The introduction of the UBO register two years ago did not run smoothly. For example, it took until the beginning of 2019 before access was provided to external authorised representatives. Because most legal entities with a duty to provide information left the registration to an external authorised representative, the deadline for the first registration was postponed from 31 March to 30 September 2019.
The online platform did not always work properly either, which meant that it was unavailable several times due to technical problems.
Furthermore, the distinction between control based on share ownership and control based on voting rights was initially not visible in the register’s control structure. In some cases, this resulted in a distorted picture, but this issue has now been resolved.
In practice, the legislative framework proved to be too limited for many practical issues. In the meantime, an online document with Frequently Asked Questions had to provide further answers. However, because the legislation is fairly recent, and currently available legal doctrine and jurisprudence are limited, discussions about its correct interpretation do arise from time to time.
Accountability and sanctions
Last summer, the legal framework for the registration of ultimate beneficial owners was updated and fine-tuned by the law dated 20 July 2020, which took effect on 15 August 2020. This law requires, among other things, individuals to provide any necessary information to the Belgian legal entity of which they are ultimate beneficial owners. The administrative body of the Belgian legal entity with a duty to provide information must ensure that the UBO register is accurate, complete and up-to-date and must consequently request any necessary data and information.
Private individuals must at least provide their name, date of birth, nationality and address. Within an international context, a private individual will also have to provide a passport number: after all, someone without a national registration number or BIS number cannot, in principle, be included in the UBO register.
Ultimate beneficial owners who do not comply with such a request for information or do not provide appropriate information may incur an administrative penalty. Fines range from €250 to €50,000. However, in an international context, foreign investors may be reluctant or even refuse to provide information if they are asked to do so. It remains to be seen how these fines will be collected, particularly because a legal entity obliged to provide information does not have to proactively report a lack of cooperation. Only manual checks could eventually lead to fines for ultimate beneficial owners and they are currently not being carried out.
Tying up loose ends
On 1 October 2020, the Royal Decree dated 23 September 2020 amending the Royal Decree dated 30 July 2018 pertaining to the operating modes of the UBO register was published in the Belgian Official Gazette. The new Royal Decree, which came into force on 11 October 2020, aims to iron out any issues in the system:
- The special reporting duty applicable to certain professionals under anti-money laundering legislation has been abolished. This is in line with a judgment by the Council of State which considered that this duty of notification did not provide sufficient guarantees in terms of professional secrecy, confidentiality and the right to a fair trial.
- From now on, all participation percentages of the UBO in each of the intermediary entities will have to be registered, at any level of the control or ownership structure. Under the initial scheme, an indirect ultimate beneficial owner only had to register the weighted percentage.
- Any documents that corroborate the accuracy of the recorded data must be uploaded also. This used to be requested previously but is now required by law. Anyone with a duty to provide information and already registered must also comply with this administrative duty. Trusts, fiduciaries or similar arrangements with a UBO registration already included in a similar register in another Member State, only have to upload an excerpt of this information.
- Trusts, fiduciary managers and similar legal arrangements with a duty to provide information must register with the Crossroads Bank for Enterprises. This solves the problem of the UBO registration of an entity with a duty to provide information only being possible on the basis of a CBE number.
- Henceforth the complete registration history will be displayed. What remains problematic, however, is the fact that the identity of the person who carried out the registration is visible, which could, in some cases, jeopardise professional confidentiality. It remains to be seen how this will be dealt with in practice.
- The data of certain UBO categories of NPOs and foundations will be accessible to any citizen, regardless of whether or not they have to demonstrate a legitimate interest. Specifically, this concerns the data of members of the board of directors, persons authorised to represent the foundation or NPO, persons in charge of day-to-day management and the founder of the foundation. The registered data of beneficiaries and other persons, who exercise control over the non-profit organisation or foundation through other means, shall only be accessible to the general public if a legitimate interest can be demonstrated.
This new legislation is definitely a step in the right direction. It just remains to be seen how these changes will be applied in practice.