New regulations were introduced which provided that from 15 November 2016 last, most Irish companies and other corporate bodies must hold adequate, accurate and current information on their beneficial owner in their own beneficial ownership register. Essentially they need to hold a record of the ultimate owners of the company. The new laws were introduced into Irish law by Statutory Instrument No 560 of 2016 (the “SI”).
The Regulations apply to all Irish companies and other corporate bodies, including, for example, ICAVs and industrial and provident societies (“Relevant Entities”).
Information that needs to be held
The following is a summary of the information that companies are required to hold under Section 4 of the SI:
(1) the name, date of birth, nationality and residential addresses of each beneficial owner of it (the beneficial owner must be a natural person);
(2) a statement of the nature and extent of the interest held by each such beneficial owner;
(3) the date on which each natural person was entered into the register as a beneficial owner of it;
(4) the date on which each natural person who has ceased to be a beneficial owner of it ceased to be such an owner;
(5) if, having exhausted all possible means and provided there are no grounds for suspicion by the company, no natural persons are identified, or there is any doubt that the persons identified are the beneficial owners, there shall be entered in the register the names of the natural person/s who hold the position of senior managing official/s of the company (including their date of birth, nationality and residential addresses). In this case, a company shall keep records of the actions taken in order to identify the beneficial ownership of it.
The following are some of the key points in the regulations:
- The regulations allow a company, where it does not already have details of its beneficial owner, to give notice to any natural person whom it believes to be its beneficial owner; once such a notice has issued, that person will have a month to reply.
- A company may issue a similar notice to a person whom it has reasonable cause to believe knows who its beneficial owner or owners are.
- A duty is imposed upon a person who is a beneficial owner or who ought to know that they are one to notify an entity that they are a beneficial owner if they have not received a notice from the entity requesting this information. There is also a duty on natural persons, in certain circumstances to notify relevant changes in beneficial ownership
Failure by a Relevant Entity to comply with any requirement of the new regulations regarding obtaining and holding information on beneficial ownership, creating and maintaining the Register, serving notice on individuals believed to be beneficial owners and confirming any change in a beneficial owner’s details is a criminal offence.
A Relevant Entity that commits such an offence can be liable for a fine of up to €5,000 on conviction.
It is also a criminal offence for an individual to fail to comply with their obligations under the Regulations, to comply with the terms of any notice sent to them or makes a statement that is false in a material way, knowing or being reckless as to whether this is the case. A person that commits such an offence can be liable for a fine of up to €5,000 on conviction.
A central register of beneficial ownership of corporate and other legal entities is required by the 4th EU Anti-Money Laundering Directive.
The Department of Finance have announced that they will shortly make a Statutory Instrument appointing a Registrar of Beneficial Ownership of Companies and Industrial and Provident Societies who will be responsible for the establishment and maintenance of the beneficial ownership register in respect of those particular corporate entities. It is expected that this role will be assigned as a separate legal responsibility to the Registrar of Companies.
The CRO have provided the following information to companies and industrial and provident societies in relation to how the register is planned to operate:
1. The new register is expected to be in place from 26 June 2017.
2. There is likely to a 3-month period in which to file without being in breach of the statutory duty to file (ie until 26 September 2017).
3. Filing will be done through an on-line portal, there will be no paper forms and there will be no filing fee.
Concerns in relation to the Register
The original regulations were introduced without public consultation and without a transition period. There are a few areas of the regulations which has led to some uncertainty. There is a fear that if the new regulations are introduced in the same manner it may lead to difficulties.
In particular, there are concerns as regards who might have access to the central register. It is not clear which arms of the state will have access to the register, and whether that access will be unrestricted. In addition, it is not clear whether parties involved in litigation or threatened litigation could seek access to such information to establish the true financial position of a person.
Companies need to act now to ensure that an accurate register is maintained by them. However, further clarity should be provided before the obligation to provide that information to the new registrar is put in place.