Edo Smid and Dennis A. Evertsz discuss the concerns about the register for ultimate Beneficial Owners (UBO) and a possible solution for shareholders who wish to keep their participation out of public view.
The Netherlands must have implemented a so-called “UBO-register” before the 26th of June 2017, in which all major shareholders of Dutch legal entities must be included. This register, which follows from the EU Anti-Money Laundering Directive, should further counteract money laundering and terrorist financing. The downside is that it will have an impact on the privacy and security of large shareholders and family companies in the Netherlands, as well as across Europe.
UBO stands for “Ultimate Beneficial Owner”, or ultimate stakeholder. Simply put, the UBO is the natural person or legal person, such as a Dutch Trust Foundation (STAK), who controls the legal entity. Only legal entities that are incorporated in The Netherlands fall within the scope of the Netherlands UBO-register. Similar UBO-rules are to be implemented throughout the EU on the basis of the mentioned directive. Whether a person is regarded as an UBO is to be determined on a case-by-case basis. An indication of being an UBO is, among other things, having an interest of more than 25%.
The contours of the intended UBO-register in the Netherlands have already been announced. A proposed bill however has not yet been submitted to the Lower House. In the intended UBO-register, the (1) name, (2) birth month, (3) birth year, (4) nationality, (5) state of residence, (6) and the nature and extent of the interest will have to be included. The register will be publicly accessible, however certain limitations may be adopted during the upcoming legislative process.
Family companies and major shareholders may fear their personal safety as information about their assets may become publicly known. With this information from the UBO register and the published annual accounts, anyone can figure out how much someone is worth. A blessing for journalists, magazines like Quote 500 and curious neighbors.
The Dutch government considers the privacy and security of family business subordinate to the higher goal, namely the prevention of money laundering and terrorist financing. Apparently, the government has forgotten the abductions of members of wealthy families (Heineken, Heijn, Van der Valk, Alberda Jelgersma). Furthermore, corporate reorganizations (with lay-offs of employees) may become more of a hassle as Dutch labor unions could make a (public) appeal to shareholders to invest from private sources as so to prevent lay-offs. Family companies and major shareholders are therefore in a hurry to find legal ways to fall outside the scope of the UBO-register.
Interests held through a Curacao trust agreement or a Curacao Private Foundation fall outside the scope of the UBO-register. For trust offices who also want to provide services to family offices, the Curacao trust and the Curacao Private Foundation can develop as an interesting product and give the sector of Curacao a positive boost. The transformation of control from, for example, a Dutch Trust Foundation (STAK), to a Curaçao trust requires coherent legal and fiscal guidance in two jurisdictions.
This is an edited translation of an article published 7th of March 2017 in the Curacao newspaper “Amigoe”.