New requirement to disclose beneficial ownership of shares in a relevant entity
Statutory instrument No. 560 of 2016 entitled ‘European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016’ (the “Regulations”) transposes into Irish Law the first sub-paragraph of Article 30(1) of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “4AMLD”).
What does it mean for business?
The first sub-paragraph of Article 30(1) of the 4AMLD requires corporate and other legal entities incorporated within the State to hold “adequate, accurate and current information on their beneficial ownership, including details of the beneficial interests held”.
Save as set out below the Regulations apply to every “relevant entity” which means a corporate or other legal entity incorporated in the State and includes a company and any other body corporate so incorporated.
The Regulations do not apply to a company or other body corporate—
(a) listed on a regulated market that is subject to disclosure requirements
consistent with the law of the European Union, or
(b) subject to equivalent international standards which ensure adequate
transparency of ownership information.
For the purposes of paragraph (a), “disclosure requirements consistent with the law of the European Union” includes the Transparency (Directive 2004/109/EC) Regulations 2007 (S.I. No. 277 of 2007).
What is a company?
A “company” means a company formed and registered under the Companies Act 2014 or an existing company within the meaning of that act.
Member States are to bring into force the laws, regulations and administrative provisions necessary to comply with the 4AMLD by 26 June 2017. However, in November 2016 Ireland transposed the first sub-paragraph of Article 30(1) of the 4AMLD in advance of the rest of the 4AMLD in order for the central register of beneficial ownership (required by Article 30(3) of the 4AMLD) to be put in place from as early a date as possible after full transposition of the 4AMLD.
Why was this legislation enacted?
The intention behind this early transposition was to allow corporate entities in the State time to request and collect the necessary beneficial ownership data in advance of the full transposition of the 4AMLD and to record such information in their own corporate beneficial ownership registers. The Regulations came into operation on the 15 November 2016.
The purpose behind this provision is so that the natural persons who are the real owners/controllers of a company can be ascertained. Often this is clear as the legal owners and beneficial owners of shares in a company are the same however in other cases, the ownership may be complicated and it may not be possible, due to a particular corporate structure being utilised, to identify a particular beneficial owner.
There is a requirement for companies to identify the natural person/s who are their underlying beneficial owners on the basis of the definition set out in Article 3(6) (a) of the 4AMLD which is incorporated into the Regulations.
The Regulations set out the information that must be obtained in relation to each beneficial owner and also specify that a relevant entity shall keep and maintain a register (which shall be known, and is in the Regulations referred to, as a “beneficial ownership register”) in which there shall be entered by it the information referred to in Regulation 4(2) to (4) of the Regulations. The Regulations also details the notices to be issued seeking the necessary information about beneficial ownership and also the position where the beneficial owner cannot be identified.
What are the penalties for non-compliance?
A relevant entity that fails to comply with a relevant section of the Regulations commits an offence and shall be liable, on summary conviction, to a class A fine.
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