Yesterday the Malta Business Registry issued a guidance document to provide information and guidance in relation to the Register of Beneficial Owners of Commercial Partnerships in terms of the Companies Act.
Article 30 of the 4th Anti-Money Laundering Directive in relation to the Register of Beneficial Owners of Commercial Partnerships was transposed into Maltese law by virtue of Legal Notice 374 of 2017 titled "Companies Act (Register of Beneficial Owners) Regulations", and provides that commercial partnerships are to maintain information of their beneficial owners and to file the said information with the Malta Business Registry (MBR).
Article 2 of the Companies Act defines a commercial partnership as a company, or any other commercial partnership formed and registered under the Companies Act. The MBR's Register of Beneficial Owners does not replace the obligation of the partnership to maintain its own beneficial ownership register.
What information is to be reported?
Every company (or partnership) is to obtain and hold accurate and up to date information in respect of each beneficial owner which information shall include the following particulars:
- The name, the date of birth, the nationality, the country of residence and an official identification document number indicating the type of document and the country of issue;
- The nature and extent of the beneficial interest held by each beneficial owner and any changes thereto; and
- The effective date on which a natural person became, or ceased to be, a beneficial owner of the company or has increased or reduced his beneficial interest in the company
What is understood by Beneficial Owner?
Article 2 of the Companies Act (Register of Beneficial Owners) Regulations states that 'beneficial owner' shall have the meaning assigned to it under the Prevention of Money Laundering and Funding of Terrorism Regulations, subsidiary legislation 373.01. The latter defines beneficial owner as any natural person or persons who ultimately own or control the commercial partnership, or the natural person or persons on whose behalf a transaction or activity is being conducted. In the case of a body corporate or a body of persons, the beneficial owner shall consist of:
- any natural person or persons who ultimately own or control that body corporate or body of persons through direct or indirect ownership of 25% +1 or more of the shares or more than 25% of the voting rights or an ownership interest of more than 25% in that body corporate or body of persons, including through bearer share holdings, or
- through control via other means, other than a company that is listed on a regulated market which is subject to disclosure requirements consistent with European Union law or equivalent international standards which ensure adequate transparency of ownership information.
A shareholding of 25% + 1 share or more, or the holding of an ownership interest or voting rights of more than 25% in the customer shall be an indication of direct ownership when held directly by a natural person, and of indirect ownership when held by one or more bodies corporate or body of persons or through a trust or a similar legal arrangement, or a combination thereof.
If after having exhausted all possible means and provided there are no grounds of suspicion, no beneficial owner has been identified, subject persons shall consider the natural person or persons who hold the position of senior managing official or officials to be the beneficial owners, and shall keep a record of the actions taken and any difficulties encountered to determine who the beneficial owner is.
- The beneficial owner must always be a natural person – an individual. One cannot identify and report a company as the beneficial owner of another company. It is very common to have shares in a company held by one or more companies. In such case, one needs to identify the beneficial owners of such companies, therefore, the individual/s who through the intermediate companies owns 25%+1 of the shares in the company. As already mentioned, if no individual is identified who holds 25%+1 of the shares in the company, then the individuals who hold the position of senior managing officials are to be reported in the Register of Beneficial Owners.
- The 25%+1 percentage test is not only in relation to the ownership of the shares, but one must also consider the control of the voting rights, ownership interest and control via other means.
- When the shares of a company are subject to the rights of usufruct, pledge or guarantee, one is to determine whether the usufructuary, pledgee or guarantee have been given the right to determine how voting rights are to be exercised or any other special rights in the agreement establishing such a relationship. Should they have been provided voting rights or any other special right, then apart from the shareholder, one is also to report the individual having such additional rights.
- When there is a cell company, one is to consider all the shareholders of the company including those who may be holding shares only in the cells since the creation of a cell does not result in a separate body but rather in the segregation of assets.
- If an officer, shareholder, beneficial owner of a company provides the Registrar with false information on the beneficial ownership, fails to keep record of beneficial owners, fails to provide information to the Registrar about a change in beneficial ownership or fails to submit the annual confirmation of details, he or she shall be guilty of an offence and liable to a fine (multa) not exceeding €5,000 and daily default penalty which shall be due for every day during which the default continues and shall accrue from the day following that on which the default occurs.
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.