The MBR published on the 5th October 2020 a guidance on the Register of Beneficial Owners of Commercial Partnership which provides an overview of requirements in terms of the Companies Act (Register of Beneficial Owners) Regulations.
Legal Notice 374 of 2017 “Companies Act (Register of Beneficial Owners) Regulations” transposed Article 30 of the 4th Anti-Money Laundering Directive in relation to the Register of Beneficial Owners of Commercial Partnerships, 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).
Definition of commercial partnership is found in Article 2 of the Companies Act which defines the commercial partnership as a company formed and registered under the Companies Act. However, the obligation of the partnership to maintain its own beneficial ownership register is not replaced by the MBR’s Register of Beneficial Owners.
1. Who is responsible for keeping the company’s information regarding its beneficial owners?
Every company (or partnership) is to obtain and hold accurate and up to date information in respect of each beneficial owners, which information shall include at least the following particulars:
- Each beneficial owner’s name, date of birth, nationality, country of residence and official identification document number that indicates 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.
Any natural person who reasonably believes to be a beneficial owner of a company is bound to provide the information to the company without delay.
2. Definition of Beneficial Owner in terms of the BO Regulations
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 which 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 (SMO) 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.
3. Final considerations:
The beneficial owner must always be a natural person – an individual. Companies cannot be identified and reported as the beneficial owner of another company. Even though it is very common to have shares in a company held by one or more companies, one needs to identify the natural person/s – individual/s – beneficial owners of such companies and who owns 25%+1 of the shares in the company. If no individual who holds 25%+1 of the shares in the company is identified, then the individuals who hold the position of senior managing officials are to be reported in the Register of Beneficial Owners.
Where there is no person who holds more that 25% of the shares or voting rights or ownership interest of an entity, the person who exercises ‘control by other means’ over a specific body corporate or its management, qualifies as beneficial owner for the purposes of the PMLFTR. Examples of these instances include:
- Persons who are granted rights through formal arrangements by means of which that person(s) exercise dominant influence over the legal person;
- Individuals who, though not being owners of a sufficient percentage of shares or voting rights, collectively exceed the 25% threshold and are subject to an arrangement to exercise their rights collectively;
- Individuals who through family connections exert influence over the decision-making body of the entity.
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. The reason for this is that the creation of the cell does not result in a separate body but rather in the segregation of assets.
A company’s branch does not have legal personality under the Maltese law and is not incorporated in Malta. For this reason, branches are not required to file beneficial ownership details in Malta. Furthermore, if the parent company of the branch is an EU company, it is likely to have that company having beneficia ownership obligations in the country of incorporation.
While no filing fees apply for registering a beneficial owner, hefty penalties are imposed in case any 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.
Contact Dr Sarah Galea or any other member or IURIS Malta if you require further information or assistance or send us an email on info@iurismalta.com