The register of Ultimate Beneficial Owners (UBOs) in the Netherlands is likely to be introduced in January 2020, subject to completion of the legislative process in the Dutch parliament. We spoke with Bauke Faber, senior legal counsel at Intertrust to understand more about the recent updates to the UBO register in the Netherlands (NL).
Q: Bauke, please give us a brief introduction as to what’s expected with the UBO register.
We expect the UBO register to be live in the Netherlands in January 2020. Each company or other entity incorporated or founded in the Netherlands must obtain information on the persons who ultimately own or control them (commonly referred to as UBOs) and register this information in the NL UBO register. The NL UBO register will be part of the Dutch Trade Register. Once the register is in place, existing entities will have 18 months to register their UBOs – so until Mid-2021.
Q: Tell us, which entities are affected?
Only companies, other entities and partnerships incorporated or founded in the Netherlands must disclose its UBOs in the NL UBO Register. The location of their business (inside or outside the Netherlands) is irrelevant. A legal entity not incorporated under the laws of the Netherlands, but with its principal place of business or branch in the Netherlands, does not need to register a UBO in the NL UBO Register. This is because Dutch law assumes that this legal entity has such obligation in its home state.
There are also requirements for de-registered partnerships, a business which is no longer established in the Netherlands but belongs to a (limited) partnership or shipping enterprise. These are formed under the laws of the Netherlands and should be re-registered in the Dutch Trade Register, so it can then register its UBO.
Q: What are the implications for listed entities? Are they exempt?
Each “issuer” of securities incorporated under the laws of the Netherlands which complies with either disclosure requirements as meant in the transparency directive or international standards comparable with such disclosure requirements (a.k.a. “Dutch stock listed entities”) and each 100% subsidiary of such “issuer” are exempted from the obligation to register a UBO in the NL UBO register.
The free float percentage is irrelevant for this exemption. A Dutch entity can list its securities on stock exchanges around the world. Unfortunately, not all jurisdictions have standards comparable with the disclosure requirements under the transparency directive. A Dutch entity which shares have been listed on a stock exchange outside the EU, the US, the UK (after Brexit) and Japan may not always use the exemption, so must register a UBO in the NL UBO register after all.
Q: Who must be registered as a UBO in the NL UBO register?
The person or people who ultimately own or control a company or other entity must be registered as UBO in the NL UBO register. There can be more than one UBO. Some examples of who is regarded as a UBO are:
- A person owning more than 25% of the shares in a BV or NV, directly or indirectly
- A person holding more than 25% of the ownership interest of a partnership, directly or indirectly
- A person capable of exercising more than 25% of the votes in a decision to amend the articles of association of a foundation, directly or indirectly
- A person effectively controlling a company or entity
If nobody qualifies as a UBO based on the ownership or control requirement, or if there’s any doubt as to which individuals are UBOs, the individual(s) that hold the position of senior managing official(s) will be considered the UBO(s).
In the case of a BV, NV and foundation the board members are the senior managing officials. In the case of a limited partnership, the general partners are the senior managing officials. If the board member is a legal entity, the person/people forming the board members of that legal entity form the senior managing officials of the entity of which the legal entity is the board member. If the board members or general partners don’t wish that they all are considered as UBO, they may select one person from their midst to be the UBO for UBO register purposes.
Just to note, the person on whose behalf a transaction is executed, doesn’t qualify as UBO for the NL UBO register, and doesn’t need to be registered in the NL UBO register. However, this person does qualify as UBO under other Dutch legislation.
Q: What UBO information will be accessible?
The following details of a UBO will be publicly available in the UBO register:
- First and last name
- Month and year of birth
- Country of residence
- Nature and extent of the UBOs economic interest
Furthermore, the Dutch Financial Intelligence Unit and other competent authorities will have access to the following additional information:
- Day, place and country of birth
- Residential address
- Citizen service number or foreign tax identification number
- Copy of passport
- Documents that prove the nature and extent of the UBO’s economic interest
We’ll investigate which documents prove the nature and extent of the UBOs economic interest.
Q: How’s a UBO’s privacy safeguarded?
The UBO register meets the requirements imposed by the EU General Data Protection Regulation (GDPR). Most parties that consult the register will only be allowed access to a limited amount of the available information. In exceptional circumstances, a UBO may request that access to the public information be restricted. This is only possible if publication of this information exposes the UBO to a disproportionate risk of, for example, violence, blackmail, extortion or kidnapping.
This type of UBO must be registered in the Dutch Trade Register but the UBO can request the Chamber of Commerce to shield parts of the UBO information from the public.
Q: Who’s charged with providing UBO information?
Each company or other entity must obtain information on its UBO and register this person with the NL UBO register. This obligation lies with each managing director (or similar official). The company must keep the NL UBO register up to date and register any changes that take place.
The relevant UBO must provide the required information to the company/entity of which they’re the UBO.
It’s important to note that organisations are bound by statutory KYC obligations. Organisations that are required by law to obtain UBO information for KYC purposes, such as (Dutch) law firms, Dutch notaries and Dutch tax advisers, must notify the NL UBO register of any inconsistencies found between the UBO information that they received from their client and the information in the NL UBO register.
Q: What happens if the UBO information is not provided?
Not meeting the requirements of this new law may be sanctioned with an administrative or criminal penalty. Exact amount is still unclear.
Q: How do you register a UBO?
The legislative proposal doesn’t stipulate how to register a UBO in the NL UBO register. This will likely be implemented by amending the Dutch trade register decree 2008. The proposal to amend this decree has recently been published. Unfortunately, the proposal on this topic isn’t clear. For now, we (have to) assume that the registration of a UBO can only occur by completing and signing a form. This includes signatures of the relevant UBO and of the director of the relevant company or entity.
Q: What’s the timing?
From (1 or 10) January 2020, a newly incorporated company and other entities will have to provide the required information on their UBO upon registering with the Dutch Trade Register. An already existing company and other entities will have until mid-2021 (18 months after the NL UBO register will be implemented).
Intertrust offers UBO registry services across our global network. For further information on UBO registry in your jurisdiction, get in touch by emailing [email protected].