and legal entities to obtain and hold adequate, accurate, and current information on their beneficial owner(s) in their own internal beneficial ownership register.
The aim of the Directive, being adopted across the EU, is to deter money laundering and terrorist financing and to help sanction those who hide their ownership or control of Irish companies/societies to facilitate illegal activities.
For Irish companies doing business in the EU, the new requirements should reduce the risk of being exposed to fraud and other fiscal crimes.
Ireland's Register of Beneficial Ownership (RBO)
Ireland legislated for the creation of its register in Statutory Instrument No 110 of 2019, which became law in April 2019.
Filings have been accepted by the RBO since July 29, 2019, when the Registrar of Companies was appointed to oversee Ireland's compliance with the EU requirements.
Under the regime, it is the legal responsibility of a company or society’s officers (director(s) and company/society secretary) to obtain and confirm beneficial ownership information, to keep the company/society’s own beneficial ownership register current and accurate, and to deliver the required beneficial ownership information to the Registrar of Beneficial Ownership within the prescribed time frames.
All newly incorporated companies and societies must register their beneficial ownership details within five months of incorporation.
What is a Beneficial Owner?
Guidance released by the RBO explains that a Beneficial Owner is defined in Article 3(6) of the EU Directive as any natural person(s) who ultimately owns or controls a legal entity, either through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in the entity, including through bearer shareholdings, or through control via other means.
These include:
• ownership (directly or indirectly) of more than 25% of the company/society’s shares;
• controlling (directly or indirectly) more than 25% of the company/society’s voting rights;
• control via other means, which is explained in Recital 13 of 4AMLD as follows:
"Control through other means may, inter alia, include the criteria of control used to prepare consolidated financial statements, such as:
• through a shareholders' agreement;
• the exercise of dominant influence; or
• the power to appoint senior management."
RBO guidance states that if a relevant entity is a subsidiary owned by another corporate entity, any natural person(s) who holds or controls a shareholding of 25% plus one share, or an ownership interest of more than 25% in the parent corporate entity, is a beneficial owner(s) of the subsidiary.
What must be filed?
It is a natural person or persons (an individual or individuals) who must be identified and entered on the RBO as the beneficial owner(s) of the relevant entity, irrespective of how many layers of ownership there are in the company/society’s structure. As such, the name of another company/society cannot be entered on the RBO.
In certain circumstances, if no natural person is identified as a beneficial owner, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s) shall be recorded on the RBO as the beneficial owner. Relevant entities must keep records of the actions taken to identify their beneficial owners.
Filing of beneficial ownership data can be made online only, through a portal on the RBO website.
The RBO Portal is similar to the Companies Registration Office’s CORE system and a user ID and password is required to log in. This can be set up at the time of registering beneficial ownerships.
There are no paper forms and no filing fees involved.
Companies and societies should ensure they submit the required information, as those who fail to meet the 22 November 2019, deadline may be subject to the penalties included in Statutory Instrument no. 110 of 2019. These fines can be as much as €500,000.
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