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UBO definition and UBO register

UBO definition and UBO register

In connection with the legislative bill for the Fourth Anti-Money Laundering Directive Implementation Act, the Minister of Finance has on 6 April 2018 submitted the Draft Money Laundering and Terrorist Financing (Prevention) Act 2018 [Wet ter voorkoming van witwassen en financiering van terrorisme – Wwft] Implementation Decree, to the Senate and the House of Representatives. The Decree defines the term “Ultimate Beneficial Owner”. On 20 April 2018, the Minister also gave an update on the legislative procedure for the UBO register. The intention is to submit a draft legislative bill to the House of Representatives at the beginning of 2019.

Introduction
In connection with the legislative bill for the Fourth Anti-Money Laundering Directive Implementation Act (the “Bill”), the Minister of Finance has on 6 April 2018 submitted the Draft Money Laundering and Terrorist Financing (Prevention) Act 2018 (Wwft) Implementation Decree (the “Decree”) to the Senate and the House of Representatives. The Decree includes the definition of the Ultimate Beneficial Owner (“UBO”). The setup of the UBO registration ties in with the definition of the UBO in the Decree.
During the preliminary scrutiny procedure relating to the Decree, running for four weeks from 6 April, the Senate and the House of Representatives have time to put forward motions to change the Decree. It is expected that the Bill and the Decree will come into force on 1 June 2018.
On 20 April 2018, the Minister also gave an update on the legislative procedure for the UBO register. The intention is to submit a draft legislative bill to the House of Representatives at the beginning of 2019.

Who qualify as UBO?
The Decree defines for each legal form which person or persons qualify as the UBO. An overview of the definition of UBO for the most common legal forms can be found in the overview below:

Legal form Definition

Legal form
Definition
BV and unlisted NV
(the listed NV and its 100% subsidiary are exempt from the obligation to indicate an UBO or pseudo UBO)

Natural persons who are the ultimate owner of, or have control over, the company via:

  1. directly or indirectly holding more than 25% of the shares;
  2. other means, such as the right to appoint or dismiss the majority of the board members.
Foundation, association, cooperation

Natural persons who are the ultimate owner of, or have control over, the relevant legal entity via:

  1. directly or indirectly holding more than 25% of the ownership interest of the legal entity;
  2. directly or indirectly being able to exercise more than 25% of the voting rights when passing resolutions concerning amendments to the articles of association;
  3. being able to exercise actual control over the legal entity.

These requirements also apply to holders of depositary receipts for shares of a Trust Office.

Partnerships (professional partnership, limited partnership and general partnership)

Natural persons who are the ultimate owner of, or have control over, the partnership via:

  1. directly or indirectly holding more than 25% of the ownership interest in the partnership;
  2. directly or indirectly being able to exercise more than 25% of the voting rights when passing resolutions concerning amendments to the partnership agreement;
  3. being able to exercise actual control over the partnership.

Pseudo UBO
If no UBO can be indicated on the basis of the above criteria or there is doubt about the existence of an UBO, it applies to legal entities that the director(s) under the articles of association are considered to be pseudo UBOs and for partnerships that one or more partners (except for limited partners) are considered to be pseudo UBOs.

UBO register
The UBO register will be introduced in the Netherlands in implementation of the Fourth Anti-Money Laundering Directive Implementation Act by means of a change to the Commercial Register Act 2007 and an accompanying decree. Briefly put, UBOs (as defined in this document) must be registered in the UBO register as part of the Commercial Register.

The registration of accurate and updated information relating to UBOs is intended to contribute to achieving more transparency about UBOs. This in the light of the protection of the integrity of the financial system against money laundering and the related basic offences such as corruption, tax offences and terrorism financing.

On 20 April 2018, Minister Hoekstra sent a letter to the House of Representatives in which he gave an update about the draft bill for the Registration of UBOs of Companies and Other Legal Entities Implementation Act. The original intention was to submit the bill to the House of Representatives in the first half of 2018. Due to an European approved proposed amendment to the fourth anti-money laundering directive (the “Amending Directive”), the commenced legislative procedure relating to the UBO register can however not be continued unchanged. The Amending Directive provides, among other things, for compulsory public access to part of the UBO information and for an extension of the implementation term relating to this element of 18 months after the Amending Directive has come into force. For that reason it has been decided to proceed with the amended implementation motion for the UBO register after the Amending Directive has come into force. It is expected that a draft bill will be submitted to the House of Representatives at the beginning of 2019.

Consequences and action points for Dutch entities
It is recommended to begin making an inventory of the UBOs or pseudo UBOs, so that when the UBO register comes into force you not only know who you must register, but also of which persons you must submit (additional) details to service providers such as banks, tax consultants and lawyers and civil-law notaries. Please don’t hesitate to contact us if you have questions about the (consequences of) the new legislation.

By Deline Kruitbosch

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