On 1 March 2019, the law dated 13 January 2019 is entered into force (the “Law”) establishing a beneficial owner register (“BOR”). The creation of the BOR is the consequence of the implementation of the Directive 2015/849/EU (as amended) of the Parliament and the European Council of 20/05/2015 into Luxembourg law. The aim is clear and has been pursued since a series of directives and laws made within the European Union since 2011: to facilitate exchanges of information in order to make corporate structures more transparent and to prevent money laundering and financing of terrorism.
Therefore, as from 1st March 2019, any Luxembourg unregulated entity is subject to a particularly acute obligation: it must proceed to the identification of its beneficial owner(s) and must declare its identity, as well as, a certain number of details and other information, which will be centralised with the BOR. However, the Law provides for a transitional period of 6 months to comply with these new obligations, i.e. by 31st August 2019 at the latest.
The entities bearing all the costs attached to the registration and to any subsequent amendment of the BOR, this will represent a new significant source of income for the Luxembourg State.
The information to be published are as follows:
- the identity (name, surname, date and place of birth, nationality, country of residence, address, identification number,…) of the beneficial owner (“BO”) i.e. “any natural person who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage (more than 25%) of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market that is subject to disclosure requirements consistent with European Union law or subject to equivalent international standards which ensure adequate transparency of ownership information.” If no person is identified as BO any natural person holding management positions will be considered as BO;
- the nature of the effective interests/stakes held by the BO; and
- the scope of the effective interests/stakes held by the BO.
Entities subject/not subject to the Law
The entities subject to the BOR are any:
- commercial companies (such as, among others, SA, SARL, SCA, SCS) excluding temporary companies (sociétés commerciales momentanées) and companies by participation (sociétés commerciales en participation);
- economic interest groupings (groupements d’intérêt économique) and the European economic interest groupings (groupements européens d’intérêt économique);
- branches created in Luxembourg by foreign entities being commercial or civil companies, economic interest groupings or European economic interest groupings;
- civil companies;
- non-profit associations;
- pension plan associations;
- agricultural associations;
- public bodies of the State and Municipalities;
- mutual insurance companies;
- special limited partnerships;
- investment funds; and
- other legal entities whose registration is required by law at the Luxembourg trade and companies’ register.
The entities listed on a regulated market will only have to provide the name of the regulated market(s) on which their securities are admitted to trading.
From a material point of view, the registration of information is made electronically and is managed by the Luxembourg business register.
Person – Delay – Price
The managers/directors of the relevant entity, attorneys and notaries can proceed to the registration with the BOR during one (1) month as from the incorporation of the entity or of any subsequent amendment. Any information and documents registered are kept during a period of 5 years starting from the date of dissolution of the entity.
The registration and any amendment is subject to fees.
A fine ranging from 1,250 and 1,250,000 Euro might apply if:
- there is a failure to register the entity or to amend any information in relation to the BO with the time limits;
- the publication is inaccurate, not actual or contains incomplete information;
- there is a failure to obtain and keep at the registered office of the company/entity all the information on the BO;
- the BO has not fulfilled his/her obligation under the Law.
Access – total or limited
The access to the BOR is on line and is TOTAL for:
National authorities involved in the fight against money laundering and terrorism financing: the State Attorney General, State prosecutors, investigating judges, the financial intelligence unit, the judicial police officers referred to in Article 10 of the Code of Criminal Procedure and approved by the Director General of the Police, the Financial Sector Supervisory Commission (CSSF), the Office of the Commissioner of Insurance, the Registration and Domain Administration, the Customs and Excise Administration, the State Intelligence Service, the Administration of the Direct Taxes , the Ministry of Finance and the Office of Export Control, Imports.
However the beneficial owner may request to restrict the access to the BOR if there is a disproportionate risk, such as the risk of fraud, bribery, kidnapping, extortion, harassment, and violence or that he/she is a minor or an incapable. In that case, the access will be limited to the national authorities, credit institutions, financial institutions, bailiffs and notaries and can be limited for a maximum period of three (3) years.
The access to the BOR is LIMITED for:
- the supervisory bodies in the supervision of money laundering and terrorist financing (the council of the Luxembourg bar association, the Chamber of Notaries, the Institute of Auditors, the Order of Chartered Accountants and the Chamber of Bailiffs);
- professionals as defined under the anti-laundering law (except branches in Luxembourg of foreign professionals as well as professionals of foreign law who provide services in Luxembourg without establishing a branch);
- resident persons or organizations demonstrating a legitimate interest based on a duly motivated request for access addressed to the manager of the BOR. Then, the manager sends the request to a coordinating committee which decides on the validity of the access’s request and informs the applicant, the entity (to allow the dispute) and the manager.
The access to the BOR by this last category of people seems vague as regards to the admissibility of the request, as well as, the validity of the request and the form of the motivations. What motivation will be accepted by the Coordination Commission? In case of refusal, on which criteria the committee the judge (if any) will take their decision? The freedom and the discretionary power given by the Law shall avoid to make contrary decisions creating a different access to the BOR according to the nationality of the entity.
Avocat, Senior Associate, SJL Jimenez Lunz