As of Sept. 27, 2020, companies are required to register their owners or those who have ultimate control in the so-called UBO register. This is the result of European rules. The purpose of the register is to combat financial-economic crime, such as money laundering, corruption or fraud. Because the data is partly public, individuals and organizations can make better informed decisions about who they want to do business with. In addition, it becomes more difficult to conceal financial-economic crime behind legal entities. Failure to comply with the registration requirement is considered an economic crime. This is punishable by imprisonment for up to two years, community service or a fine of up to €21,750.00.
What is a UBO?
UBO stands for ultimate beneficial owner. This is the person within a company who ultimately owns or controls the entity. The registration requirement applies to all legal entities and partnerships, with the exception of listed companies, sole proprietorships, legal entities under public law and owners’ associations. This can therefore include persons with a majority of shares, as well as persons who have actual control over the company. Church denominations must also register in the UBO register.
The Register
The UBO register makes transparent who is “pulling the strings” within a company. All EU member states were required to have such a register in place by January 10, 2020. The Dutch government did not succeed in doing so in time, which is why it will also not be possible to actually register UBOs until later this year. The Dutch UBO register will become part of the Commercial Register of the Chamber of Commerce (KvK). Some of the data in the register will become public. This includes first and last name, birth month and year, nationality, country of residence and the nature and extent of the UBO’s economic interest.
Registration
From September 27, 2020, UBOs can be registered in the register at the Chamber of Commerce. Organizations registered in the Commercial Register on that date will have a year and a half from then on to register their UBOs. The registration of UBOs will be free of charge and may be done by the signatories within an organization. After registration, changes to the UBOs must be reported to the Chamber of Commerce.
Foreign UBOs
UBOs of foreign companies are not included in the register. The same applies to legal entities with a main or branch office in the Netherlands. They will have to comply with the regulations in the country where they are incorporated.
Do you have questions about the UBO register or the registration requirement? If so, please contact one of our corporate law experts.
This article was written by the Corporate Law Practice Group.