MBR Issues A Guidance Document On The BO Register Of Commercial Partnerships – Corporate/Commercial Law



Malta:

MBR Issues A Guidance Document On The BO Register Of Commercial Partnerships


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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.

Useful guidelines:

  • 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.

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