Filings of information under new regulations on the beneficial ownership of corporates commences in June 2019. Karl McLaughlin of RSM Ireland explains what’s going on

Since November 2016, the Fourth Anti-Money Laundering Directive (4AMLD) required corporate and legal entities to hold accurate, up to date information on the beneficial owner or owners in a beneficial ownership register. 

Under the regulations, corporate and legal entities must create a Beneficial Owners Register i.e. a list of persons who ultimately own or control, through direct or indirect ownership, a shareholding in excess of 25%. 

Every entity is under a statutory obligation to immediately take ‘all reasonable steps’ to obtain and hold adequate, accurate and current information in respect of its beneficial owners.  Where Beneficial Owners cannot, after all reasonable efforts, be identified, the names of the company’s ‘senior managing officials' (e.g. company directors) must be entered in the register of beneficial owners.

Recent Developments

On 22 March 2019, the Department of Finance released Regulations to establish a Central Register of Beneficial Ownership of Corporates. These regulations replace and expand the scope of those introduced last November. 

In Association with

Under the 2019 Regulations, every relevant entity shall take reasonable steps to obtain:    

• The name, date of birth, address, nationality and residential address of each beneficial owner 
• A statement of the nature of the extent and interest held, or the nature and extent of control exercised, by each beneficial owner
• The PPS Number, where appropriate, of each beneficial owner (to enable the beneficial owner’s identity to be cross checked and validated — the Registrar shall not disclose this information)

This information must be filed on the Central Register. The RBO will begin to accept online filings from June 22, after which there will be five months for companies and Industrial & Provident Societies to file their RBO data to meet their statutory duty. It is likely that the CRO will be given stewardship of this register.

Entities Subject to the Regulations

The Regulations apply to every relevant entity which is defined as a corporate or other legal entity incorporated in the state and includes a company and any other corporate body so incorporated. 

However, the Regulations do not apply to a company or other body corporate that is listed on a regulated market that is subject to disclosure requirements consistent with EU law; or is subject to equivalent international standards which ensure adequate transparency of ownership information. 

Who Will Have Access?

The public will have access to the following information for each beneficial owner:

• Name
• The month and year of birth
• Country of residence
• Nationality

A statement of the nature and extent of the interest held, or the nature and extent of control exercised by, the beneficial owner.

The information filed on the Central Register will be accessible to the Revenue Commissioners and state competent authorities, which include the Central Bank of Ireland, the Minister for Justice or other competent authorities which the minister may prescribe. Those authorities may disclose relevant information recorded in the Central Register to a corresponding competent authority in another EU member state.

Summary

The initial filing deadline is 22 November 2019. A company or beneficial owner that fails to comply with the Regulations shall be liable on summary conviction to a Class A fine, or conviction on indictment to a fine up to €500,000. There is also provision for custodial sentencing of up to 12 months for non-compliance or false information. 

For most owner managed companies, compliance with the requirement should not be too onerous. However, identifying the beneficial owner of certain entities, in particular those with a complex ownership structure, may not be a straightforward task. In such situations, individuals responsible for company secretarial filings may seek professional advice in respect of the identification process.  

Introduction of the Directive brings a greater level of transparency and accountability to the public arena. However, for beneficial owners with legitimate business and personal reasons for anonymity, the new Regulations may present an increase in cost and bureaucracy. 

• Karl Mc Laughlin is a director at RSM Ireland who specialise in this area. For more information or advice, call 01 496 5388 

• The implications of this change will be discussed on May 16 at the Institute of Chartered Secretaries annual conference  being held in Dublin.