All Irish registered companies, including Companies Limited by Guarantee, with some minor exceptions, are required to create, and maintain, an internal Register of Beneficial Owners .
They are also required to supply this information to a central (public) register of all ‘beneficial owners’ of Irish companies (RBO) and provide updates to the register if and when they occur.
What is a Beneficial Owner?
A beneficial owner is a natural person who ultimately owns or controls, directly or indirectly, a legal entity.
How would a person own shares indirectly?
A person might hold shares through a ‘nominee’ on the basis of a Declaration of Trust or they may hold shares in a company through other companies, in a group structure.
Is there a minimum level of ownership that applies?
Yes. The 4th Anti Money Laundering Directive (4AMLD ) says that a person shall be considered to come under its regulations if they hold either directly or indirectly a shareholding, or ownership interest, of 25% plus one, in a subject company. (A subsequent EU Directive may reduce this to 10%).
What information must be recorded internally by each company on their Ultimate Beneficial Owners (UBOs) ?
At a minimum the following information must be held in an internal register:
- Full name, residential address, date of birth and nationality;
- A statement of the nature and extent of the interest held by each beneficial owner;
- The date on which the individual was entered into the Register of Beneficial Owners;
- The date on which a person ceased to be a beneficial owner;
- If no beneficial owner can be identified the Company must then enter the names of its ‘senior managing officials’ e.g. its Directors/Chief Executive on the Register of Beneficial Owners.
- PPSN numbers for each UBO must be obtained for onward transmission to the RBO but are NOT retained in the internal register. (They are required for verification purposes only)
Thereafter, the company will need to record changes in beneficial ownership details and deliver these to the Central Register when they occur, and within a 14 day period.
Particular care should also be taken if the company undertakes any procedures which might impact the structure of their beneficial owners – such as a fresh allotment of shares, transfer of shares, purchase of own shares or a redemption of shares.
How is this information collected?
In the vast majority of cases the legal owners and the beneficial owners of Irish companies will be the same. As such the information will be contained in the subject company’s Statutory Books/Register of Members.
In cases where the beneficial owners are not the direct legal owners, there is an obligation on the Company to send a notice (Regulation 7 Notice) to each person it believes to be a beneficial owner. This notice sets out all of the particulars which the Company already holds on that individual and asks them to confirm the contents.
In turn, there is an obligation on that individual to respond, within one month, confirming or correcting the particulars in the notice and to supply any information which may be missing.
The subject Company may also send a further notice (Regulation 9 Notice) to any other third party, such as a professional advisor, who it reasonably believes knows the identity of any person who is a beneficial owner. Such third parties may have the option to decline replying on the basis of having legal privilege.
What happens if Beneficial Owners/Third Parties do not provide confirmation or respond?
The subject Company must take ‘all reasonable steps’ and, more importantly, be able to demonstrate how it has taken those steps, to obtain the particulars.
In the event that the information is not forthcoming, or where no beneficial owner can be identified, the Company must then enter the names of its ‘senior managing officials’ e.g. its Directors/Chief Executive on the Register of Beneficial Owners.
Individuals/beneficial owners who do not provide confirmation, leave themselves open, in very serious cases, of fines up to €500,000 if convicted on indictment.
What happens if Ultimate Beneficial Owners do not have a PPSN ?
Where UBO’s do not have a PPSN, a Form BEN2 must be completed and sworn before a Notary Public. This will be particularly applicable to UBO’s who are located outside the State.
Who has access to the information on an internal Register of Beneficial Owners.
Competent authorities such as the Garda Síochána, the Revenue Commissioners, the Criminal Assets Bureau or an inspector appointed under section 764(1) of the Companies Act 2014 must be granted timely access, on request, to an internal beneficial ownership register.
In addition, if a company enters into certain occasional transactions, e.g. a transaction requiring Customer Due Diligence to be applied by a Designated Person such as a credit institution, auditor, external accountant, legal advisor or Trust & Corporate Service Provider – such as CFI, the company must provide the Designated Person, on request, with information identifying its beneficial owners.
What information submitted to the Central Register is available to the public?
The public, and Designated Persons, have access to the following information for each ultimate beneficial owner:-
- Name;
- The month and year of birth (but not day);
- Country of residence;
- Nationality;
- A statement of the nature and extent of the interest held, or the nature and extent of control exercised by, the beneficial owner;
- PPS Numbers will NOT be available.
‘Competent Authorities’ such as An Garda Síochána, Financial Intelligence Units, the Revenue Commissioners and the Criminal Assets Bureau have access to all of the above information including the residential address of the beneficial owner and may exchange this information with other EU Competent Authorities.
Who will enforce these regulations?
In the current environment where AML/Terrorism financing issues are to the fore, it is felt that a hard line approach will be taken to any potential breaches and that high profile prosecutions may be likely in order to provide a deterrent.
Offences under the Regulations may be brought and prosecuted by the Director of Public Prosecutions or the RBO. The RBO, at her discretion, may refer a case to the Director of Public Prosecutions where the case is one in relation to which the Registrar has reasonable grounds for believing that an indictable offence under the Regulations has been committed.
There is also a reporting obligation on a Designated Person (or indeed a Competent Authority) where they determine that there is a discrepancy between the information provided to them and the information filed on the Central Register. Such report must be made to the RBO who may serve a notice requesting clarification.
Are there penalties for not complying?
Yes. A company, beneficial owner, or third party that is believed to have information regarding beneficial ownership etc., that fails to comply with the Regulations in relation to an internal Register of Beneficial Owners shall be liable on summary conviction to a Class A fine (not exceeding €5,000) or, when conviction is on indictment to a fine up to €500,000 and possibly a jail term of up to twelve months.
There are further criminal offences committed where:
- Materially false information is sent to the RBO;
- Designated Persons do not notify RBO of discrepancies they have found;
- ‘Presenters’ fail to provide certain information about themselves to RBO.
How can CFI assist?
CFI can help companies issue the required notices to Beneficial Owners, collate the returned information and create the relevant Register of Beneficial Owners, and subsequently assist in the onward transmission of such information to the RBO.