All shareholders soon to be listed in trade register?

September 25th

As a result of announced legislation in the Netherlands, the details of people who ultimately count as interested parties in a company will be published in the chamber of commerce's trade register. This not only applies to all shareholders in a public limited company (BV) but also, for example, to limited partners in a limited partnership (CV). Within this context, we also refer to this as the UBO register. UBO stands for Ultimate Beneficial Owner.

What is this about?

There is an EU directive, the fourth anti-money-laundering directive, which all member states are obliged to follow. Pursuant to this directive, each country must maintain a UBO register. This obligation was introduced within the framework of the anti-terror measures and measures aimed at fighting money laundering. Each member state was supposed to have implemented the required legislation by 27 June 2017.

Like many other governments within the EU, however, the Dutch government has been in no hurry and, at this moment, the legislation only exists as a consultation version. Such a version is published to give everyone the opportunity to comment on the proposed legislation. Once all the comments have been collected and examined, the government puts forward a definite legislative proposal that then has to be adopted by the lower and upper houses of the Dutch parliament. Only then will the UBO register come into effect. The definite legislation was announced for the second half of this year but, for the time being, there is still no proposed legislation. The government has indicated, though, that the legislation should come into force as of 1 January 2018. Whether that date is feasible is questionable.

To whom does the legislation apply?

The new legislation applies to all partnerships and companies registered in the chamber of commerce's trade register and incorporated under the law of the Netherlands. Branches of foreign companies established in the Netherlands and not incorporated under Dutch law are not covered by registration in the Netherlands. If these branches are incorporated under the law of one of the other member states of the EU, then registration will take place in that country. Branches incorporated under the law of a country outside the EU are, therefore, not covered by this legislation.

There are, naturally, a number of exceptions to the registration obligation, such as churches and one-man businesses. For all those partnerships and companies to which the legislation does apply, the personal details of the ultimate beneficial owners will be registered. Such an ultimate beneficial owner is the natural person who (ultimately) has an interest in a partnership or company. How great that interest must be is not, as yet, clear. The directive is based on an economic interest of 25% or more or a control of 25% or more, but member states are free to choose another percentage.

Some of this information will be public and some not. The details that will be public are that person's name, month and year of birth, nationality and city of residence and the nature and scope of their participation in the company. The non-public information consists of details such as the address and citizen service number (BSN).

Who can request the information?

In principle, anyone can request the public information. There may, however, be a charge for this. This is the case now for information already in the trade register. Non-public information can only be requested by the Fiscal Information and Investigation Service (FIOD), the tax authority and other governmental bodies.

Can you prevent publication?

An ultimate beneficial owner can ask the chamber of commerce not to publish their details. This is only possible if there is a risk of fraud, kidnapping, blackmail or suchlike. It is not (yet) clear from the legislative proposal how this risk can or should be established or demonstrated. If the chamber of commerce decides that the details should, nevertheless, be published then an objection and, following that, an appeal can be lodged.

When must the details be provided?

The legislative proposal now states that all existing partnerships and companies must supply the chamber of commerce with these details within 18 months of the implementation of the legislation. New companies will have to immediately supply such details when registering in the trade register.

To conclude

As we said, whether the legislation will actually be introduced on 1 January 2018 is debatable. What is certain, in any event, is that this legislation will be introduced in the foreseeable future. We will have to wait and see what the legislation ultimately comprises. Clearly, we can expect legislation that makes it compulsory to provide and publish information on the ultimate beneficial owner. We will, naturally, keep you abreast of developments. If you already have any questions now then, of course, you can always contact one of Alfa's legal experts. With 32 locations throughout the Netherlands, there is bound to be one near you.