Implementation of the UBO exemption for listed entities

By 10 January 2020, the registration of Ultimate Beneficial Owner (UBO) for corporations and other legal entities within the EU/European Economic Area (EEA) had to be in place, while the deadline for trusts and similar legal arrangements followed two months later. These obligations stem from the fourth and fifth Anti-Money Laundry Directive (the Directive).

All corporations and other legal entities incorporated in the EU/EEA must register their UBOs, but the Directive provides for an exemption for listed companies. 

There are other EU Member States which follow a similar line of reasoning. Bulgaria and Lichtenstein, for example, explicitly state that both listed companies and entities whose shares or voting rights are held directly or indirectly by listed companies – thus their subsidiaries – that are subjected to disclosure requirements as referred to in the Directive or to equivalent international standards, are exempt from the UBO registration. 

On the other hand, there are a lot of EU Member States whose exemption only mentions the listed companies themselves, not their subsidiaries. This is true for Croatia, Ireland, Lithuania, Luxemburg, Portugal, Slovakia, and Slovenia. In most cases, it is yet unclear how the exemption applies in practice. For example, case laws may come up that extend this narrow interpretation. However, in Slovenia, the Slovenian Office for Prevention of Money Laundering has explicitly stated that the exemption shall not apply to subsidiaries which are directly or indirectly owned by listed companies. Furthermore, the Czech Republic surprisingly does not provide an exemption for listed companies whatsoever.

Finally, there are some EU Member States that fall somewhere in between. In Belgium, Germany and Malta, for example, the subsidiaries are not mentioned in the law-implementation of the UBO exemption. In Belgium, there is a written opinion of the tax authorities that states that subsidiaries that are directly or indirectly 100% owned are exempt from the UBO registration. In Germany, the interpretation of the Transparency Register goes even further, and states that that the exemption is also applicable for subsidiaries if (1) the parent companies hold more than 50% of the capital shares or controls more than 50% of the voting rights and (2) there are no other UBOs at the subsidiary. Finally, in Malta, it follows from practical experience that if there is a declaration that (1) the subsidiary is ultimately solely held by listed entities and (2) no natural person ultimately qualifies as a beneficial owner in terms of the Regulations in respect of such company, no further UBO registration is needed.

Bulgaria

Entities whose shares or voting rights are directly or indirectly held by listed companies – thus the listed entity itself as well as its subsidiaries – that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. Instead, the members of the governing body of the entity listed are considered to be the UBO’s.               

Croatia

Listed companies that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. This exemption mentions only the listed companies themselves, not their subsidiaries.

Czech Republic

Listed companies and their subsidiaries are not exempted from the UBO registration. 

Germany

Listed companies that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. The implementing legislation only refers to the listed entities themselves, not to their subsidiaries.

However, the Interpretation of the Transparency Register extends the exemption to subsidiaries, as long as the parent companies hold more than 50% of the capital shares or control more than 50% of the voting rights and there are no other UBO’s at the subsidiary. 

Netherlands

Listed companies that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. The 100%-daughter companies of these listed companies are also exempt. Furthermore, the Dutch Minister of Finance confirmed that other subsidiaries that stand in a 100%-relation to the listed company, e.g. (great)granddaughters, are also exempt. It is yet somewhat unclear if this relation needs to be in a ‘straight upward line’ or if it can be branched, e.g. when the subsidiary has two direct 50%-shareholders which are both 100% held by a listed company.

It is yet somewhat unclear if this relation needs to be in a ‘straight upward line’ or if it can be branched (e.g. when the subsidiary has two direct 50%-shareholders which are both 100% held by a listed company).

Portugal

Listed companies that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. This exemption mentions only the listed companies themselves, not their subsidiaries.

Slovakia

Listed companies that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. This exemption mentions only the listed companies themselves, not their subsidiaries.

Slovenia

Listed companies that are subjected to disclosure requirements (as referred to in the Directive or to equivalent international standards), are exempt from the UBO registration. The implementing legislation  only refers to the listed entities themselves, not to their subsidiaries.

Furthermore, a publicly available written explanation of the Slovenian Office for Prevention of Money Laundering states that the exemption shall not apply  to subsidiaries which are directly or indirectly owned by listed companies.