Update on the Luxembourg register of ultimate beneficial owners: what you need to know
The law introducing in Luxembourg a register of ultimate beneficial owners (UBO) of companies and other legal entities (Registre des bénéficiaires effectifs, RBE) was approved in December 2018 and published on 15 January 2019. Here is what you need to know about the new disclosure obligations that will soon apply.
The new law enters into force on 1 March 2019. Entities falling within its scope will then have six months to comply with their new obligations (i.e., until 1 September 2019).
2. Which entities fall within the scope of the new law?
Most of the Luxembourg entities registered with the Luxembourg Register of Trade and Companies (Registre de Commerce et des Sociétés, RCS) are covered by the new law. The latter will notably apply to all Luxembourg civil and commercial companies, e.g., S.à r.l.s, S.A.s and S.C.A.s (except for sociétés commerciales momentanées et sociétés commerciales en participation), to (European) economic interest groupings and to Luxembourg branches of foreign entities.
Fonds communs de placement and companies listed on a regulated market in Luxembourg, the European Economic Area or a third country that imposes obligations recognised as equivalent by the European Commission within the meaning of Directive 2004/109/EC,1 are no longer excluded from the scope of the law.
Fund entities, whether regulated or not, and with or without legal personality, will thus also have to comply with new requirements.
3. Who is a UBO of a Luxembourg company?
A UBO is defined as any natural person who ultimately owns or controls the entity or any natural person for whom a transaction is executed or an activity realised. In the case of companies, this includes any natural person who ultimately owns or controls the company through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that company, including through bearer shareholdings, or through control via other means. A person may thus be a UBO based on the ownership criterion and/or on the control criterion.
A direct or indirect shareholding of more than 25% held by a natural person in a Luxembourg company is an indication that the ownership criterion is met. This does not mean that a person who owns a shareholding of 25% or less is automatically not a UBO, since that person may exercise actual control via other means.
If, after having exhausted all possible means and provided there are no grounds for suspicion, no UBO can be identified, or if it is uncertain whether the persons identified are the UBOs, information has to be provided with respect to the natural person(s) holding the position of senior management (dirigeant principal).
4. What information will have to be disclosed?
The RBE will contain the name, date and place of birth, nationality and the country of residence, the exact private or professional address of the UBO and the identification number for the individuals registered in the Luxembourg Register of natural persons (or for non-resident individuals their national identification number, e.g. the number of the ID card). The nature and the extent of the beneficial interest held must also be included in the RBE.
Companies listed on a regulated market in Luxembourg, the European Economic Area or a third country that imposes obligations recognised as equivalent by the European Commission within the meaning of Directive 2004/109/EC, will only have to provide the name of the regulated market(s) on which their securities are admitted to trading.
The information will be kept in the RBE until a period of five years after the date on which the relevant Luxembourg entity has been removed from the RCS (e.g., because it has been dissolved or has ceased to exist).
5. Who will have access to the information?
Any person will have a right to access such information (except for the exact private or professional address and identification number of the UBOs) without having to demonstrate a legitimate interest. This results from the 5th EU anti-money laundering Directive, which was adopted in May 2018.
However, a Luxembourg company required to file information with the RBE may request that the access to such information be limited exclusively to the national authorities (e.g., the Luxembourg tax authorities), credit and financial institutions, as well as bailiffs and notaries acting in their professional capacity. Such request must be duly motivated and addressed to the RBE manager (i.e., to the economic interest grouping “Luxembourg Business Registers”, which also maintains the RCS). The limitation of access will be granted only in exceptional circumstances, where access to information available in the RBE could expose the UBO in question to a disproportionate risk, a risk of fraud, kidnapping, blackmail, violence, intimidation, or in case the UBO is either a minor or legally incapable.
6. What are the obligations to which Luxembourg companies will be subject?
Luxembourg entities will have to collect information, file it with the RBE, keep it up to date and give it to national authorities upon request.
Information on the UBO will have to be filed with the RBE within one month from the moment when the entity has become aware or should have become aware of the event requiring the registration or modification of information.
The filing will be made electronically on the website of the RBE manager.
7. What are the obligations to which the UBO of Luxembourg companies will be subject?
The UBO of a Luxembourg company will have to give to the latter all the necessary information so that the Luxembourg company may comply with its obligations.
8. What are the sanctions in case of non-compliance?
For Luxembourg companies, non-compliance may result in a criminal fine ranging from EUR 1,250 to EUR 1,250,000.
A UBO that does not comply with its obligation to cooperate with the Luxembourg company may also receive a criminal fine ranging from EUR 1,250 to EUR 1,250,000.
9. Practical aspects
A grand-ducal regulation will provide details about electronic registration and payment modalities. According to the currently available draft regulation, registrations will have to be made in French, German or Luxembourgish. A request to register or modify information will have to be supported by documentary evidence that includes (i) official documents enabling to identify the UBOs, (ii) if relevant, the request to limit the access to the information available in the register, and (iii) if relevant, a proof that the registered entity is listed on a regulated market that fulfils certain conditions.
In principle, the search criteria within the RBE will be the name or RCS number of the Luxembourg company.
10. How can we help you?
We can help you with the identification of the UBOs, the filing of information in the RBE and in procedures such as the submission of a request to limit the access to information filed in the RBE.
If you need more information, please contact one of your trusted advisers in Loyens & Loeff Luxembourg.
1 Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC.