The Belgian UBO register
Companies and other legal entities incorporated in Belgium now have to collect and hold information on their Ultimate Beneficial Owners (UBOs). Directors will be responsible for submitting this information to the Belgian UBO register in a timely manner, and may be penalised 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 (Directive). Among the provisions in the Directive is the requirement that EU Member States set up, by 26 June 2017, a UBO register that lists the UBOs of companies and other legal entities.
In order to comply with the Directive, Belgium must introduce a UBO register that records the UBOs of companies and other legal entities incorporated in Belgium.
The Law of 18 September 2017, which implements the Directive and introduces the Belgian UBO register, was published in the Belgian Official Gazette on 6 October 2017.
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 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 Directive, but extends its scope to voting rights (the Directive 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 seems 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. By already introducing the definition, however, the legislature anticipates the adoption of the Fifth Anti-Money Laundering Directive, which is expected to extend to Member States that have a link with the trust, the obligation to report who the UBOs of trusts are.
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. A Royal Decree will publish a list including the legal entities similar to trusts.
UBO information to report
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 Directive (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 mentioned under b.(v) and b.(vi) should be included in the UBO register (information under b.(i) to b.(iv) is already publicly available in the Crossroads Bank for Enterprises (KBO/BCE)).
Directors 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 Directive requires that the information be sufficient, 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. A Royal Decree will include the modalities involved.
Apart from the sanctions that already exist for infringing the Belgian Companies Code, administrative fines of between EUR 50 and EUR 5,000 may apply to directors who do not comply with these obligations.
Limited access to the UBO register
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 a Royal Decree.
In principle, access to the UBO register will be granted only for anti-money-laundering and anti-terrorist-financing purposes.
Entry into force
The Law of 18 September 2017 was published in the Belgian Official Gazette on 6 October 2017 and entered into force 10 days later. One or more Royal Decrees will also have to be published before directors will be able to report the information required to the Belgian UBO register.