Belgian UBO register effective soon
All companies and other legal entities incorporated in Belgium have already the obligation to collect and hold information on their Ultimate Beneficial Owners (UBOs). It is expected that the Belgian UBO register will be effective in the course of the third quarter of 2018 and that the UBO information will have to be reported before the end of 2018.
Directors will be responsible for submitting this information to the Belgian UBO register in a timely manner, and may be sanctioned if they fail to comply with this obligation.
Recent legislative developments
On 20 May 2015, the Fourth Anti-Money Laundering Directive was adopted by the European Parliament and Council (hereafter 4th AMLD). Among the provisions in the 4th AMLD is the requirement for EU Member States to set up a UBO register that lists the UBOs of companies and other legal entities. The 4th AMLD lays down minimum requirements, Member States can impose more stringent requirements.
The Law of 18 September 2017 on the prevention of money laundering and terrorist financing and on the limitation of cash payments (hereafter AML law) implements the 4th AMLD in Belgium and introduces the Belgian UBO register.
The AML law includes the framework for the Belgian UBO register. The incorporation of the UBO register itself will be laid down in a Royal Decree. This Royal Decree will include the modalities of the UBO register, such as the way information needs to be reported to the UBO register, the exact content of this information, the access and use of the UBO register, etc. The Royal Decree will be published in the course of the third quarter of 2018.
In the meantime, on 30 May 2018, the Fifth Anti- Money Laundering Directive (hereafter 5th AMLD) has been adopted. The 5th AMLD amends the 4th AMLD with respect to the UBO register on certain aspects, such as the obligation for the Member States to grant public access to essential information on UBOs.
For the moment, it is not clear yet whether the expected Royal Decree will already take into account the amendments laid down in the 5th AMLD or not.
Who are UBOs?
As a rule, UBOs who must be reported in the Belgium UBO register are the natural persons who ultimately own or control the legal entity in question, and/or on whose behalf a transaction is executed or a business relationship is entered into.
Natural persons who hide behind intermediaries also count as UBOs. They are broadly defined as natural persons who benefit, or will benefit, from a 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 agree to the modalities involved.
The AML law contains four definitions of UBOs, each of which refers to one of the four categories of legal entity identified by the legislator:
1. UBOs of companies
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 the voting rights, the shares or the share capital of a Belgian company. Belgium aligns with the threshold of the 4th AMLD, but extends its scope to voting rights (the 4th AMLD does not foresee a threshold for voting rights);
- The natural persons who control the holding company or companies, in cases where the Belgian company is indirectly held through one or more holding companies that hold more than 25% of the shares or the share capital of the Belgian company. Therefore, in the case of multi-layer structures, control over the ultimate holding company appears to be the decisive factor in determining who is a UBO;
- 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" specified in Article 5 of the Belgian Companies Code, such as the right to appoint the majority of the directors of the company, and joint control;
- The natural persons who hold the position of senior managing official in cases where no natural persons can be identified on the basis of the guidelines above, or if there is any doubt that the identified persons are the ultimate beneficiaries. According to the explanatory memorandum, in most cases the person who holds the position of senior managing official will be the CEO or the chair of the executive committee.
2. UBOs of foundations and (international) non-profit organizations ((I)NPOs)
The following natural persons are considered as the UBO’s of foundations and (I)NPOs:
- The directors;
- Natural persons who are entitled to represent the NPO;
- Natural persons in charge of the daily management of the foundation or the (I)NPO’s;
- Founders of the foundation;
- 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;
- Any other natural person who controls the foundation or the (I)NPO through other means.
3. UBOs of trusts and fiduciaries
Settlors/founders, trustees, protectors (if any), beneficiaries and any other natural persons who ultimately control a trust or fiduciary through direct or indirect ownership or other means are considered UBOs 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 must 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, but this should change with the announced modification of the Civil Code.
The 5th AMLD specifies however that UBOs of trusts and fiduciaries will need to be reported in the Member State where the trusts or fiduciary is effectively managed.
4. UBOs of legal entities similar to trusts and fiduciaries
Natural persons with functions equivalent to those of UBOs of trusts and fiduciaries will be considered UBOs of entities that are similar to trusts and fiduciaries. It is expected that the Royal Decree will include a list of legal entities similar to trusts.
What type of information should be reported in the UBO register?
Adequate, accurate and current information on the UBO needs to be reported.
The Belgian UBO register will list at least the name, date of birth, nationality and address of each UBO. This is more than the minimum information required under the 4th AMLD (name, month and year of birth, nationality and country of residence).
For UBOs of companies, detailed information on the nature and extent of the beneficial interest they hold should also be included in the UBO register.
Regarding foundations and (I)NPOs, only information relating to the UBOs in whose interest the entity has been set up and the UBOs who control the entity through other means should be included in the UBO register, as the information of the other UBO’s is already publicly available in the Crossroads Bank for Enterprises (KBO/BCE).
The Royal Decree will lay down further specifications on the information that needs to be disclosed.
Directors are personally liable for reporting UBO information
All Belgian legal entities (companies, foundations and (I)NPOs) are required to collect and hold information on their UBOs. The 4th AMLD requires that the information is adequate, accurate and current.
Directors of companies, foundations and (I)NPOs must report the UBO information required within one month after it becomes known or is changed. The information must be reported electronically. The Royal Decree will include the modalities involved.
Apart from the sanctions that already exist for infringing the Belgian Companies Code, administrative fines of between 50 EUR and 5,000 EUR may apply to directors who do not comply with these obligations.
Will the UBO register be publicly accessible?
The Belgian UBO register will be established within the Ministry of Finance. The service responsible within the Ministry will be in charge of collecting, managing and controlling the quality of the information reported. The conditions regarding access to the UBO register will be laid down in the Royal Decree.
The explanatory memorandum of the AML law indicates that access to the Belgian UBO register will be granted only for anti-money-laundering and anti-terrorist-financing purposes.
The 5th AMLD, however, requires the Member States to grant public access to essential information on UBOs, including at least the name, month and year of birth, country or residence, nationality and the nature and the extent of the beneficial interest held. Member States can make the access subject to prior registration and/or the payment of a fee. Access to the information on UBOs of and fiduciaries requires for the applicant to demonstrate a legitimate interest.
It is not clear whether the Royal Decree will immediately grant public access to the Belgian UBO register or not.
Entry into force
On the basis of the AML law, entities already have the obligation to gather and keep adequate, accurate and current information on their UBOs.
The reporting of the information to the Belgian UBO register by the directors will only be possible until after the publication of the Royal Decree (expected in the course of the third quarter of 2018).
By 10 March 2021, the registers of the different Member States should be interconnected.
This article is part of the Real Estate Quarterly - July 2018