The 2019 Law, which addresses the requirements of Article 30 of the Fourth AML Directive1 and provides for the establishment of a national register of beneficial owners of companies and other legal entities (the "RBE"), will take effect on 1 March 2019. Pursuant to the 2019 Law, the Luxembourg Business Registers (the "LBR") has been assigned responsibility for the management of the RBE.
The Fourth AML Directive came into force on 25 June 2015. Article 30 of the Fourth AML Directive requires corporate and other legal entities incorporated within an EU Member State (in this case, Luxembourg) to obtain and hold adequate, accurate and current information on their beneficial owners, including details of the beneficial interests. In addition, Article 30 requires each EU Member State to establish a central register of beneficial ownership information in relation to the corporate and other legal entities in scope.
Who is a beneficial owner?
The term beneficial owner means a natural person who ultimately owns or controls the legal entity through direct or indirect ownership of a sufficient percentage of the share or the voting rights in that entity or through control via other means (the "Beneficial Owner"). A percentage of 25% plus one share or an ownership interest of more than 25% in the legal entity held by a natural person is considered to be evidence of direct ownership, and a shareholding of 25% plus one share or an ownership interest of more than 25% held by a corporate entity under the control of a natural person, or by multiple corporate entities that are under the control of the same natural person, is stated to be an indication of indirect control.
Where no Beneficial Owners can be identified, In-Scope Entities (defined below) are required to enter the names of the senior managers of the In-Scope Entity as the Beneficial Owners.
Which entities are within scope?
The 2019 Law is intended to apply to a wide range of commercial companies and other legal entities including, but not limited to, public limited companies (sociétés anonymes), private limited companies (sociétés à responsabilité limitée), partnerships limited by shares (sociétés en commandite par actions), common limited partnerships (sociétés en commandite simple), special limited partnerships (sociétés en commandite spéciale), foundations, civil companies, interest groupings, European interest groupings, investment funds (fonds d'investissement), common funds (FCPs) and branches of foreign companies (each an "In-Scope Entity" and together the "In-Scope Entities").
Listed companies also fall within the scope of the 2019 Law, however listed companies are not required to provide the same type of information as must be provided by In-Scope Entities.
Internal Beneficial Owner Register – Information to be Held
The following is a summary of the information that an In-Scope Entity must obtain and hold in respect of its Beneficial Owner(s):
(a) first name and family name;
(c) date and place of birth;
(d) country of residence;
(e) private residential or professional address;
(f) national or foreign identification number (as applicable); and
(g) the nature and extent of beneficial interest held (the "BO Information").
Maintenance of BO Information
All BO Information obtained and held by an In-Scope Entity in respect of its Beneficial Owner(s) must be adequate, accurate and up-to-date.
In addition, such information, together with the relevant supporting documentation2, must be kept by the In-Scope Entity at its registered office.
In the event an In-Scope Entity is liquidated, the BO Information must be kept for five years following the date of liquidation and the In-Scope Entity must inform the LBR as to where the BO Information will be kept for the duration of this period.
RBE – Information to be Filed
The BO Information must be filed electronically with the LBR and may be filed by: (i) the In-Scope Entity; (ii) an authorised representative of the In-Scope Entity; or (iii) the notary incorporating or amending the articles of incorporation (or equivalent in the case of a legal entity that does not have articles of incorporation) of the In-Scope Entity.
Listed companies, in contrast, must only file the name of the regulated market on which their securities are admitted to trading.
In respect of newly incorporated entities, the BO Information must be registered within one month of its incorporation. Existing In-Scope Entities have a six month period from the date on which the 2019 Law takes effect to comply with the provisions of the 2019 Law and register the BO Information.
Any changes to the BO Information must be registered within one month of the date on which the In-Scope Entity became aware or should have become aware of an event or circumstances triggering a change to the BO Information.
All applications for the registration and / or the amendment of BO Information must be accompanied by the relevant supporting documentation.
Access to the RBE
The RBE and the BO Information will be available electronically and may be accessed by (i) National Authorities3 in the exercise of their functions and (ii) members of the public. Members of the public will not, however, have access to (i) the private residential or professional address or (ii) the identification number of the Beneficial Owner(s).
In the event the BO Information is accessed by either the National Authorities or a member of the public, neither the In-Scope Entity nor their Beneficial Owner(s) will be informed that the BO Information has been accessed.
Any person or professional (as defined in the 2019 Law) who has access to the RBE must, without delay, inform the LBR of any inaccurate or incorrect BO Information contained in the RBE.
Restricting Access to the RBE
In certain exceptional circumstances, an In-Scope Entity and / or a Beneficial Owner may, on a case-by-case basis, request that access to the BO Information be restricted to National Authorities, credit institutions, financial institutions as well as bailiffs and notaries acting in their capacity as public officials.
Certain exceptional circumstances include, but are not limited to, the risk of fraud, kidnapping, blackmail, extortion, harassment and / or violence.
Any restriction on the ability to access the BO Information is subject to strict conditions and if such a restriction is granted, a note to that effect will be included on the RBE.
Penalties in the Event of Non-Compliance
The 2019 Law imposes significant monetary fines (ranging from €1,250 to €1.25 million) on In-Scope Entities that: (i) fail to meet the deadlines set out in Article 4(1) and Article 7(4) of the 2019 Law in respect of registering and / or amending the BO Information; (ii) knowingly provide inaccurate, incomplete or non-current BO Information; (iii) fail to obtain and hold the BO Information at their registered office and / or; (iv) knowingly provide the National Authorities or any professional (as defined in the 2019 Law) with inaccurate or non-current BO Information.
In addition, any Beneficial Owner that fails to meet its obligations under the 2019 Law may be subject to a monetary fine which may range from €1,250 to €1.25 million.
What actions should Luxembourg companies take?
All Luxembourg companies will now need to take proactive steps to determine whether they are In-Scope Entities and each In-Scope Entity should commence taking steps to identify, obtain and hold information about their beneficial owner(s). In-Scope Entities have a six month period from the date on which the 2019 Law takes effect to comply with its provisions and access to the information contained in the RBE may only be requested upon the expiration of this six month period.
In light of the obligations imposed under the 2019 Law, we can assist clients to assess the impact of the 2019 Law on their entities registered in Luxembourg and to provide advice on next steps. We can also advise In-Scope Entities in relation to the creation and maintenance of an internal beneficial owner register and such other matters required in order for In-Scope Entities to fulfil their legal obligations under Luxembourg law.
For assistance on any of the above matters, please liaise with your usual Maples and Calder contact or any of the people listed above:
1 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing.
2 The 2019 Law provides that a Grand-Ducal Regulation, which has yet to be published, will provide further detail on the supporting documentation.
3 The term national authorities, as defined in the 2019 Law, includes but is not limited to, the Financial Intelligence Unit (Cellule de renseignement financier), the Luxembourg financial regulator (Commission de Surveillance du Secteur Financier) and the Tax Administration (l'administration des contributions directes).