The Register of beneficial owners: new duties and liabilities for directors
The law dated 13 January 2019 setting up a register of beneficial owners for Luxembourg legal entities creates new duties and liabilities for directors.
The law dated 13 January 2019 setting up a register of beneficial owners for Luxembourg legal entities and :
Implementing provisions of article 30 of the 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, amending the regulation (EU) Nr. 648/2012 of the European Parliament and of the Council and repealing the Directive 2005/60/CE of the Commission as amended by the Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 ;
Amending the amended Law of 19 December 2002 concerning the register of commerce and companies as well as bookkeeping and annual accounts of companies and modifying some other provisions (the “Law”)
has been published on 15 January 2019 and will enter into force on 1st March 2019. Entities in the scope of the Law must be compliant therewith by 1st September 2019 at the latest.
As an additional measure in the fight against money laundering and terrorist financing, the Law provides for the set-up of the Register of Beneficial Owners (“Registre des bénéficiaires effectifs”), i.e. a central register listing information on the natural persons behind Luxembourg companies and other legal entities (hereafter the “RBE”), under the supervision of the Ministry of Justice.
Luxembourg entities in the scope of the Law shall obtain and conserve at their registered office information on their ultimate beneficial owner(s) (the “BO(s)”).
The technical means for the transfer, filing and storage of information on the RBE will be determined by a forthcoming grand ducal regulation. The below summary is not exhaustive and is subject to the grand ducal regulation providing for additional details
How does the Law impact you, as a director?
Verify if your entity is required to disclose its BOs
If your entity is a commercial company, interest grouping, civil company, non-profit association, foundation, pension savings association, agricultural association, State public establishment and commune, branch opened in the Grand Duchy of Luxembourg, special limited partnership, mutual fund registered with the Luxembourg company register, then it is required to disclose its BO(s) to the RBE (the “Registered Entities”).
The BO assessment may result in your name being disclosed in the RBE
The Law does not provide for a definition of BO. It refers to the definition provided in the law dated 12 November 2004 on the fight against money laundering and terrorist financing, as amended (the “2004 Law“) which provides that a BO means “any natural person(s) who ultimately owns or controls the customer or any natural person(s) on whose behalf a transaction or activity is being conducted.” In accordance with 2004 Law, the concept of BO shall include at least in the case of corporate entities:
“(i) any natural person who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage 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.
A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a natural person shall be an indication of direct ownership.
A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership;
(ii) if, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), any natural person who holds the position of senior dirigeant (manager); […]”
The obligation of transmitting the BO related information to the RBE is incumbent upon your Registered Entity
As the transmission of the information to the RBE falls within the competence of your Registered Entity itself (and not of its BOs), as director you need to ensure the relevant processes are implemented.
Verify / obtain availability of the information to be disclosed
As each Registered Entity shall disclose the following information, you must make certain that appropriate procedures be implemented and maintained so as to ensure that adequate, accurate and up to date information, together with the supporting documentation on your Registered Entity’s BO(s) are available:
Day of birth;
Month of birth;
Year of birth;
Place of birth;
Country of residence;
Full private or professional address;
Identification number (for persons registered with the National Register of Natural Persons); or
Foreign identification number (for non-resident persons non-registered to the National Register of Natural Persons);
The nature of the effective interests/stakes held by the BO(s);
The scope of the effective interests/stakes held by the BO(s).
Listed companies, the securities of which are admitted to trading on a regulated market, are exempted from such filing and the information to be disclosed will be limited to the name of the regulated market where their shares are admitted to trading.
The actual filing of the information on BO(s) with the RBE
The actual filing with the RBE of the information shall be required by your relevant Registered Entity or its representatives (amongst which you, as director). Notaries can also proceed with such filing when incorporating a Registered Entity or amending its articles of association.
Timeframe for the filing and for any subsequent amendment be made to the RBE
Your existing Registered Entity will have a six-month period as from the entry into force of the Law to require the filing of the information on their BO(s) with the RBE.
Past this transitional period, your Registered Entity or its representative (amongst which you, as a director) shall make the filing of its BO(s) within one month as from its incorporation and has one month to update the RBE as from the moment your Registered Entity or its representative (amongst which you, as a director) is aware or should have been aware of a circumstance that should trigger the filing to the RBE.
Should the RBE reject the filing of BO(s) information (if the information is incomplete or not in compliance with legal provisions and regulations or non-consistent with the supporting documentation), your Registered Entity will have fifteen days to rectify its filing.
The information in the RBE will be publicly accessible
The information in the RBE is accessible to the Luxembourg national authorities (e.g. the CSSF, the tax administrations) but also to any member of the public, by electronic means. The access procedures and the search criteria will be set out in a grand ducal regulation.
Your Registered Entity or a BO may request that access to the information is restricted. However, such restriction will only be granted for a limited period of time in exceptional circumstances. The BO must demonstrate that access would expose him/her to a disproportionate risk, such as the risk of fraud, bribery, kidnapping, extortion, harassment or violence or when the BO is a minor or an incapacitated adult.
Impact in case on non-compliance: criminal sanctions
The Law provides for criminal sanctions ranging from EUR 1,250 to EUR 1,250,000 for the Registered Entities and for the BO(s) failing to comply with their obligations under the Law.
Please not that the term “director” is used as a generic term herein and should be read as a reference to “manager” depending on the form of your entity.
Disclaimer : Whilst reasonable care has been taken in writing this newsflash, the author does not accept any responsibility for the completeness or accuracy of its contents. Readers shall not entirely rely on the content of this newsflash, and shall take their own professional advice to apply to their individual circumstances.
Partner at Kleyr Grasso and member of the ILA Legal and Regulatory Committee