Private member’s bill for central shareholders' register submitted
A private member’s bill for the creation of a central shareholders' register has been submitted with the House of Representatives recently. The register is intended to fight financial and economic crime and promote legal certainty.
8 February 2017
The members of the House of Representatives Groot and Gesthuizen have submitted a private member’s bill on January 19, 2017, for the creation of a central shareholders' register. The bill comes on the back of earlier signs of serious defects in the current registration of shareholders of private limited liability companies (BVs) and non-listed public limited liability companies (NVs). Finding out who these shareholders are is sometimes very hard, or even impossible. This is because only sole shareholders of companies are currently recorded in a central register at the Trade Register.
The explanatory memorandum to the bill states that the central shareholders' register should serve to collect and provide information on shares and shareholders of BVs and non-listed NVs. Such information can be consulted by the Tax Administration and other designated public services, civil law notaries, and certain institutions that fall within the scope of the Money Laundering and Terrorist Financing (Prevention) Act (Wwft). The register should thus provide insight into persons working under the cover of a company and into the shareholdings they hold.
The underlying objective of creating a central shareholders' register is twofold. The initiators want the register to act as a tool in preventing and fighting financial and economic crime committed by legal entities and at the same time they want it to contribute to the promotion of legal certainty in the legal system. The adjustment in the explanatory memorandum is also described as being necessary to meet modern-day requirements. Compared with a paper system, a digital system would ensure more transparency, greater data reliability and - in the long run - it would save costs. So as to ensure data reliability, the register will solely contain information registered by civil law notaries and originating from - or relating to - notarial deeds.
Relationship with UBO register
In addition to the central shareholders' register, a UBO register is available. This register is required under the fourth European Anti Money Laundering Directive and contains information on ultimate beneficiaries. While the systems’ objectives are largely the same, their scope of application is different. The UBO register’s scope is broader in some places and narrower in others. According to the initiators, the registers add value and they complement each other. They particularly cover the same areas in terms of BVs and non-listed NVs.
Differences compared with UBO register
The UBO register requires the identity of the natural person who is entitled to a legal entity, or who exercises control over it, to be determined. Ultimate beneficiaries are in any case considered to be shareholders if they are (directly or indirectly) entitled to more than 25% of the shares or voting rights, or if their shareholding exceeds 25%. If no beneficiary or owner can be identified, in the most extreme case a natural person who is part of the senior executive management should be considered to be the UBO.
The central shareholders' register contains data on holders, beneficiaries and pledgees of depositary receipts for registered shares in BVs or non-listed NVs, irrespective of their percentage of shareholding. In addition, both registers cover disparate groups of entities and persons. For example, in addition to BVs and NVs the UBO register also includes foundations, associations and partnerships. The accessibility of both registers is different, too. The Dutch legislature opts for a public system as far as the UBO register is concerned. Unlike the central shareholders' register, which only a select number of parties will be able to consult. Finally, both systems are different in terms of how they are provided with information. UBOs are required to provide information themselves, while the central shareholders' register relies on notarial deeds.
At the latest, the UBO register needs to be implemented on June 26, 2017. Earlier on, the State Secretary for Finance had announced that the development of a central shareholders' register would be postponed for the time being, because of the introduction of the UBO register. The private member’s bill means the legislative process for the central shareholders' register will now be set in motion as well.
Source: Parliamentary documents II 2016/17, 34661, no. 2.