Concept legislative proposal regarding
the registration of the final stakeholders

The Dutch proposition for the implementation act is open for comments through a so-called internet consultation. The consultation term ended on 28 April 2017, a relatively short term, but the European directive needs to be implemented on 26 June 2017 at the latest. The proposal ensures adjustments of three laws: The Trade Register Act 2007, the Prevention of Money Laundering and Financing of Terrorism Act (hereinafter 'WWFT') and the Economic Crimes Act. The Trade Register Act 2007 provides provisions regarding the setting and management of the trade register. The Chamber of Commerce was appointed as the manager of the trade register. It is proposed to include the information regarding the UBO in the trade register.

In this news item a summary of the proposal follows.

Background

According to the explanatory notes for the legislative proposal, it is common knowledge that persons who are involved with money laundering and financing terrorism make use of (masking) legal structures. The register kept by the Netherlands on the basis of the directive is meant to "make it visible who the UBOs are of companies, and other legal entities that were founded in the Netherlands. And with that, to make a valuable contribution to reaching more transparency of the UBO's of companies and legal persons, regarding the protection of integrity of the financial system for money laundering or financing terrorism, as well as the connected basic crimes such as corruption, tax crimes and fraud."

What is an UBO?

An UBO is a natural person who is the ultimate owner, or who is in control of a company or legal entity. It is indicated in the Trade Register Decree 2008 that it will be further described per type of company and legal person who should be seen as the ultimate stakeholder; this description was not included in the proposal.

Which UBO information should be registered in the Trade Register?

The Provision does not dictate which information about the ultimate stakeholder and their economic interests should be registered, the provision only states a minimum requirement to the information that should be included in the register.

The following six points will be included in the so-called 'public part' of the register:

• name;
• month and year of birth;
• nationality;
• street of residence;
• the nature and size of the economic interest of the ultimate stakeholder. The latter will be registered in bandwidths 25, 50, 75 and 100% for the public part of the register.

Besides this, additional information and documents will be included in the non-public part of the register:

• day, place and country of birth;
• address;
• if applicable, Dutch citizenship number (BSN), or an international fiscal identification number (TIN), as well as information that makes clear in which country the number was obtained
• copy of the documents with which the identify of the UBO was verified;
• copy of the documents with which the UBO status of a person is confirmed, and with which the nature and scope of that interest are shown.

The UBO may submit a request for blocking their UBO information with the Chamber of Commerce. For this appeal to succeed, the UBO will need to prove that one of the situations indicated in the provision applies: exposure to a risk of fraud, kidnappping, blackmail, violence or intimidation, minority or incapacity. The decision of the Chamber of Commerce regarding a request for blocking the UBO information is a decision in the sense of article 1:3 of the General Administrative Law, towards one is allowed to object and appeal against.

Who's UBO information needs to be registered and which terms apply to this?

The main rule is that all legal persons and companies that were founded in the Netherlands need to submit the UBO information to the trade register. For international legal persons with a main or branch office in the Netherlands it is not yet obligated to register the UBOs since these legal entities were not created in the Netherlands. Exceptions to the UBO registration obligation include sole proprietorships, public law entities, church associations and associations of owners.

Based on article 20, second paragraph, of the Trade Register Act 2007, submissions for registration of information will be made no later than a week after the fact that creates the obligation of submission. For all companies and legal persons registered with the Chamber of Commerce already, a transition period of 18 months applies to meet all the requirements of the new statement obligation for UBO information.

There is already a legislative proposal for a feedback requirement for certain organisations if they have reasonable doubt regarding the correctness or in case of the lack of UBO info with the Chamber of Commerce; these organisations have a so-called gate keeper's role. It has also been announced that such a feedback requirement will be created for WWFT organisations in the future.

Accessibility of information and protection of personal information

In the explanatory notes for the legislative proposal, the accessibility of the information is fully taken into account, which information should be in the public part of the register and who can access that information. A distinction is made between 3 groups that want access to the information of the UBO in the trade register.

Only the competent authorities and the Financial Intelligence Unit can access the UBO information form the non-publicly accessible part of the register; this information is sorted on natural persons. It should be kept into account that these authorities can also not search for natural persons in the register, but only for companies or legal persons. This meets the requirement of the directive that the central register - in this case the Chamber of Commerce as the keeper of the trade register - makes sure that the competent authorities and the Financial Intelligence Unit have timely and unlimited access to all UBO information, without the involved legal entity being aware of this.

For WWFT organisations, access is only granted to a limited set of six points of information in connection to the protection of privacy, or they are only granted access to the public part of the register. Access to the remaining UBO information, including address information or BSN or TIN is therefore not given according to the explanatory memorandum because that access could cause risks connected to, for example, identity theft or kidnapping. Access to the limited set of information points is also in accordance with the obligation that the directive dictates: WWFT organisations are not allowed to completely rely on UBO information from the trade register for their client research.

According to the explanatory memorandum and earlier notifications in the Parliament it is expected that a large number of persons and organisations in the Netherlands and abroad are able to show a legitimate interest for disclosure of information from the UBO register. It is therefore proposed to only grant access to the limited set of six points of information regarding an UBO to this (large) group, just like the WWFT organisations with disclosure obligations; this is the information that is included in the public part of the register.

It is emphasized that in order to safeguard amongst other the protection of privacy and personal lives of the UBO's to be registered, the registration of all clients of information on the register (with the exception of the competent authorities and the Financial Intelligence Unit, will pay a fee for access and further blocking of the information if the UBO shows that the UBO could be exposed to a risk of fraud, kidnapping, blackmail, violence, or intimidation by making the information public. Blocking of information as incidated above, is applicable to the requets from the large group with a legitimate interest, not for the request from the competent authorities, the Financial Intelligence Unit and WWFT organisations.