Owning up for new legal requirements
New regulations came into operation in November 2016 that require most Irish corporates to create and maintain a beneficial ownership register, which records adequate, accurate and current information in respect of the beneficial owners of the entity. Companies must take all reasonable steps to ensure the information is obtained and entered on the Register. There is also an obligation to keep the information contained in the Register up to date.
WHAT ENTITIES ARE AFFECTED?
The regulations apply to all companies and other body corporates, except companies listed on an EU regulated market and companies that are subject to equivalent transparency requirements.
WHO IS A BENEFICIAL OWNER?
Beneficial owners are individuals who ultimately own or control the company through direct or indirect ownership of a sufficient percentage of the shares or voting rights or through control by other means.
A shareholding of 25% plus one share or an ownership interest of more than 25% will be evidence of direct ownership. A shareholding or ownership interest of over 25% held by a corporate entity under the control of an individual, or by multiple corporate entities which are under the control of the same individual is evidence of indirect ownership.
WHAT INFORMATION MUST BE OBTAINED?
The company must take “all reasonable steps”, including issuing notices to persons they believe to be beneficial owners, to obtain the following information:
-
the individual’s name, date of birth, nationality and residential address
- a statement of the nature and extent of the interest held by the individual.
Where the beneficial owners are not identified by the company, or they have a doubt as to the identity of the beneficial owner, the company is obliged to enter the same details (name, date of birth, nationality etc.) of the senior managing officials (e.g. directors, or the CEO) of the company into the Register.
Offences
A company that fails (i) to take all reasonable steps to obtain and hold adequate, accurate and current information in respect of its beneficial owners, or (ii) give the required notice to an individual believed to be a beneficial owner, or (iii) fails to keep its Register up to date, will commit an offence, and may be liable to a fine of up to €5,000.
It is also an offence for an individual to:
- fail to notify the company that he or she is a beneficial owner, where he or she knows that the details in the Register are incorrect, or
- fail to comply with a notice served by a company.
In any such case the individual may also be liable to a fine of up to €5,000.
WHAT SHOULD COMPANIES DO NEXT?
Companies should immediately create a Register of Beneficial Ownership, which is likely to look similar to the register of members. Companies should review company records to try to identify whether the legal (registered) shareholders are also the beneficial owners. If not, or if this is not clear, companies should take all reasonable steps, including issuing notices to persons, to obtain the required information and to enter it on a Register.
