Transparency as a rule - the latest development on the draft bill implementing the Luxembourg Register of Effective Beneficiaries
On 10 October 2018, the Chamber of Deputies of the Grand Duchy of Luxembourg received the revised version of the draft bill of law N°7217 amended by the Government of the Grand Duchy of Luxembourg (the Bill). The purpose of the Bill is to create the Luxembourg Register of Effective Beneficiaries in transposition of art. 30 of the EU Directive 2015/849 as amended by the EU Directive 2018/843.
The purpose of this note is to summarize the current status of the Bill.
Who will be affected?
Any individual (the Effective Beneficiary) who is either directly or indirectly (i) the holder of 25% or more of the shares, or (ii) in control, through its shareholding or otherwise, any Luxembourg entity registered with the Luxembourg Business Register (Registre de Commerce et des Sociétés, Luxembourg – the RCSL).
The entities listed below (each a Registered Entity) must be registered with the RCSL (this list is not exhaustive):
- Public limited company (société anonyme) and simplified public limited company (société par actions simplifiée),
- Private limited liability company (société à responsabilité limitée) and simplified private limited liability company (société à responsabilité limitée simplifiée),
- Corporate partnership limited by shares (société en commandite par action),
- Common limited partnership (société en commandite simple) and special limited partnership (société en commandite spéciale),
- General corporate partnership (société en nom collectif),
- Co-operative society (société coopérative),
- European company (société européenne),
- Civil company (société civile),
- Luxembourg subsidiary of any foreign commercial companies,
- Non-profit association (association sans but lucratif),
- Fundation (fondation),
- Economic interest groups (groupements d’intérêt économique) and European economic interest groups (groupements européens d’intérêt économique), and
- Mutual funds (fonds communs de placement).
Who will manage the information?
The RCSL will manage the register under the name of “Registre des bénéficiaires effectifs” or “RBE”, in the previous version of the Bill this was called the “REBECO”.
Who will feed the information to the RBE?
It is the responsibility of the Registered Entities to keep the RBE informed.
Following its incorporation, or a transfer of its ownership or any other event that is triggering a change in the Effective Beneficiaries of the Registered Entity, or in the information concerning its Effective Beneficiaries (each a Registration Event), any Registered Entity must provide any requisite information on the Effective Beneficiaries to the RCSL within one month of the knowledge of the Registration Event, or from the point in time where the Registered Entity should have had knowledge of such Registration Event. Any such information must be circulated to the RCSL together with the relevant sustaining document, the details of which shall be determined by a Grand Ducal Regulation once the law is be adopted.
The RCSL shall check the received information and make it available online on the RBE within 3 days of receiving it. The process will not be automatic.
Which information of the Effective Beneficiary will be available on the RBE?
- Their full name,
- Their nationality,
- Their full date of birth,
- Their place of birth,
- Their country of residence,
- Their full private or professional address,
- Their identity card/passport number,
- The nature of the interest they hold in the Registered Entity, and
- The extent of the interest they hold in the Registered Entity.
How will the information be fed and updated on the RBE?
This will be done electronically on a secured online page by the Registered Entity or its agent on the RCSL’s website.
Any national authorities and/or professionals of the financial sector (e.g. banks, insurance companies, pension funds, undertaking for collective investments, management companies, auditors, lawyers etc.) accessing the RBE will be obliged to declare any erroneous, incomplete or out of date data to the RCSL.
How long will be the information retainer period?
The information retainer period will be five years after the radiation of the Registered Entity from the RCSL. During this period all information, request of recordings in the RBE and all documentation will be kept for reference.
Any data on accessing information on the RBE by a national authority will be retained for a period of five years.
Who can access to the information on the Effective Beneficiary on the RBE?
National authorities will have full access to the data on the Effective Beneficiaries with no restrictions.
Any other person will only have access to the following information on the Effective Beneficiary:
- Full name,
- Nationality,
- Full date of birth,
- Place of birth,
- Country of residence,
- Nature of his/her interest, and
- Extent of his/her interest.
In other words, the only information that will not be publicly available is the full private or professional address and the identity card/passport number of the Effective Beneficiary.
Important questions are how the database will handle the data during a search (e.g. only by name of Registered Entity or also by name of Effective Beneficiary) and what results will a search give (will a search under a company name disclose all other companies owned or controlled by a given Effective Beneficiary)? The conditions of accessing the RBE and the criteria of searches will be regulated by a Grand Ducal Regulation.
The access to the database by national authorities will be tracked with substantial security measures allowing to determine individually who accessed the RBE, what information and why was it gathered, and the date and time of access to the information. In the current drafting of the Bill, it is unclear that others (including foreign authorities) consulting the RBE would be submitted to similar recordings.
Is it possible to request some access restrictions on the information of an Effective Beneficiary?
The Effective Beneficiary or the Registered Entity may post a request to the RCSL and that restrictions can be set as to who can access the RBE’s file of the Registered Entity.
Restrictions will only be granted in exceptional circumstances, in which cases only national authorities, banks, financial institutions, or notaries performing their duties will be granted access.
The exceptional circumstances may be upheld where the Effective Beneficiary could be exposed to disproportionate risks, risks of fraud, kidnapping, blackmail, extortion, harassment, violence or threat, or where the Effective Beneficiary is a minor or otherwise incapacitated adult.
If a restriction is granted, it will be for a maximum period of 3 years, although it will be extendable on request from the Effective Beneficiary or the Registered Entity.
Any decision on granting restrictions on access will eventually be appealable in court and any such opened proceeding will affect the suspension of public access to the file of the Registered Entity until a final decision is taken.
What sanctions may apply?
The Registered Entity who fails to request recording of its Effective Beneficiaries in the RBE, fails to record changes in its Effective Beneficiaries, provides incorrect, incomplete or out of date information on its Effective Beneficiaries, or fails to store all information at its registered seat about its Effective Beneficiaries may be fined up to EUR 1,250,000.-
The Effective Beneficiaries who fail to provide the Registered Entity with any information that it is due to be recorded on the RBE may also be fined up to EUR 1,250,000.-
How long will be the grand fathering period?
Any Registered Entity must provide all the requested information within 6 months of the promulgation of the law.
When will the Bill be adopted?
This is the second release of the draft Bill, after it was commented by all the relevant bodies of the State. Now that the elections are behind us it is likely that it will be voted before the end of the year, hence it might be in force as early as the first quarter of 2019.
For more information please contact Victor Regnard on +352 26 48 68 48 or at victor.regnard@crsblaw.com.
