December 2022 – As of 2020, European Union ("EU") Member States are obliged to make details of ultimate beneficial owners ("UBOs") of corporate and other legal entities available to the general public. However, in light of the recent decision of the Court of Justice of European Union ("the ECJ"), it is now questionable whether this obligation will remain.

The requirement to make details of UBOs publicly available was introduced by Article 30 (5) of Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing ("the AML Directive"). The Member States are entitled to restrict public availability of details on UBOs under the AML Directive in the following cases:

  • if such publication would expose the UBO to disproportionate risk, risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or
  • if the UBO is a minor or otherwise legally incapable.

The requirements under Article 30 of the AML Directive have been implemented in the legislation of CEE EU Member States as follows:

Member state Scope of publicly available information of UBOs Exemption from the public access
Bulgaria
  • name and nationality of the UBO;
  • personal identity number for Bulgarian citizens / date of birth for foreign nationals;
  • country of residence, if different from the Republic of Bulgaria, or the country referred to in the first bullet point above;
  • nature of the rights held (beneficial interest).
 None.
Croatia
  • name and surname of the UBO;
  • country of residence of the UBO;
  • date of birth of the UBO;
  • nationality of the UBO;
  • nature and extent of the beneficial interest held.
 None.
Czech Republic
  • name, resident state, year and month of birth, and nationality of the UBO;
  • description of the UBO's position within the company's structure;
  • share size in the company (direct or indirect), if any, and/or vote share in the company, if any;
  • date when the respective person became / ceased to be the UBO.
 UBO legally incapable
Hungary
  • name and surname of the UBO;
  • birth name of the UBO;
  • nationality of the UBO;
  • place and date of birth of the UBO;
  • home address of the UBO;
  • nature and extent of the beneficial interest held.
 None.
Romania
  • name and surname of the UBO;
  • year and month of birth of the UBO;
  • nationality of the UBO;
  • resident state of the UBO;
  • nature and extent of the beneficial interest held.
 None.
Slovakia
  • name and surname of the UBO;
  • full date of birth of the UBO;
  • nationality of the UBO;
  • full residence address of the UBO;
  • nature of the beneficial interest held.
 None.


Charter of Fundamental Rights of the European Union

Under the Charter of Fundamental Rights of the European Union ("the Charter"), the following rights, inter alia, apply:

  • everyone has the right to respect for his or her private and family life, home and communications (Article 7 of the Charter); and
  • everyone has the right to the protection of personal data concerning him or her (Article 8(1) of the Charter).

Article 52(1) of the Charter allows for a limitation on the exercise of the rights and freedoms recognised by the Charter, but in such case the limitation must be provided for by law and respect the essence of the rights and freedoms in question.

However, such limitations:

  • may be made only if they are necessary and genuinely meet the objectives of general interest recognised by the EU, or the need to protect the rights and freedoms of others; and
  • shall be subject to the principle of proportionality.

The AML Directive undoubtedly represents a limitation of the rights recognised by the Charter and thus, it must be assessed whether such interference is appropriate, necessary and proportionate.

With respect to the above, on 22 November 2022 the ECJ, in Joined Cases C-37/20 (Luxembourg Business Registers) and C-601/20 (Sovim), issued a ruling that invalidates Article 30 (5) of the AML Directive ("the Judgment")  due to its serious interference with the fundamental rights to respect for private life and to the protection of the personal data of UBOs concerned.

Under the ECJ's opinion, the information on UBOs as envisaged by the AML Directive is capable of enabling a profile to be drawn up concerning certain personal identifying data, the state of the person's wealth, and the economic sectors, countries and specific undertakings in which he or she has invested.

Furthermore, the ECJ is of the view that "the potential consequences for the UBOs resulting from possible abuse of their personal data are exacerbated by the fact that, once those data have been made available to the general public, they can not only be freely consulted, but also retained and disseminated and that, in the event of such successive processing, it becomes increasingly difficult, or even illusory, for the UBOs to defend themselves effectively against abuse."


The ECJ thus concludes that the limitation of rights recognised by the Charter introduced by the AML Directive has not sustained its proportionality. Although the Judgment does not automatically invalidate the underlying implementing legislation of EU Member States, it may be expected that the EU Member States will amend their legislation sooner or later.

In the meantime, UBOs may consider seeking to restrict public access to their data in the relevant UBO registers in accordance with the procedures under the national legislation that are available to them with respect to the Judgement and breach of their fundamental rights.

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.