Hide and seek: the UBO register

On the 27^th of September 2020 the UBO register will be available in the Netherlands. A natural person with an economic interest of more than 25% in a Dutch legal entity will from that moment onwards be required to register as the ultimate beneficiary owner (UBO) of that specific entity. This requirement originates from the fourth Anti-Money Laundering Directive of the EU (2015/849 and 2018/843). The purpose of the UBO register is to combat money laundering and terrorist financing. The register will make it difficult for the UBO to hide behind legal entities.

The UBO register, which will be publicly available, requires the following legal entities to register their ultimate owners:

• B.V. and the N.V., with the exception of publicly listed companies, 100% subsidiaries of a publicly listed company as well as companies in formation;
• Foundation (stichting);
• Association (vereniging), with the exception of an association of homeowners;
• Cooperation (coöperatie)
• Mutual societies (onderlinge waarborgmaatschappijen);
• Partnership (maatschap);
• Limited partnership (commanditaire vennootschap);
• General partnership (VOF);
• European Economic Interest Grouping;
• Shipping company (rederij);
• Religious community (kerkgenootschap);
• European Company or a European Limited Company if the registered office is in the Netherlands

There is no registration requirement for other legal entities such as the sole proprietorship and the legal entities governed by public law. Foreign entities which operate solely from a branch in the Netherlands are also not required to register their UBO(s).

The UBO

As mentioned above the UBO is a natural person who has an economic interest of more than 25% in a legal entity. Examples are direct or indirect ownership of more than 25% of the shares or the ability to exercise more than 25% of the voting rights in a general meeting. All entities required to register a UBO are required to register at least one UBO.

It is possible that a natural person holds an economic interest of less than 25%, but has the effective control over the entity. In that case the entity should also register this person as a UBO. Deciding who is a UBO is therefore not solely based on objective criteria.

In the case of a foundation it is not always clear who should be registered as a UBO. Besides the rules mentioned above regarding the effective control and/or the ability to exercise more than 25% of the voting rights, the law also states another criteria which could cause a natural person to be considered a UBO. The UBO of a foundation can also be a natural person who has received a payment which is greater than 25% of the permitted funds distributed in the previous year. Only once the annual accounts, for example in the next year, illustrate that this natural person did not receive more than 25% of the permitted funds, they can be removed from the UBO register.

Cumulative preferred shares have a similar mechanism to identify the UBO. Shareholders who hold less than 25% of the shares, but have a right to more than 25% of the dividend (due to the cumulative nature of the shares), should also be registered as a UBO.

If, based on the above criteria, no UBO can be considered, a pseudo-UBO should be registered. An example of a pseudo-UBO is a director or CEO, as it should be a natural person in the higher management of an entity.

Personal information

If the legal entity has to register the personal information of the UBO, the entity has the sole responsibility for a correct and timely registration. This implies that the entity, or the board of the entity, has to check who the UBOs are and request the required information.

The following information has to be provided:

• Name
• Date of birth
• Nationality
• Address
• Country of permanent residence
• Type of economic interest (shares, voting rights or another type of economic interest)
• Size of the economic interest (in brackets of larger than 25% - 50%, larger than 50% - 75% and larger than 75% - 100%)
• BSN of fiscal identity number
• Copy of a document of identification
• Copy of a document which illustrates the ownership (such as a shareholders register or articles of association)

If the UBO does not have any economic interest, for example if they have the effective control, no copy of the ownership information can and has to be provided. Moreover information regarding the size and type of economic interest does not have to be registered. In the case of a natural person who holds the effective control, a statement however has to be made explaining the way the effective control is exercised.

The name, birth month and year, nationality, country of permanent residence and the type and size of the economic interest will be the only information which can be obtained by the public. The other information can only be accessed by the Dutch government.

Possibility to refrain public from accessing information

Only in extraordinary cases it is possible to refrain the public from accessing the information in the UBO register. A request to hide the information has to be entered with the Chamber of Commerce. The request will be granted if the information sees to a minor or a incapacitated natural person. A request can also be granted if it will cause a danger for the natural person. Examples of this are fraud or blackmail. The Dutch police and Public Prosecutor’s office will rule whether the request should be granted based on the fact that the negative effects for the natural person are disproportionate to the need to provide the public with the UBO information.

International requirements

Seeing as the UBO register originates from the European Anti-Money Laundering Directive, each European country is required to have a UBO register. This could imply that a UBO of multiple European companies will be registered in several UBO registries all around Europe. We advise both a UBO and the board of an international organization to check the specific UBO requirements in each of the countries where the organization is active in order to comply with national regulations in a timely manner.

How and when

The registration of a UBO and accessing the UBO register is both possible via the website of the Dutch Chamber of Commerce. The registration is free. From the 27^th of September at 08:00 it is possible to register a UBO.

Legal entities established after the 27^th of September 2020 are required to register their UBO(s) immediately. If the legal entity already exists prior to the 27^th of September, registration should take place before the 27^th of March 2022. If changes occur in the UBO after registration, the Chamber of Commerce should be notified within a week.

If the legal entity is removed from the Chamber of Commerce, for example because of insolvency, the UBO information will remain available for another 10 years in the Dutch register.

Wat can you do?

Do you own more than 25% of the economic interest in one of the entities listed above? Make sure to provide the entity in which you hold an interest with the required information.

Are you a director or are you the owner of a legal entity? In that case you need to take care of a timely registration of the UBO information. If the registration of the UBO(s) does not occur before the deadline, the entity may receive a fine. The maximum height of this fine is EUR 21.750. Moreover the Dutch authorities have also been granted the power to impose periodic penalty payments to ensure registration. The failure to register the information on time is seen as an economic offense and could lead to a liability for directors.

Questions regarding the UBO register and the possibilities? Do not hesitate to contact us.