Ireland: New Law Requires Companies To Identify Beneficial Owners

What has happened?

New regulations just signed into law mean that most Irish companies must now gather information on individuals who are their underlying beneficial owners. The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (the "2016 Regulations") took effect on 15 November 2016 and companies should act now to ensure that they comply with the new regulations. Failure to comply with the 2016 Regulations is a criminal offence.

It is likely that this beneficial ownership information will become publicly accessible when related measures concerning a central register of beneficial ownership come into force next year. The new law affects Irish incorporated legal entities such as companies, limited partnerships and ICAVs (but not trusts which will become subject to similar regulation over the coming months).

Shareholder privacy

Up to now, the identity of the beneficial owners of Irish companies could remain largely private and so the new obligations represent a significant development for certain companies and their ultimate beneficial owners. The 2016 Regulations came about as a result of an EU directive (the Fourth Anti- Money Laundering Directive ("4AMLD")) in part aimed at increasing transparency in relation to the real ownership of corporate vehicles. The UK government introduced similar measures this year with the establishment of the PSC Register (a public register of persons with "significant control" over a company). It is interesting to note that detailed statutory guidance was issued in the UK in conjunction with the new measures which is not the case with the 2016 Regulations.

The deadline for transposing 4AMLD into Irish law is 26 June 2017 but Ireland has acted early on elements of the directive to give companies time to comply with their information-gathering obligations.

Analysis of ownership structures

In many cases, where the legal owners and beneficial owners of a company are the same, the 2016 Regulations are unlikely to prove controversial or to cause difficulty. The Department of Finance has acknowledged, however, that there are many complex company ownership structures in place where determining who the underlying beneficial owners are will not be a simple task and that the new regulations will necessitate in-depth legal analysis of their ownership structures. For some companies, the ownership structure may be very dilute and there may not in fact be a particular beneficial owner.

Who is a beneficial owner?

A "beneficial owner" is defined as the individual(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity. A shareholding of 25% plus one share or an ownership interest of more than 25% in the entity held by an individual is an indication of direct ownership.

A shareholding of 25% plus one share or an ownership interest of more than 25% in the entity held by a corporate entity, which is under the control of an individual(s), or by multiple corporate entities, which are under the control of the same individual(s), is an indication of indirect ownership

Central register

Over the coming months, we can expect to see further Irish measures to fully transpose 4AMLD. All EU member states must establish central registers of beneficial ownership information in relation to the corporate and other legal entities in scope. In Ireland, this central register is likely to be kept by the Companies Registration Office (CRO). Competent authorities and financial intelligence units, entities carrying out customer due diligence and those who can demonstrate a "legitimate interest" in the ownership information will be able to access the central register.

In terms of public access generally, much will depend on the approach of the Irish government to discretions given to member states in 4AMLD as to who is entitled to view the relevant shareholding information. Recent developments at EU level (in the form of a proposed amendment to 4AMLD) indicate that this public access discretion may be removed, meaning that "civil society at large" should have access to beneficial ownership information, thus "contributing to enhanced public scrutiny" of corporate entities to prevent money laundering and terrorist financing.

Exclusions

Certain entities are excluded from the scope of the 2016 Regulations:

  • Those listed on a regulated market that is subject to disclosure requirements consistent with the law of the EU (including transparency regulations)
  • Those subject to equivalent international standards which ensure adequate transparency of ownership information.

The 2016 Regulations do not exempt Irish incorporated subsidiaries of such listed companies.

Corporate entities to keep "beneficial ownership register"

Entities in scope must take all reasonable steps to obtain and hold "adequate, accurate and current" information on their beneficial ownership: the name, date of birth, nationality and residential address of each beneficial owner and a statement of the nature and extent of the interest held by each such beneficial owner. This information must be held in a new "beneficial ownership register". Failure by a relevant entity to keep such a register is a criminal offence and can result in a fine of up to €5,000. The Irish High Court has the power to order rectification of the register and can determine disputes as to whether a party in fact holds a beneficial interest.

In the context of obtaining information, where all possible means for determining the beneficial owner have been exhausted by a relevant entity to no avail and, provided there are no grounds for suspicion by the relevant entity, or in circumstances where there is any doubt that any individual so identified is a beneficial owner of the relevant entity, the names of the senior managing officials of entity (including directors and the chief executive officer) must be added to the register instead, even where those senior managing officials do not hold an interest (legal or beneficial) in the relevant entity. Entities must keep records of the actions they take to establish the identity of their beneficial owners. At present, no statutory inspection rights are set out in relation to beneficial ownership registers.

Entities must keep the beneficial ownership register up to date. The 2016 Regulations give no guidance on the frequency with which an entity must check to see that ownership information is "current". The 2016 Regulations include procedures governing notifications and communications about changes in beneficial ownership between corporate entities and their beneficial owners.

Notices

Where a corporate entity does not already have details of its beneficial owner, it must give notice to any individual whom it reasonably believes to be its beneficial owner. Once such a notice has issued, the individual assumed to be a beneficial owner has one month to reply. Failure by an individual to comply with this requirement is a criminal offence.

A corporate entity may issue a similar notice to a third party which it has reasonable cause to believe knows who the corporate entity's beneficial owner(s) are. The 2016 Regulations contain a limited form of safeguard which will permits non-disclosure of information where any claim to legal professional privilege could be maintained in legal proceedings.

Importantly, an individual who is a beneficial owner or who ought to know that they are one must notify the corporate entity of which they are a beneficial owner if they have not received a notice from the entity requesting this information. In certain circumstances, changes in beneficial ownership must be notified to the entity by the individual.

Trusts

For trusts, similar measures will be brought into force when 4AMLD is fully transposed in 2017. The equivalent beneficial ownership register will apply to trusts that generate "tax consequences". 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.