What you need to know about the Beneficial Ownership Regulations 2016

Thursday, 24 November 2016

Up to now, there was no general legal requirement to disclose the identity of the beneficial ownership of Irish corporates and that information could remain confidential in most cases. However, the signing into law of the EU (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (Regulations) requires each Irish corporate and other legal entity incorporated in Ireland (with certain exceptions) (In-Scope Entities) to establish and maintain a beneficial ownership register and to take "all reasonable steps” to obtain, hold and keep up-to-date "adequate, accurate and current" information about beneficial ownership by individuals of such In-Scope Entity. This new requirement is effective from 15 November 2016 and is a significant development from an Irish corporate governance and privacy perspective.

The Regulations transposed Article 30(1) of the Fourth EU Money Laundering Directive (4AMLD) in Ireland. The deadline for transposition of the remainder of 4AMLD into Irish law is 26 June 2017. 4AMLD and the Regulations aim to increase transparency in relation to the real ownership of In-Scope Entities to assist in combatting money-laundering, tax evasion and terrorist activities.

The Regulations are the first step towards creation in Ireland of a central register of beneficial ownership of In-Scope Entities (Central Register). Once 4AMLD is transposed in full, Ireland will be required to ensure that the information recorded on the beneficial ownership registers of In-Scope Entities is held on the Central Register. Early implementation of the Regulations is to give In-Scope Entities time for the necessary information-gathering to take allow efficient population of the Central Register.

As the Regulations apply to In-Scope Entities and beneficial owners with effect from 15 November 2016, In-Scope Entities need to act promptly to ensure compliance with their obligations to take “all reasonable steps” to identify beneficial owners (which may be problematic in certain instances) and to establish, maintain and update a beneficial ownership register. The threshold for being a ‘beneficial owner’ via shareholding is 25% plus one share and the definition is broad, encompassing sole or shared, direct or indirect ownership via shareholding or control by other means.  Where beneficial owners cannot be reliably identified by an In-Scope Entity, details of senior managing officials (Director & CEO) must be entered on its beneficial ownership register. Individual beneficial owners also need to become aware of their rights and obligations in this regard. Failure by In-Scope Entities or beneficial owners to comply with these obligations is a criminal offence.

For a summary of the key rights and obligations of In-Scope Entities and beneficial owners under the Regulations and guidance on the steps In-Scope Entities need to take to ensure compliance, please click here.

It is not clear yet what form Ireland’s Central Register will take and how accessible it will be. 4AMLD requires that the beneficial ownership register of In-Scope Entities and the Central Register must be capable of being accessed in a “timely and unrestricted” manner by specified persons/organisations. A key question is whether the Central Register will be accessible to the wider public and this appears likely as it is one of the changes to 4AMLD recently proposed by the European Commission (known as 5AMLD) and, if accepted, 5AMLD is likely to enter into force together with 4AMLD in June 2017. To learn more about the Central Register, including entitlement to access, please click here.

Please contact any member of our Corporate Governance and Compliance Group or your usual ByrneWallace contact if you need assistance in understanding and complying with your new legal obligations under the Regulations or 4AMLD, including advice on creation and maintenance of a beneficial ownership register, analysing ownership and control of your company/group, obtaining requisite information and/or preparing and issuing required statutory notices.