What is the Register of beneficial owners?
The requirement to register with the RBO or Register of Beneficial Ownership was introduced as a result of an EU Directive known as the 4th Anti-Money Laundering Directive . This legislation, which came into effect in 2019 via the European Union (Anti-Money Laundering: Beneficial Ownership Of Corporate Entities) Regulations 2019, mandated that all Irish companies and industrial and provident societies maintain a register of their beneficial owners.
The RBO serves as a central register of beneficial ownership of all types of companies and societies in Ireland and helps to identify their beneficial owners. The register is designed to improve transparency and help prevent money laundering and the financing of terrorism by ensuring that details about those who ultimately own or control a company are recorded on the RBO. This process of documenting beneficial ownership details, includes direct or indirect ownership interests, thereby promoting adequate transparency of ownership information.
All entities are required to file beneficial ownership information, which includes details that specify who ultimately owns a sufficient percentage of shares or has voting rights or ownership interest.
Significance of the RBO for Companies and Industrial Entities
The transposition of the Fourth Anti-Money Laundering Directive (EU 2015/849) into Irish law requires companies to identify and record the individuals who ultimately own or control them.
The significance of the RBO lies in its role as a central register that enhances transparency and accountability. The register must be accessible by relevant authorities and is required to be kept up to date by the company. The information in the RBO is not accessible by the public, however certain entities like the An Garda Siochana, the Revenue Commissioners and others can access it. As a result, businesses benefit from improved credibility and trust among stakeholders, ultimately contributing to a healthier economic environment.
Who qualifies as a Beneficial Owner?
Establishing the beneficial owner of a company can vary from very simple ownership structures to very complex, especially where there is many layers of ownership involved, such as;
- Multi-tiered ownership structures– Companies may be owned indirectly through multiple layers of subsidiaries or other entities, such as trusts, holding companies, or partnerships. Each layer may involve different individuals or entities, making it challenging to determine the ultimate beneficial owner (UBO);
- Use of intermediaries: In some cases, beneficial owners may use intermediaries (such as nominee directors, trustees, or corporate service providers) to hold shares on their behalf. This can obscure the true ownership behind the company. It is essential that a company looks behind these intermediaries to ascertain who the beneficial owners are.
- Complex legal structures: Some companies may use complex legal structures, such as shell companies, to conceal ownership or control. These structures are may be used for legitimate business purposes, such as tax planning or asset protection, but they can make identifying the beneficial owner more difficult.
- Family trusts and estates: In the case of family-owned businesses, ownership may be held through family trusts, foundations, or estates. The beneficial owners could be multiple family members, and tracing these ownerships through legal documents or records can require additional effort.
- Cross-border ownership: When ownership spans multiple countries, determining beneficial ownership can involve navigating different legal systems, corporate regulations, and access to company records. This can be particularly challenging in jurisdictions with weaker transparency standards.
Companies must report the name, address and PPS Number of the beneficial owner and any ownership of shares held. The obligation to maintain an accurate record in the register and in the RBO is essential for compliance and for the central register to function effectively. This transparency is vital for preventing illicit activities and fostering trust in business operations.
What is a Beneficial Owner?
A Beneficial Owner is defined as “any natural person(s) who ultimately owns or controls a legal entity, either through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in the entity, including through bearer shareholdings, or through control via other means”.
These include:
- ownership (directly or indirectly) of more than 25% of the company’s shares,
- controlling (directly or indirectly) more than 25% of the company’s voting rights,
- control via other means.
What is Direct control?
Direct control is where the beneficial owner personally owns or controls a relevant entity by one or more of the following means:
- 25% plus one share; or
- 25% or more of the voting rights; or
- 25% or more of the ownership interest; or
- has direct control or influence over the company/society via other means.
A shareholding of 25 % plus one share or an ownership interest of more than 25 % in a company held by a natural person shall be an indication of direct ownership.
What is Indirect control?
“Indirect Control” occurs where a shareholding of 25% plus one share or an ownership interest of more than 25% is 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). This cover situations where you have layers of companies. You must follow the chain of ownership through the structure to determine the natural person (if any) who owns the group.
“Control through other means” occurs included the criteria of control used for the purpose of preparing consolidated financial statements, such as
- through a shareholders’ agreement,
- the exercise of dominant influence or
- the power to appoint senior management”.
Identifying Beneficial Owners – no person holding more than 25%
If a natural person cannot be identified as the beneficial owner (UBO) of a company, then the Senior Managing Officials (being all the directors of the Company) must be entered on the RBO as the beneficial owners. It is the responsibility of the company to obtain and confirm the beneficial ownership information and to deliver the required information to the RBO.
How to File Data with the RBO
Accessing the portal in the RBO website, found at www.rbo.gov.ie, allows users to securely file their beneficial ownerships.
When submitting information, companies must ensure that the name, residential address, date of birth and PPS Number entered in the RBO are correct, as this is crucial for identifying the beneficial owners. The data in the RBO must be comprehensive, reflecting all aspects of ownership, control, and beneficial interests to ensure compliance with existing regulations.
Internal Register of Beneficial Owners
Maintaining an internal beneficial ownership register is essential for transparency and compliance and by maintaining accountability and transparency in corporate governance.
Organisations can ensure that all beneficial owners entered comply with regulatory requirements and it keeps essential information secure and accessible ensuring that all stakeholders can identify the individuals who ultimately benefit from the company’s operations. This practice fosters accountability and trust.
Disclaimer: Specific advice should be obtained in relation your company / query as the above advice is general in form. All our blogs are provided for educational and practical purposes and should not be treated as professional / legal advice. For any specific queries you may have please contact our office.
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