The Belgian Law of 18 September 2017 (the “Law”) implementing the 4th Anti-Money Laundering Directive of May 2015 (the “4th AML Directive”) has established the Ultimate Beneficial Owners Register (“UBO Register”) in which Belgian companies, non-profit organizations, foundations, trusts and other similar entities have to record their ultimate beneficial owners.
Article 4,27° of the Law determines, depending the type of the legal entity involved, which natural persons have to be reported as the ultimate beneficial owners:
- For corporate entities, the ultimate beneficial owners are i) private individuals who have direct or indirect ownership of a sufficient percentage of the voting rights or ownership interest in the entity (i.e. more than 25 % of the shares or voting rights; in case of indirect ownership, the percentage to be taken into account is the weighted percentage) ii) private individuals who control the corporate entity by any other means (e.g. shareholders’ agreement, the power to appoint members of the management board, veto right). If none of the aforementioned persons is identified the ultimate beneficial owners are deemed to be the natural person(s) are the senior management.
- For non-profit organizations, foundations, trusts and other similar entities, the Law directly identifies the natural person(s) which are deemed to be their ultimate beneficial owners (e.g. the founder, beneficiaries, members of the Board of directors, etc).
When a Belgian company is owned 25% by a non-Belgian non-corporate entity which has no shares and no voting rights (e.g. a non-Belgian foundation), the question arises as to whether the Belgian company has to use the specific beneficial owners’ criteria applicable to this type of entity and which are different from the criteria applicable to corporate entities. This remains an open question for the moment but in the absence of any other clarification from the Belgian regulator it would seem that for corporate entities, the only criteria in order to identify the natural person(s) having direct or indirect beneficial ownership of the corporate entity are the criteria applicable to corporate entities. This means that the Belgian corporate entity which is ultimately owned by a non-Belgian foundation or other non- company entity only has to apply the identification criteria for corporate entities and does not have to apply the criteria applicable to non-profit organizations, foundations etc. The result is that, in such a case, the Belgian corporate entity falls into the residual category of entities where the ultimate beneficial owner cannot be identified on the basis of the applicable criteria. This is turn means that the Belgian company has to report as its beneficial owner the senior management.