Commercial Alert: the National Audience reject Commercial Register appeal

According to the Order JUS/319/2018 ("Order") that approved the new models for the submission of the annuals accounts in the Commercial Register, Spanish companies are obligated to identify the beneficial owners. The obligation exists where: (i) the beneficial owner is a natural person who, whether directly or indirectly, owns more than 25% of its share capital; and (ii) the Company submits their annual accounts for the periods ending after January 1, 2017 (companies listed on a regulated market are excluded from the requirements of the Order).

Where a company fails to submit the ultimate beneficial owner form with the annual accounts, the Commercial Register shall qualify the submission as defective and will proceed to impose penalties because of the deferred default.

This Order has been adopted to transpose Directive 2015/849 (the "Directive") of 20 May 2015 regarding anti-money-laundering and terrorist financing into Spanish Law.

The General Council of Notaries ("CGN") and the Patronal CEPYME ("Patronal") filed an administrative appeal against the Order. The appeal is requesting that the Order not require to make available to the general public the identity of the ultimate beneficial owner as they consider that the Order:

  1. grants the full accessibility of the Ultimate Beneficial Owner by every person from the Commercial Register;
  2. was wrongly brought into law under endorsement by the Ministry of Justice when they were not the relevant or competent body to do so;
  3. has the potential for holding incorrect information available to the public as there is no inherent requirement to update the name of the ultimate beneficial owner if they were to change within the tax year; and
  4. is of little or no use, as Spain already has a Real Ownership Data Base, set in the anti-money laundering regulation.

The National Audience, arguing that the Order does not attack the rights to privacy of the identified persons as a beneficial owner, has rejected these precautionary measures. The presented appeal is still ongoing, and we are watching closely for future court resolutions regarding to this controversy. Anaford will report on developments in this case when and as they become available.

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