UBO is the abbreviation for ‘Ultimate Beneficial Owner’. This is the natural person (or persons, not a company) who is the ultimate beneficial owner of a company. As of September 27, 2020, Dutch companies can register their UBO in the new Dutch UBO Register. This is mandatory.
When to take action?
The register has been open for registrations since the 27th September of 2020. From that moment on, organisations had 18 months (i.e. until the 27th March of 2022) to complete the registration. The register is managed by the Chamber of Commerce (KvK), which has already sent a letter to most organisations that are obliged to file a statement.
What if you do not register in the UBO-register?
Failure to comply with the registration obligation carries various penalties, such as a prison sentence of up to six months (!), a fine of up to € 20.500,- or community service. This punishment can be for the company, but also for the UBO!
So in order to avoid any risk, it is better to just register your UBO. The person authorised to sign within the organisation can make the declaration on this website. Why is that necessary? Who is a UBO? And how does registration in the register work exactly? Below is a brief summary of this new register.
Who is the UBO within your company?
The UBO is the person who has the ultimate interest or control over the company. The Dutch Wwft law (in English: Prevention of Money Laundering and Terrorist Financing Act) states that in the case of a BV or NV, you are the UBO if you own – more than – an (indirect) 25% of the shares or the voting rights. This could be more than one person per company.
Who is the UBO within associations (‘verenigingen’) and foundations (‘stichtingen’)?
With other companies such as foundations and associations the above mentioned also applies. However, in case of a foundation or association, one is also an UBO if, directly or indirectly, a person has more than 25% of the votes in the decision-making concerning amendments to the articles of association. Still no UBO detected? In such case the UBO is the person who can exercise the actual control over the company.
No one to designate as UBO?
If nobody within the company satisfies the above, then the same applies to every (kind of) company. The UBO is then the natural person (or persons) who belong to the senior management of the company (in the Netherlands, for instance, this is the entire board of a BV or NV). So there is always at least one UBO. If you are in doubt about who in your company is the UBO (or UBOs), please contact us by e-mail info@thelegalcompany.nl or call 020 345 0152.
Why this new UBO register?
The new register stems from European legislation (from the Fourth Anti-Money Laundering Directive (EU/2015/849) to be exact) and is intended to counter money laundering and terrorist financing. This register is meant to provide transparency in who is pulling the strings (behind the scenes). Criminals will no longer be able to put up a smokescreen with a multitude of legal entities. In the register you can immediately see who the ultimate owner is. An additional advantage is that business relations can now easily see with who they are doing business (or will not do business with). The following information will be included in the public part of the register:
- First name + last name;
- Date of birth;
- Nationality;
- Country of residence;
- Nature and extent of the interest.
As of 27 September 2020, everyone will be able to view this information by ordering an online extract from the Chamber of Commerce (KvK) UBO register for €2.50,-. For this you will need an access code, which you can easily request here.
Recent criticism
There was a lot of criticism on the disclosure of these personal data. The Privacy First Foundation even filed a lawsuit. They demanded that the register should be taken out of operation, but were unsuccessful. The Court rejected the claim of Privacy First. The reason for this is that it is not plausible that the registered UBOs will suffer serious damage in the short term. The Court took into account that an UBO who fears that, by disclosing his personal data, he will run the risk of abduction, extortion or the something similar, can immediately shield all his data from the general public. Dutch legislation provides this possibility.
Which organisations have to register?
1.5 million organisations in the Netherlands have to join this new register. Registration of the UBO is mandatory for the following Dutch legal forms:
- BV’s and NV’s (not listed on a stock exchange market);
- Stichtingen (foundations);
- Verenigingen (associations);
- OWM;
- Coöperaties (cooperatives);
- Personenvennootschappen (like ‘maatschappen’, ‘VOF’ and ‘CV’. These are personal partnerships)
- Rederijen (shipping companies);
- European companies (SE, SCE, EESV);
Listed companies and their 100% subsidiaries are exempted from the obligation to register their UBOs. After all, they are already subject to the strict rules of the Transparency Directive.
Should you register the UBO of your Dutch branch?
Foreign legal entities with only branches (and no Dutch legal entities) in the Netherlands are not required to register UBOs in the Netherlands. Foreign legal entities – such as a Ltd or GmbH – which only have branches in the Netherlands are also not required to register in the Netherlands.
No Chamber of Commerce number without specification of UBO!
Do you start a new Dutch company as from 27 September 2020? Then you will only receive a Chamber of Commerce (KvK) number if you have provided your UBO. All new companies will therefore be registered automatically.
Special obligations for foundations.
After the declaration, the obligations from the law implementation of the UBO-register are fulfilled, except for foundations. The board of a foundation is obliged to include all beneficiaries, who receive payment of 25% or more of the distributed amounts in a certain financial year, in a register in its own administration.
Questions or advice?
The corporate legal advisors of The Legal Company are specialized in corporate law. Do you have doubts about who is the UBO in your organization or do you have other questions? Please contact us by emailing info@thelegalcompany.nl, call +31 20-3450152 or fill out our contact form.
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