On 19 July 2019, the Federal Public Service of Finance published a new version of its FAQ on the register of Ultimate Beneficial Owners (UBO Register). The previous update was made on 2 April 2019. In addition to answering some technical issues, the newly updated FAQ mainly provides clarification for listed companies, associations and foundations, formalities of requests for derogations and declarations of spouses. The deadline of 30 September 2019 is maintained.
The deadline for registration of the ultimate beneficial owners (UBO’s) is maintained. The information on the UBO’s must be transmitted to the UBO Register by 30 September 2019 at the latest.
Thereafter, all modifications must be recorded within a one-month period.
2. Exemption for listed companies
Companies do not have an obligation to register their beneficial owners if they are listed on a regulated market subject to disclosure requirements consistent with EU law or subject to equivalent international standards which ensure adequate transparency of ownership information.
The updated FAQ thus now provides for an exemption for listed companies, in line with article 3 § 6 of the EU 4th Anti-money laundering directive and with its implementation by other EU countries.
3. Non-profit associations and foundations
A. Natural persons in whose interest the entity was founded or operates
Associations and foundations also have to transmit information on the (categories) of natural persons in whose main interest the entity was founded or operates.
The FAQ clarifies that general target groups can be registered. A reference to the articles of association may be sufficient.
B. Any other natural person that otherwise exercises the ultimate control over the entity
Where applicable – as a residual category –, associations and foundations also have to submit information on any other natural person that otherwise exercises the ultimate control over the entity.
This only concerns persons who do not fall within one of the other categories of beneficial owners such as natural persons having the authority to represent the entity, but whose capacity has not been published, or members acting in concert.
4. Formalities for derogation requests
The updated FAQ clarifies some aspects of the formalities for requesting a derogation to the access by the general public to the information concerning a UBO.
The request may be filed either by the UBO (or a duly appointed proxyholder) or by the legal representative of the relevant entity when it makes the registration.
A request for a derogation for exposure to disproportionate risk, risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation must be accompanied by supporting documents, such as:
- A reasoned derogation of another country with a similar register
- A conclusion of a risk analysis report of an independent third party
- A complaint filed with the police, a conviction or judgement, protective police measures
- Any other document evidencing one of the abovementioned risks.
In case of a negative decision, legal action may be initiated before the Council of State.
For minors, the derogation automatically granted will last until they reach majority.
5. Declaration of spouses
The updated FAQ sets out guidelines for UBO declarations of spouses.
For interests falling within the marital community, the UBO will, in principle, be the spouse mentioned in the share register of the company or which exercises the voting rights. If both spouses do it jointly, they must be jointly registered with an equal number of shares or voting rights.
In other cases, one should analyse which spouse exercises in practice control over the entity.
The updated FAQ document is available on the website of the Federal Public Service of Finance.
Simont Braun has advised Rewe, the second largest German supermarket chain, on the Belgian legal aspects of the purchase of Lekkerland/Conway, a major wholesaler specialised in consumption on the go, supplying gas stations, kiosks, convenience stores, etc. The transaction was signed on 28 May 2019 and the parties are now waiting for clearance by the competition authorities.
As both Rewe Group and Lekkerland are active in several European countries, their merger implied substantial cross-border aspects and the active cooperation of several top tier law firms, principally in Germany (lead), Belgium, Switzerland, the Netherlands and Spain.
Simont Braun’s Corporate M&A team advised Rewe on the Belgian legal aspects of the transaction, in particular by carrying out a legal due diligence on the Belgian target companies and assisted on the related legal and regulatory questions surrounding the transaction.
“Our team is delighted to have contributed to such a landmark European cross-border transaction, in close cooperation with Taylor Wessing Germany (lead firm). Our demonstrated capabilities to act in the framework of international transactions make us a go-to law firm for such matters on the Belgian market. Our integrated multidisciplinary structure and strong linguistic skills were clearly a plus,” highlights Axel Maeterlinck, partner in Simont Braun’s Corporate M&A department.
The Rewe Group generated a turnover over € 61 billion last year, courtesy of its 360,000 employees in 22 European countries. With the merger with Lekkerland, a new European powerhouse is born in the convenience segment. Lekkerland has about 4,900 employees in Europe and generated a turnover of € 12.4 billion euro last financial year. In Belgium, the group operates under the name Conway and its 400 people generate a turnover of € 1.5 billion (source: www.retaildetail.be).
The Simont Braun team was led by partner Axel Maeterlinck, together with partners Fernand de Visscher, Steven Callens and the assistance of counsel Pierre Van Achter and associates Tine Bauwens, Laura Grauer, Julie Kever and Peter Blomme.
The Belgian judicial restructuring procedure by transfer under judicial supervision (“PRJ 3 / WCO 3”) regulates the transfer of all or part of the debtor’s undertaking under the supervision of a judicial trustee.
One of the main added-values of this Belgian procedure is the “right of option”, which allows the transferee to choose which transferor’s employees it wishes to keep on after the transfer, provided that this choice is dictated by economic, technical or organisational reasons entailing changes in the workforce (article XX.86 §3 of the Economic Code; former article 61 § 3 of the Business Continuity Act).
On 14 August 2017, the Antwerp Labour Court of Appeal referred a preliminary question to the ECJ on the compatibility of the Belgian provision with articles 3 and 4 of Directive 2001/23 relating to the safeguarding of employees’ rights in the event of transfer of (parts of) undertakings (also called “TUPE Regulation”). This question has been raised in proceedings launched by an employee (Mrs Christa Plessers), who has been dismissed further to the transfer of her employer’s company under judicial supervision and is asking for her reinstatement in the transferee’s company.
Condemnation of the Belgian procedure by the ECJ
In order to answer this question, the ECJ had to determine whether:
- the “right of option” granted to the transferee falls under the exception laid down in article 5 §1 of Directive 2001/23, which requires that the transferor (1) is subject to a bankruptcy proceeding or any analogous insolvency proceeding that has been instituted in view of the liquidation of the transferor’s assets, and (2) is under the supervision of a competent public authority;
and if not,
- whether articles 3 and 4 of Directive 2001/23 preclude the Belgian “right of option”.
The ECJ decided on 16 May 2019 that the choice granted to the transferee by the Belgian law does not meet the cumulative conditions laid down in Article 5(1) of Directive 2001/23 and that, consequently, transfers carried out in such circumstances must comply with articles 3 and 4 of Directive 2001/23.
The ECJ emphasised that “dismissals which occur in the context of the transfer of an undertaking must be justified by economic, technical or organisational reasons relating to employment which do not intrinsically relate to that transfer”.
Yet, article XX.86§3 of the Economic Code does not impose upon the transferee to justify its choice with regard to the transferor’s employees who are made redundant.
As a result, according to the Court, the application of current article XX.86§3 of the Economic Code could seriously threaten the principal objective of Directive 2001/23, i.e. to protect employees against unjustified dismissals in the event of a transfer of undertaking.
Therefore, the ECJ decided that Directive 2001/23 has to be interpreted as prohibiting the transferee to choose the employees it wishes to keep on after the transfer.
What is the impact of this decision under Belgian law?
Given the ruling of the ECJ, it becomes complicated for the Belgian courts to interpret article 86 §3 of the Economic Code consistently with Directive 2001/23.
However, and as the ECJ pointed out itself, in accordance with EU law, the Belgian courts will not have to discard their own national provisions. As a result, as long as article 86 §3 of the Belgian Economic Code is not amended, it seems that the sole possibility for employees who have been dismissed in the framework of a transfer under judicial supervision will be to sue the Belgian State to claim compensation because (i) it did not correctly implement Directive 2001/23, or (ii) the national courts did not correctly interpret article 86 §3. However, in that second case, the dismissed employees will also have to prove that they suffered damages due to this wrongful behaviour. In other words, they will have to prove that they were not dismissed for economic, technical or organisational reasons, which might be a difficult task.
Conclusion: is it the end of the PRJ3/WCO 3?
By considering that current article 86§3 of the Belgian economic Code does not comply with Directive 2001/23, the ECJ might have sounded the death knell of the PRJ3/WCO3.
As mentioned before, the main advantage of such a proceeding is precisely to allow the transferee not to keep all the transferor’s employees but only the chosen ones. In addition, under this proceeding, the transferee can also modify the working conditions of the transferred employees. Even if this second principle of the Belgian legislation was not referred to the ECJ, one can expect a similar ruling, which would make the PRJ3/WCO3 completely useless.
In any case, the Belgian legislator will have no choice but to modify the Title V of the Economic Code to make it consistent with Directive 2001/23. This modification might be included in the coming (and more significant) reform of the Belgian insolvency law to implement the Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures, whose final text has just been approved (15 May 2019) by the Parliament and the Council.
To be continued with our next government…
Fanny Laune & Pierre Van Achter
The new Code, which was published in the Official Journal on 4 April 2019, will gradually come into force as from tomorrow.
The date of entry into force of the new Code is 1 May 2019. As from this date, each newly incorporated entity will have to comply with all the provisions of the new Code.
For existing companies and associations, the general rule is that the new Code will come into force on 1 January 2020, with a final deadline for adapting the articles of association on 1 January 2024. However, existing entities may choose an early opt-in and thus, through an amendment to their articles of associations, render the new Code fully applicable as from 1 May 2019.
Also to note: the Royal Decree dated 29 April 2019 implementing the new Code has been published today. This Royal Decree merges into a single text the regulatory provisions of various existing Royal Decrees. It contains nine books and is available here.
For any query, do not hesitate to contact a member of our corporate team.
An important update of the UBO Register FAQ document has been published by the Federal Public Service Finance on 2 April 2019. It provides a number of clarifications on the scope of the regulations, notably with respect to the notion of senior managing official, the situation in case of a usufruct / bare ownership, co-ownership, shareholders’ agreements… It also confirms that UBOs will have the right to know who consults their data. The updated FAQ document is available here: http://bit.ly/QandA-ubo
The Belgian anti-money laundering regulations (the Law of 18 September 2017 and the Royal Decree of 30 July 2018) require all companies, non-profit-making organisation and foundations, as well as trusts, fiduciaries and other similar legal entities managed from Belgium, which are the responsible “information providers”, to obtain and hold adequate, accurate and up to date information on their “beneficial owners” (UBO) and to transmit it to the UBO Register, managed by the General Administration of the Treasury.
2) DEFINITION OF UBO
UBO are individuals who directly or indirectly exercise effective control over information providers. There are different categories of UBO depending on the type of control exercised and on the type of information provider.
For companies, the following are considered as beneficial owners:
- Individual(s) who directly or indirectly has/have ownership of a sufficient percentage of voting rights or own sufficient shares in the company (an indication of a sufficient percentage is the possession, directly or via ownership interest held by one or more companies, of more than 25% of voting rights or of shareholding);
- Individual(s) who control via other means (such as via a shareholders’ agreement) ;
- In the case no individual(s) is/are found under the first two categories, the senior manager.
Others persons qualify as UBO for non-profit-making organisations, foundations, trusts, fiduciaries or other similar legal entities. If your entity corresponds to one of those, we will provide you with further details.
3) INFORMATION TO PROVIDE
As mentioned in the Royal Decree, the following information regarding each beneficial owner must be communicated to the UBO Register by the company which is the information provider:
- last name, first name, date of birth (day/month/year), citizenship(s), country of residence, complete address of permanent residence, date on which they became the UBO of the company, national registry number or registration number with the Crossroads-Bank for Companies (or overseas equivalent),
- the relevant category of UBO to which he/she belongs,
- if he/she is a direct or indirect UBO (via one or more other entities),
- if the individual(s) meets the criteria alone or in coordination with others,
- for indirect beneficial owners, full identification of each of the intermediary entities is required,
- the percentage of shares or voting rights owned and,
- in case of indirect holding or control, the percentage of shares or weighted voting rights held in the company.
4) ACCESS TO THE REGISTER
The UBO Register is an online register accessible on the FPS Finance website.
UBO Register data are accessible not only to the competent authorities and obliged entities (notably the Ministry of Finance, the tax authorities, the Belgian Financial Intelligence Processing Unit (CTIF), the police, the National Bank of Belgium, the FSMA, company auditors, accountants, lawyers, notaries, bailiffs, etc.), but also, for companies, to all members of the “general public”, in line with the increased transparency principle enshrined in the 5th Anti-Money Laundering directive.
However, those persons will not have access to the first name, the exact date of birth, the complete address of residence, the national registry number or equivalent of the beneficial owners.
All consultations of the register made by those persons will be recorded and kept for a period of 10 years.
The data held in the register will also be kept for a period of 10 years after the date of loss of legal personality of the information provider or the date on which it ceased its activities.
5) REQUEST FOF DEROGATION
A request for derogation can be made via the UBO Register online platform. In this case, access for the general public to the information is suspended until the General Administration of the Treasury grants or declines to accept the derogation.
In principle, a derogation may only by granted under exceptional circumstances, expressed as follows under in the directive:
“in the event the beneficial owner concerned demonstrates that this access exposes him/her to disproportionate risk, to risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or in the event the beneficial owner is a minor or incapacitated”.
A specific request may also be made directly via the General Administration of the Treasury.
Supporting documents which evidence the derogation request must be attached to the official request.
The different entities must transmit the information to the UBO Register before 30 September 2019.
Administrative or criminal fines will apply in case of non-compliance by companies and more particularly by the directors of their obligations. The fines range between 250 EUR and 50,000 EUR.
Thereafter, all modifications must be recorded within a one month period.
Moreover, the information recorded in the Register must be confirmed annually by the information providers. The companies are required to establish a procedure which ensures it is possible to make information available and to keep up to date and correct information, clearly identifying their beneficial owners.
Companies are required to take the following measures:
- Set up internal procedures to facilitate the collection of the requested information and communication of any potential changes relating to it;
- Identify the beneficial owners and their corresponding category(ies), and where necessary compile the documents testifying to the veracity of the information communicated (e.g.: a copy of an identity card, a shareholder register, a notarial deed, articles of association of the intermediary company in case of indirect ownership).
- Appoint the legal representative or an external representative with an E-ID card who will be responsible for providing the information listed in the Royal Decree via MyMinFin on behalf of the information provider. In the scenario an external representative is chosen, it may be either an internal agent to the information provider or an external agent (e.g. an accountant, a legal advisor, a natural or legal person).
Practical information is available on the website of the Federal Public Service Finance, particularly under the FAQ document.
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