12 July 2017 / article

Directors soon required to report UBO information to the Ministry of Finance

In the near future, companies and other legal entities incorporated in Belgium will have to collect and hold information on their Ultimate Beneficial Owners (hereafter “UBO’s”).

Directors will be responsible to report the aforesaid information to the Belgian UBO register in a timely manner. Administrative sanctions may apply to Directors failing to comply with this obligation.

1. Recent legislative developments

On 20 May 2015, the fourth Anti-Money Laundering Directive was adopted by the European Parliament and the Council (hereafter “Directive”).

In our newsletter of 4 April 2017 we informed you that, in execution of the Directive, Belgium has to introduce a UBO register in which the UBO’s of companies and other legal entities incorporated in Belgium have to be identified.

In the meantime, a draft bill implementing the Directive, and introducing the Belgian UBO register, has been submitted to Belgian parliament.

Based on the draft bill, the main features of the Belgian UBO register may be summarised as follows:

2. Who are the UBO’s?

As a rule, UBO’s who need to be reported in the Belgium UBO register are defined in the same way as under the Directive, being the natural persons who ultimately own or control the legal entity and / or the natural persons on whose behalf the transaction is executed or the business relationship is entered into.

Natural persons hiding behind intermediaries also qualify as UBO’s. They are broadly defined as being natural persons who benefit or will benefit from the transaction or business relationship and who, de iure or de facto, directly or indirectly, have the power to decide on the execution of the transaction or the business relationship and / or to determine or to agree to the modalities thereof.

The draft bill further contains four definitions of UBO’s, each of them referring to one of the four categories of legal entities identified by the legislator:

a) UBO’s of companies:

i) The natural persons who directly or indirectly own a sufficient percentage of voting rights of or a sufficient ownership interest in a company, being:

  • The natural persons who directly hold more than 25% of (i) the voting rights, (ii) the shares or (iii) the share capital of a Belgian company. In doing so, Belgium aligns with the threshold of the Directive, but extends its scope to voting rights (the Directive does not foresee a threshold for voting rights);
  • When the Belgian company is indirectly held through one or more holding company(ies) which hold more than 25% of (i) the shares or (ii) the share capital of the Belgian company, the natural persons who control the holding company(ies). Said otherwise, in case of multiple-layer structures, it is the criterion of control over the ultimate holding company which seems to be the decisive factor to qualify as UBO;

ii) The natural persons who control the company by other means. Control by other means may be assessed on the basis of the notion of “control” under article 5 of the Belgian Companies code (e.g. right to appoint the majority of the directors of the company, joint control,…);

iii) When the aforesaid natural persons cannot be identified or if there is any doubt that the identified persons are the ultimate beneficiaries, the natural persons who hold the position of senior managing official. According to the explanatory memorandum, in most cases, the person who holds the position of senior managing official will be the CEO or the chairman of the executive committee.

b) UBO’s of foundations and (international) non-profit organizations (hereafter “(I)NPO’s”):

The following natural persons are considered as the UBO’s of foundations and (I)NPO’s:

i) The directors;

ii) Natural persons who are entitled to represent the NPO;

iii) Natural persons in charge of the daily management of the foundation or the (I)NPO’s;

iv) Founders of the foundation;

v) Either the natural persons, or the category of natural persons when these have not yet been appointed, in whose interest the foundation or the (I)NPO has been established;

vi) Any other natural person who controls the foundation or the (I)NPO through other means.

c) UBO’s of trusts and fiduciaries:

Both the settlor/founder, the trustee, the protector (if any), the beneficiaries and any other natural person who ultimately controls the trust or the fiduciary through (in)direct ownership or through other means are considered as UBO’s of trusts or fiduciaries. If the beneficiaries have not yet been appointed, the category of persons in whose interest the trust or fiduciary has been set up or operates needs to be reported. According to the explanatory memorandum, only express trusts are targeted for now.

This will remain without consequence for the time being, as trusts and fiduciaries do not exist under Belgian law. By already introducing the definition, the legislator however anticipates the adoption of the fifth anti-money laundering Directive (expected by October 2017), where it is expected that the obligation to report UBO’s of trusts will be extended to Member States that have a link with the trust.

d) UBO’s of legal entities similar to trusts and fiduciaries:

Natural persons having functions equivalent to UBO’s of trusts and fiduciaries will be considered as UBO’s. A Royal Decree will publish a list including the legal entities similar to trusts.

3. UBO information to report

The Belgian UBO register will contain at least the name, date of birth, nationality and the address of the UBO. This is beyond the minimum information required under the Directive (name, month and year of birth, nationality and country of residence).

For UBO’s of companies, detailed information on the nature and the extent of the beneficial interest held should also be included in the UBO register.

Regarding foundations and (I)NPO’s, only information relating to the UBO’s mentioned under b.(v) and b.(vi) should be included in the UBO register (information under b.(i) to b.(iv) being already publicly available in the Crossroads Bank for Enterprises (KBO/BCE)).

4. Directors liable for reporting UBO information

All Belgian legal entities (companies, foundations and (I)NPO’s) are required to collect and hold information on their UBO’s (in line with the wording of the Directive, the information needs to be sufficient, accurate and current).

The obligation to report the aforesaid information to the UBO register is imposed on the directors of the companies, foundations and (I)NPO’s. They need to report the required UBO information within one month after the information is either known or modified.

Apart from the sanctions already existing in case of infringement of the Belgian companies code, administrative fines between EUR 50 and EUR 5,000 may apply to directors who do not comply with the aforesaid obligations.

The information will need to be reported electronically. A Royal Decree will include the modalities thereof.

5. Limited access to the UBO register

The Belgian UBO register will be established within the Ministry of Finance. The competent service will be in charge of collecting, managing and controlling the quality of the information reported.

The conditions regarding the access to the UBO register will be laid down in a Royal Decree.

The Belgian tax administration will only have access to the UBO-register for anti-money laundering and combat of terrorist financing purposes.

The draft legislation upholds the same principle for other entities and persons entitled to access the UBO register.

6. Entry into force

The draft legislation does not include provisions on the entry into force, meaning that the law will in principle enter into force on the 10th day after the publication in the Belgian Official Gazette. One or more Royal Decrees will have to be published as well before directors will be able to report the required information to the Belgian UBO register.

In the meantime, should you have any questions about the UBO register do not hesitate to contact us. We will keep you informed of any further developments in this matter.

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