UPDATE: New legislative developments on Ultimate Beneficial Owners
Now that the Ultimate Beneficial Owners (hereinafter “UBO”) of all Belgian corporate and other legal entities are (or, should be) registered in the UBO-register - see our previous newsflash - the Belgian legislator recently took the opportunity to introduce some changes to the related legal framework. With these amendments the legislator implemented the Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (hereinafter the “Fifth Anti-Money Laundering Directive”) and aligned the legislation (to some extent) with the already existing reality of the Belgian online UBO-register.
Below is an overview of the main changes in the next chapter of the continuing UBO journey. These novelties were introduced by the Law of 20 July 2020 containing various provisions on the prevention of money laundering and terrorist financing and for the limitation of the use of cash (hereinafter the “Law”) and the Royal Decree of 23 September 2020 amending the Royal Decree of 30 July 2018 on the operating modalities of the UBO-register (hereinafter the “Royal Decree”).
- The Law
The Law modified the Belgian Company Code (hereinafter the “BCC”) to bring it in line with the Fifth Anti-Money Laundering Directive which introduced a new obligation and sanction for the UBO itself to further ensure compliance with the UBO-requirement(s). The relevant provisions of the Law already entered into force on 15 August 2020.
While the existing obligations within the legal UBO-framework mainly applied to the reporting entity itself and the members of its management body, the BCC now imposes an obligation on persons who qualify as UBO of such an entity, to provide that entity with the information required by the BCC. The failure of the UBO to provide the entity with such sufficient, adequate and up-to-date information could now be sanctioned with administrative fines ranging between the amount of 250 and 50.000 EUR.
This new obligation and sanction will facilitate the reporting entities to meet their own obligation to identify and register their UBO’s, which was in the past not always easy if the required information to do so was not provided by the same.
- Royal Decree
The Royal Decree is the most recent development in the legal UBO-landscape and has entered into force on 11 October 2020. The main novelties introduced by the Royal Decree relate to the information to be uploaded in the UBO-register and access thereto, and will therefore have in practice a far-reaching impact for each reporting entity.
- Information to be uploaded
A first modification introduced by the Royal Decree relates to the indirect UBO of a Belgian company (being the UBO who owns or controls the reporting company through one or more intermediate entities). It is now prescribed that the weighted percentage of shares or voting rights that the beneficial owner holds or controls in the reporting entity, as well as in each of the intermediate entities, should be included in the UBO-register. Upon closer consideration, the aforementioned provision implies a mere alignment of the wording of the legislation with the already existing practice of the Belgian online UBO-register and with the FAQ available on the website of the Belgian Federal Public Service Finance (hereinafter “FPS Finance”).
Furthermore, the Royal Decree introduces the requirement to register all documentation demonstrating that the information uploaded in the UBO-register is adequate, accurate and up-to-date. Again, this element is not completely new in the Belgian UBO-landscape, but does rather constitute a return to the initial phase of the UBO-register when the registration of the UBO could not be completed without the underlying documents being attached. However, there was no legal basis to oblige reporting entities to upload additional documentation in the UBO-register. Therefore, this requirement was quickly abolished by the FPS Finance and is now re-introduced, this time by law.
The Royal Decree does not further specify what exact documentation is to be uploaded. In the first place, inspiration might be drawn from the first versions of the FAQ, in which reference was made to, among others, the identity card of the UBO, extracts from the foreign commercial register of foreign intermediate entities as well as the articles of association and shares’ register of the reporting entity. In the meantime, the FPS Finance has also provided more specific guidelines on its website (see here). Reference is made to a copy of the share register, the articles of association, shareholder agreements, notarial deeds or any other document. A comprehensive list of documentation is not foreseen, and the additional documentation to be provided will have to be considered on a case-by-case basis (or, category by category). Taking into account the obligation for reporting entities to maintain adequate, accurate and up-to-date information about their UBO(s), as currently already prescribed by the BCC, as well as the legal obligation to keep the books at the company seat, a large part of the documentation should already be available at the registered office of the reporting entities.
Finally, The Royal Decree does not include any transitional provisions in this respect. Therefore, it could be assumed that already registered entities also have to upload the documentation as soon as possible. This aspect, too, has now been clarified on the website of the FPS Finance. It is indicated that the reporting entities that were already registered on 11 October 2020 are granted an additional period to comply with the new documentation obligation. More specifically, these entities will only have to upload the documentation concerned by 30 April 2021, at the latest. To avoid any doubt, each new registration performed after 11 October 2020 will in any case have to comply with the new documentation obligation.
- Access to the UBO-register
Furthermore, the Royal Decree provides for a broader accessibility to the UBO-register. The access no longer only relates to the currently registered information, but also to the history of the modifications to the information. Additionally, the information registered related to certain categories of UBOs of (international) non-profit associations and foundations (being natural persons holding a position in the management body of these entities and the founder(s) of a foundation) will be accessible to each citizen, regardless of whether a legitimate interest is demonstrated.
- Registration of trusts, fiduciaries and similar legal entities in CBE
One last point of attention is the obligation imposed on trusts, fiduciaries and similar legal entities to register in the Crossroads Bank for Enterprises (hereinafter “CBE”), prior to their registration in the UBO-register. This obligation stems from a practical reason, i.e. the registration in the UBO-register is only possible via the unique identification number assigned following the registration in the CBE.
For any further advice or assistance on this topic, please feel free to contact us.