Irish incorporated companies and other legal entities have been required since 15 November 2016 to create and maintain a beneficial ownership register.
Irish incorporated companies and other legal entities have been required since 15 November 2016 to create and maintain a beneficial ownership register. This obligation was a first step in preparation for disclosure on a central register, which was to be established by 26 June 2017. The timing of the obligation to disclose beneficial ownership information to a central register has now been extended to autumn 2017. It is expected that, once introduced, companies will be given three months to submit the required information to the central register.
The collection of beneficial ownership information by companies forms part of Ireland’s obligation to establish a central register of beneficial owners under the European Union (EU) Fourth Anti-Money Laundering Directive (AMLD4).
This article provides a summary of the type of information to be maintained in a beneficial ownership register, discusses who will have access to the central register once established and highlights the primary differences in practice, between disclosure requirements in the UK and Ireland.
The central register of information on the beneficial ownership of companies and industrial and provident societies will be held and maintained by the Companies Registration Office (CRO). It will only be possible to update the central register by using a new dedicated online portal and submission of paper statutory forms by companies will not be possible. It is understood that the Department of Finance is working on a statutory instrument that will require entities to submit information to the central register.
AMLD4 provides that, at a minimum, banks, credit institutions and accountants undertaking customer due diligence requirements, competent authorities such as the Central Bank, financial intelligence units (i.e. An Garda Síochána in Ireland), and those with a ‘legitimate interest’ will have access to the central register. It does not currently require EU countries to make the information on the central register publicly available.
There has been much debate at EU level on the meaning of ‘legitimate interest’ in the context of negotiations for an amending directive (AMLD5), which will amend AMLD4. The debate has focussed on whether the term should be defined at an EU level or at national level. Under AMLD5, there is also a proposal to require the central register to be publicly available, something that is already the case in the UK.
The delay in transposing AMLD4 in Ireland will likely give the Department of Finance time to consider Ireland’s policy position and engage in the ongoing debate in relation to the proposal for a AMLD5 at EU level as well as giving Irish policymakers an opportunity to gain early stage insights from the implementation of AMLD4 in other EU countries, particularly in relation to whether other countries have opted to permit public access to their central registers.
Beneficial owners are essentially individuals with significant control (whether direct or indirect) over a company. Ownership interests in listed companies (in markets which meet EU or equivalent transparency criteria) are excluded from these requirements. For example, companies whose shares are listed on stock exchanges such as the Irish Stock Exchange, the London Stock Exchange and NASDAQ are excluded from these requirements, although their subsidiaries will not be so exempt.
Ireland has adopted the definition of beneficial ownership and the threshold ownership level set out in the AMLD4. In simple terms, a beneficial owner includes an individual:
Where it does not prove possible to establish the ultimate beneficial owners of a company and/or there are no individuals who meet these threshold ownership requirements, the name and details of the senior managing officials (including the directors or the chief executive officer) of the company must be disclosed.
The information to be included on the register is:
Criminal penalties apply for failure on the company’s part to keep its own beneficial ownership register up to date, to collect the information and, on the owner’s part, to supply such information.
The register must also include details of the date on which the individual was first added to the register as a beneficial owner and the date on which the individual ceases to be a beneficial owner.
If Ireland decides to make the central register publicly available, it is likely to restrict public access or redact certain information e.g. residential address, to protect the privacy of owners.
The United Kingdom (UK) has already implemented a central register of “persons with significant control” (PSC) over UK incorporated companies. This has applied to UK incorporated companies since 6 April 2016. The requirements to send the information to the central register held by Companies House came into effect from 30 June 2016.
As Ireland’s enactment of the measures are drawn directly from the AMLD4, those who are familiar with the UK requirements as they apply to UK companies are likely to find some differences in the implementation in practice, of the measures between the UK and Ireland. The table below sets out those primary distinctions.
In addition to identifying the individual who controls them, Irish companies need to create and maintain a Beneficial Ownership Register. In the UK, beneficial ownership information on UK companies is already publicly available. In Ireland, this information will, from autumn 2017, begin to become available to competent authorities, banks, credit institutions, an Garda Síochána and those who can demonstrate a legitimate interest.
The scope of these requirements is not just confined to companies – trusts and other legal entities are also likely to be subject to requirements in relation to reporting information on their beneficial owners to a central register. The precise scope of these reporting obligations has yet to be defined.
A key challenge for the CRO as Registrar of the central register will be in verifying the accuracy and consistency of information reported by companies. There is already some research done in the UK that highlights challenges arising for the UK Companies House in relation to inconsistencies in information reported by companies in the UK.
The Registrar should have enforcement measures available to ensure that the information contained in the central register of beneficial ownership is adequate, accurate and current - one of the principal aims of AMLD4. Such enforcement measures would have to be contained in the statutory instrument that will require entities to submit information to the central register.
Given that the statutory instrument is currently being finalised, companies should, if they have not already done so, establish and maintain their beneficial ownership register.
If you would like to learn more how these information requirements will affect you or how to meet your obligations under the Directive and Irish law, please feel free to contact your usual KPMG contact or any member of KPMG’s Legal Services team.
For more in depth information please contact Andrea Sherlock, Associate Director, Legal Services.