Dutch government announces introduction UBO-register

Introduction
Last year, on February 2nd and April 25th, we informed you about the envisaged introduction of an ultimate beneficial owner (“UBO”) register in the Netherlands (“UBO-register”), in implementation of Directive (EU) 2018/843 of the European Parliament and the Council
of 30 May 2018 amending inter alia Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. 

Last week, on April 4th, the legislative proposal introducing the UBO-register in the Netherlands, also referred to as the implementation act registration ultimate beneficial owners of companies and other legal entities (implementatiewet registratie uiteindelijk belanghebbenden van vennootschappen en andere juridische entiteiten) (the “Legislative Proposal”) has been published.

Who is concerned?
UBO information should be registered in the UBO-register of the following companies and other (legal) entities incorporated/established under the laws of the Netherlands:

• private or public companies with limited liability (besloten vennootschap met beperkte aansprakelijkheid (B.V.) respectively (naamloze vennootschap (N.V.)), excluding those with a stock exchange listing which are subjected to certain publication requirements and their 100% subsidiaries);
• European public companies (SE), having their registered office in the Netherlands;
• European economic interest groupings (EESV);
• European cooperative companies (SCE), having their registered office in the Netherlands.
• all sorts of foundations (stichtingen), associations (verenigingen), formal associations, informal associations that operate a business, cooperatives (coöperaties) and mutual insurance associations (onderlinge waarborgmaatschappijen);
• partnerships (maatschappen), commercial partnerships (vennootschappen onder firma, i.e. v.o.f.) and limited partnerships (commanditaire vennootschappen, i.e. C.V.); and
• shipping companies (rederij),

hereinafter jointly referred to as: “companies and other (legal) entities”.

Based on the Legislative Proposal, companies and other (legal) entities (in particular relevant for Dutch partnerships) that are not registered (anymore) in the Dutch trade register (handelsregister) managed by the Dutch Chamber of Commerce (Kamer van Koophandel), for example because their business is not operated in the Netherlands (anymore), are required to register certain information in the Dutch trade register (again), including but not limited to information regarding their UBO(s).

Mutual funds (fondsen voor gemene rekening) are excluded from this UBO-register, however another legislative proposal (introducing a UBO-register dedicated for trusts) shall soon be published and mutual funds will fall within the scope of that register (which register is to be implemented before March 10th, 2020). 

Foreign companies (including those incorporated/established under the laws of Bonaire, Saba and Sint Eustatius) are not required to register any information in the UBO-register, regardless of such companies having their headquarters or a branch in the Netherlands. Based on the EU directive, only companies and other (legal) entities that are incorporated in the Netherlands (or in case of partnerships established pursuant to an agreement that is governed by the laws of the Netherlands), are obliged to register information in the (Dutch) UBO-register. Inter alia legal entities under public law, churches (kerkgenootschappen), associations of owners (verenigingen van eigenaars (VvE)), sole proprietorships (eenmanszaken) and informal associations that do not operate a business are not required to register their UBO(s) in the UBO-register. 
    
No exception is made for legal entities that qualify as a public benefit pursuing entity, also referred to as a algemeen nut beogende instelling (ANBI).
    
Who qualifies as UBO?
The UBO is the natural person who ultimately owns or controls a company or other (legal) entity. There can be more than one UBO. In conjunction with the (revised) administrative measure published on April 6th, 2018, at least the following natural persons are considered to be an UBO: 

• in case of a private company with limited liability (B.V.) or a public company (N.V.): natural persons who own or control such company, through holding directly or indirectly more than 25% of the shares, voting rights or ownership interest of the respective company, which includes holders of bearer shares; 
• in case of other legal entities (excluding churches): natural persons who own or control such legal entity, through (i) holding directly or indirectly more than 25% of the ownership interest in that legal entity, (ii) being able to cast directly or indirectly more than 25% of the votes required to adopt a resolution to amend the articles of association of that legal entity, or (iii) being able to de facto control that legal entity;
• in case of a partnership: natural persons who own or control such legal entity, through (i) holding directly or indirectly more than 25% of the ownership interest in the partnership, (ii) being able to cast directly or indirectly more than 25% of the votes required to amend the agreement that governs the partnership, or in the matter of implementation of that agreement other than by acts of administration, in so far in the agreement prescribes adopting resolutions by a majority of votes cast, or (iii) being able to de facto control that partnership. 

This enumeration is purely exemplative and not exhaustive. If resources to determine the UBO have been exhausted to no avail and on the condition that there are no grounds for suspicion, or if there is any doubt regarding a person ultimately owning or controlling a company or other (legal) entity, (a) natural person(s) who is/are part of the senior management of the respective company or other (legal) entity (i.e. the natural person(s) involved with the day-to-day management) qualify as UBO (in case of a limited partnership the limited partner is excluded in this respect).  

Which information should be included in the UBO-register and for how long?
The following information regarding an UBO shall be publicly available in the UBO-register:

• name;
• month and year of birth;
• country of residence;
• nationality; and
• nature and extent of the UBO’s economic interest.

In relation to the nature and extent of the UBO’s economic interest, only a range (>25% through 50% (exclusive), 50% through 75% (exclusive), or 75% through 100% (inclusive)) needs to be registered. In other words, no absolute numbers are registered.

Further, the Dutch Financial Intelligence Unit (FIU Nederland) and other competent authorities (which are all subject to an obligation of confidentiality) shall in addition have access to the following information:

• day, place, and country of birth;
• residential address;
• if issued: the citizen service number (burgerservicenummer, BSN) and foreign tax identification number (fiscaal identiteitsnummer, TIN);
• a true copy of a document which is used to verify the UBO’s identity; and
• a true copy of documents substantiating why the UBO qualifies as such and showing the nature and extent of the UBO’s economic interest.

For privacy reasons, organizations that are required by law to obtain UBO information for KYC purposes, as well as journalists, researchers and civil society organizations are not granted access to this additional information.

Each UBO-register in the European Union shall be linked to one another. The UBO’s information shall be accessible though the national registers and through the system of linked registers for at least 5 years but for no longer than 10 years after deregistration of the company or (legal) entity in the UBO-register. The Dutch government intends to opt for a 10 year period, taking into account that investigations regarding crimes that are related to anti-money laundering investigations and financing terrorism tend to focus on the past.

How should the UBO’s information be filed in the UBO-register?
The aforementioned information about an UBO should be registered in the UBO-register, which shall become a dedicated part that is embedded in the Dutch trade register, which will be managed by the Dutch Chamber of Commerce. Those who are obliged to register the UBO’s information will be able to do so by filling in forms in hard-copy. It is envisaged that civil-law notaries will be able to register information electronically, on their behalf (similar to how information is currently being registered in the Dutch trade register). The Dutch Chamber of Commerce confirmed that they shall actively approach those required to register information about their UBO(s), to the extent that they have sufficient information about the company or other (legal) entity’s existence.

Who can access the UBO-register?
The basic UBO information shall be publicly accessible. However, only the Dutch Financial Intelligence Unit and other competent authorities (such as the Dutch Tax Authority, the Dutch public prosecutor’s office and various Dutch regulatory authorities including but not limited to DNB, AFM and BFT) shall be able to search on natural persons. Parties obliged to notify and third parties shall not be able to search on natural persons, just on the name of the company or other (legal) entity. 

In all cases, those who request access to information registered in the UBO-register shall need to pay a cost-effective fee to the Dutch Chamber of Commerce. Such fee shall need to be paid for each company and other (legal) entity of which the UBO information is requested. Those who request access to UBO information shall be required to register themselves with the Dutch Chamber of Commerce.

Most parties that consult the UBO-register shall therefore have access to limited information. In exceptional circumstances, an UBO may request the Dutch Chamber of Commerce that access to the information publicly visible be restricted (except for the nature and extent of the UBO’s economic interest, since this information is deemed not to be traceable to a natural person). Such UBO shall need to evidence that at least one of the following cases applies:

• exposure to disproportionate risks;
• a risk of fraud, kidnapping, blackmailing, extorsion, bullying, violence or intimidation;
• the UBO is a minor; or
• legal incapacity of the UBO for other reasons.

Objection and appeal shall be possible against such ruling of the Dutch Chamber of Commerce. In order to make this an effective exception, the UBO information shall not be publicly accessible during the time an UBO needs to file a request, for the Dutch Chamber of Commerce to make its decision on such request and the decision to (not) restrict information becomes final and conclusive, unless the authorized authorities, the Dutch Financial Intelligence Unit, credit institutions, financial institutions and civil-law notaries, requests access to the UBO’s information (these organizations shall always have access to the basic UBO information).

The UBO-register dedicated for trusts is expected not to be publicly accessible, only persons who can evidence to have a legitimate interest are expected to be granted access to information registered in the UBO-register for trusts.

Which obligations are imposed on the relevant entities, an UBO and organizations bound by statutory KYC obligations?

(Managing directors/owners of) companies and other (legal) entities
Those who own (toebehoren) or each of the managing directors or – if those are not present – those who is/are charged with the day to day business of the companies and other (legal) entities which fall within the scope of the UBO-register, are obliged to register the UBO’s information in the UBO-register. The entities are required to keep the UBO-register up to date and complete. 

Furthermore, the obligation for companies and other (legal) entities to register UBO information in the UBO-register should be clearly differentiated from the obligation to collect and keep up to date the following UBO information (in a private/internal register):

• name;
• (full) date of birth;
• country of birth;
• residential address (including the country of residence);
• nationality;
• a citizen service number (burgerservicenummer, BSN) and a foreign tax identification number (fiscaal identiteitsnummer, TIN), if applicable;
• a true copy of a document evidencing the UBO’s identity, e.g. a passport; 
• nature and extent of the economic interest of the UBO; and
• a true copy of documents evidencing why the UBO qualifies as such and evidencing the nature and extent of the UBO’s economic interest.

The latter requirement applies to:

• private or public companies with limited liability, excluding those with a stock exchange listing which are subjected to certain publication requirements and their 100% subsidiaries;
• European public companies (SE), having their registered office in the Netherlands;
• European economic interest groupings (EESV);
• European cooperative companies (SCE), having their registered office in the Netherlands;
• cooperations, mutual insurance associations, associations, both formal and informal associations, associations of owners, churches, other legal entities under private law, foundations, partnerships (including but not limited to commercial partnerships and limited partnerships); and
• shipping companies.

Apart from these obligations, pursuant to the Legislative Proposal the board of directors of foundations shall be obliged to maintain and keep up to date a (private/internal) register in which the names and residing addresses of all beneficiaries who received a distribution which in size is less than 25% of the amount available for distribution in a specific financial year, in addition to the amount of the distribution(s) and the date of the distribution(s).

UBO
The UBO is required to provide the information which needs to be registered with the UBO-register to the entities of which it qualifies as an UBO (also referred to as the obligation to cooperate).

Organizations that are required by law to obtain UBO information for KYC purposes
Organizations that are required by law to obtain UBO information for KYC purposes, such as law firms and financial institutions, are required – in so far necessary and to the extent that it does not interfere unnecessarily with their tasks – to notify the Dutch Chamber of Commerce of any inconsistencies found between the UBO information registered in the UBO-register and UBO information that they received from other sources. For new clients these organizations are required to obtain evidence of registration of UBO information or an excerpt of the UBO-register.

What are the penalties in case of non-compliance?
Not meeting certain obligations under the Legislative Proposal, such as the requirements of registering the information in the UBO-register, collecting and keeping up to date information by companies and other (legal) entities (in their aforementioned private/internal register), or the UBO’s aforementioned obligation to provide the relevant companies and other (legal) entities with the UBO’s information, can be sanctioned with both administrative and criminal penalties. 

Criminal penalties are deemed needed in case aggravating circumstances are applicable, such as deliberately registering incorrect information about the UBO or a possible combination with other (fraudulent) offences. In case of not registering (in a timely manner) the UBO information, in general administrative penalties shall be deemed sufficient. 

Not complying with the Legislative Proposal can, after it has entered into effect, be sanctioned with imprisonment, a community punishment order (taakstraf) or a fine. An order subject to a penalty for non-compliance may be combined with an administrative penalty. 

The Dutch Tax Authority’s department of Economic Enforcement (“BEH”) and the Dutch public prosecutor’s office shall be responsible for enforcement and act after a notification of the Dutch Chamber of Commerce to BEH that the UBO information is not, not timely, not completely or incorrectly registered.

When will the UBO-register enter into force?
The UBO-register should be implemented on January 10th, 2020 at the latest. After entering into effect of the Legislative Proposal, those required to register UBO information in the UBO-register have not more than 18 months to comply in case the company or other (legal) entity exists at the time that the Legislative Proposal enters into effect. In case such company or other (legal) entity is incorporated/established after entering into effect of the Legislative Proposal, the UBO information should be registered immediately (simultaneously with registration in the Dutch trade register).

How can we assist?
Buren can assist you with any question regarding the new obligations imposed by the Legislative Proposal. Among others, we can assist you with the UBO identification process, with filing or amending UBO information with the UBO-register and also requesting restricted access to an UBO’s information. In Luxembourg we have been doing so since the Luxembourg law introducing a similar register was published on January 15th, 2019.