The law establishing a Register of Beneficial Owners for Luxembourg-registered entities came into force as of 1 March 2019. The beneficial ownership register is based on Article 30 of Directive (EU) 2015/849 of the European Parliament (as amended), and has been established implementing the Directive’s aims to prevent money laundering and terrorist financing. The RBE Law regulates the obligations of the covered entities to obtain and hold information on their ultimate beneficial owners (UBOs) at their registered office and the obligation for Luxembourg to put in place a register of UBOs including adequate, accurate and up-to-date information accessible to the public and to the Luxembourg authorities within the scope of their duties.
What entities are affected?
- Public and private limited liability companies, simplified joint stock companies (except commercial temporary companies), and commercial companies by participations;
- Corporate partnerships limited by shares, common limited partnerships, and special limited partnerships;
- Luxembourg branches of foreign companies;
- All mutual funds;
- Non-profit associations;
- Civil companies; and
- Interest groupings and European interest groupings.
Who is a “beneficial owner?”
The definition of the UBO is taken from the amended law of 12 November 2004 on the fight against money laundering and terrorism financing, which defines a UBO as “any natural person who ultimately owns or controls the customer or any natural person on whose behalf a transaction or activity is being conducted”.
In the case of companies:
a shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a natural person shall be an indication of direct or indirect ownership (if through a corporate entity);
if a natural person can be identified as a beneficial owner in accordance with the above criteria, or if there is a doubt as to whether the identified persons are the UBOs, the natural person acting as the main manager (dirigeant principal) shall be identified.
What information must be filed with the RBE?
The following information must be electronically filed with the RBE for each UBO:
- family name and first name(s);
- date (day, month and year) and place of birth;
- citizenship(s) and country of residence;
- precise private or professional address;
- identification number for the individuals registered in the national register of natural persons (Registre National des Personnes Physiques) / foreign identification number for the non-resident individuals; and
- nature and extent of beneficial interest held in the registered entity.
Companies listed on a regulated market in Luxembourg, or in another Member State of the European Economic Area or in another third country that imposes obligations recognized as equivalent by the European Commission within the meaning of Directive 2004/109/EC remain within the scope of the RBE Law. However, such companies will only have to file with the RBE the exact name of the regulated market(s) on which their securities are admitted to trading.
The filing request must also include certain supporting documents. Technical aspects, such as the list of such documents, the filing process thereof and the fees payable to the Luxembourg business register GIE, were determined by way of Grand Ducal regulation, published on 19 February 2019 (French language only).
Who will be granted access to the RBE?
The RBE will be made electronically available to:
- national authorities (as listed in the RBE Law), with full access; and
- any person (whether residing in Luxembourg or not and without having to demonstrate a legitimate interest), with a limited access (in this instance, all information except the private and professional address and the national or foreign identification number of the UBOs will be made available).
In exceptional circumstances, the registered entity or a UBO may request that the access to the information filed with the RBE be limited for a maximum period of three years (which may renewed upon a duly justified request). This may apply if the UBO is exposed to a disproportionate risk, a risk of fraud, kidnapping, blackmail, violence, intimidation, or where the UBO is either a minor or legally incapable. In such a case, the access to the relevant information will be limited to the national authorities, credit and financial institutions, public notaries and bailiffs.
What does the new development mean for companies?
The RBE Law, which entered into force as of 1 March 2019, requires covered entities to obtain and report information on their UBOs. Registered entities have been granted a six-month transition period as from this date to comply with its provisions. The RBE will be available for consultation at the end of this six-month period.
Sanctions for Non-Compliance
For the registered entities: criminal fines ranging from EUR 1,250 to EUR 1,250,000 shall be imposed on any registered entity not complying with the obligations to obtain and hold the required information on their UBOs and file, within the legal timeframe, such information (and supporting documents) to the RBE or having voluntarily provided inaccurate, incomplete or obsolete information on their UBOs.
For the UBOs: the criminal fines above apply to the UBO where he/she fails to provide the required information allowing the registered entity to satisfy its obligations under the RBE Law.
What should companies do?
Luxembourg-registered entities (and their management bodies) must:
- obtain and hold in an internal file at their registered office adequate, accurate and up-to-date information as well as supporting documentation on their UBO(s);
- file these at the RBE within a month after the registered entity has become aware or should have become aware of the event requiring the registration or modification of the information;
- provide, upon simple request and within three business days, such information and information on its owner, to the national authorities listed in the RBE Law (e.g., state prosecutor, Commission de Surveillance du Secteur Financier, tax authorities, etc.);
- provide, upon a duly justified request and within three business days, such information (aside from the private or professional address, and the identification number of the UBOs) and information on its owner, to the professionals listed in Article 2 of the AML Law (e.g., credit institutions, professionals of the financial sector, lawyers, notaries, etc.) in the framework of the performance of their customer due diligence measures as laid down in the AML Law; and
- designate the place where the information and the supporting documents will be kept for a period of five years from the date on which the registered entity has been removed from the RCS, in case of a dissolution. The designation of the place of storage shall be published in the Recueil Electronique des Sociétés et des Associations.
Each UBO of the registered entities must:
- provide the registered entity with all of the information required by the RBE Law so that the latter may comply with its obligations thereunder.