Global trends of deoffshorization urge jurisdictions to create public repositories of information about ultimate owners of registered companies. The offshore governments are also obliged to amend or adopt relevant legislative acts and make the UBO (ultimate beneficial owners) registers publicly accessible.
Do you know what information about the ultimate beneficial owner(s) of an offshore company is legitimately available to the public now?
Another question is about the scope of public access to such data stored in the registries of different countries.
To answer them, let us start with the basic definitions.
Who is the ultimate beneficial owner?
The ultimate beneficial owner of a legal entity is a natural or legal person who has the actual impact on the company’s activities and receives material benefits from it. In the broadest sense, a beneficiary is someone entitled to some benefits. There are two types of beneficial ultimate owners: those who own 25% of the authorized capital of an entity; and those controlling the company by other means, regardless of the formal stock ownership.
An executive director or a member of the Board can be the beneficial owner. Nearly all jurisdictions that have created their public UBO registers take the same approach to defining the ultimate beneficial owner as a natural or legal person that owns no less than 25% of the company’s shares.
Another criterion for determining the ultimate beneficial owner of any particular company refers to management and control matters. If a person or entity makes decisions about the distribution of the organization’s profits, appoints or fires officers, or approves financial statements, that person or entity may also be recognized as an ultimate beneficial owner.
Sometimes it is not possible to qualify the ultimate owner even by the above-mentioned criteria. In such cases, a relevant remark is made in the register. The main aim of identification and verification of company beneficiaries is to prevent terrorist financing and minimize the risk of money laundering. This is part of important measures under the tax information exchange agreements.
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Accessibility to ultimate beneficial owners registers
One of the main differences between UBO registers in different countries is the specifics of data access modes:
- Public access. In this case, anyone can receive from open public resources information about the ultimate beneficiary of a particular company. If the owner lives in a country with a high crime rate, he has the opportunity to conceal the data by filing an appropriate application for intellectual property protection.
- Confidential access. In this case information about owners is hidden from third parties. Data is available only to the state registrar. Access can be allowed to the tax authorities on the basis of a court ruling.
Since 2020, all EU countries are obliged to provide public access to their registers of ultimate beneficial owners of companies, as stipulated in the 5th EU Anti-Money Laundering Directive (which came into force in 2018).
Please note: since March 2021, all UBO registers of the EU countries will be connected to a single information system.
Any third party can now obtain the following general information about the company:
- the company name,
- the date of incorporation,
- the legal address,
- the registered office address,
- the name of the registered agent.
Information about the real owners may be concealed if it is allowed by the laws of the country of incorporation.
Over 80 countries have already passed laws requiring establishments of ultimate beneficial ownership registers. However, the number of countries that have taken meaningful steps in this direction is low so far, and the pace of the reform is slow. Some countries have not registered or have not updated the UBO data; some have registered and updated but not online; the states that have registered and published the data online feature different modalities of data storage and access. In other words, the countries’ approaches to the ownership transparency levels are different. Also different is the scope and quality of relevant information.
Publicly accessible UBO registers are maintained, for example, in the following jurisdictions:
- the United Kingdom,
Examples of countries where beneficial ownership transparency is not allowed (unless there is a formal request on behalf of the public authorities) are as follows:
- The British Virgin Islands,
- Hong Kong,
- The Cayman Islands,
Cyprus: UBO register for offshore companies
In 2020, Cyprus created a register of ultimate beneficiaries. It is controlled by the Cyprus Registrar of Companies and Official Receiver (the RoC). Access to information about the owners of the company is not public. It can only be obtained by the registration agents, as well as tax authorities and law enforcement agencies on reasonable grounds.
Information about the beneficial owner (which can be provided only on the basis of a court ruling) includes the full name, citizenship, country of residence, share in the company.
When requesting an extract from the Cyprus Trade Register, the applicant will receive an electronic transcript containing the following information:
- the company name;
- the company registration number;
- the legal structure type;
- the legal address;
- the date of establishment of the company;
- the founders, directors, and secretaries;
- the authorized capital.
Information about the beneficiaries’ identities will be concealed. The ultimate owners can retain their data in the public domain if they wish.
BVI: UBO register for offshore companies
The Register of beneficial owners of companies in the British Virgin Islands also requires to indicate the identity of the ultimate owner when registering an offshore company. But the information is confidential and will be disclosed only under certain conditions: a formal request of tax authorities or law enforcement agencies, in case of a court decision.
Confidentiality of offshore companies
Confidentiality in the offshore industry today does not imply complete anonymity. Information about the owners and assets is in some cases concealed from third parties. But it is worth remembering that offshore companies cannot be used to hide income from the country of their tax residence. If the company’s country of incorporation has adopted the international standard of reporting and exchange of tax information with the home country of the beneficiary, business information is to be available to the relevant tax authorities.
Confidentiality of offshore companies is not about hiding data from the government of the country of tax residency, but about protection from unscrupulous competitors, unfounded lawsuits, and divorce disputes.
Have you decided to register an offshore company, but do not want to appear in the public register of beneficiaries? If so, you should better choose those jurisdictions in which such an opportunity is provided for beneficiaries of newly registered companies. If the question of transparency/privacy of information about the company is not vital for you, then the establishment can be carried out in any other suitable country.
You are welcome to contact our experts at the address given at the top of this page for questions and requests. Our team will help you choose the best jurisdiction for registering an offshore company and take care of opening a corporate bank account.
How should I deal with a company if its ultimate beneficiary is not established?
If you have started working with a company that fails to provide information about the ultimate beneficial owner (or such data are not specified at all), we recommend asking some authorized staff members in the company about the reason for this fact. Depending on the answer you can decide whether to continue the cooperation.
Who controls the validity of information about the offshore company’s ultimate beneficial owners?
Almost every offshore jurisdiction requires the provision of reliable data on the ultimate owners of the future entity when considering applications for companies’ incorporation. All data are checked for relevance, and only then the decision to register / not to register the firm is made. Even if nominee services are used, registrars in any case know about the real owners.
What information about offshore companies is publicly available?
Virtually anyone can obtain the following information about a company: its name, legal address, date of registration, name of the registered agent. Information about the directors, founders, shareholders, authorized capital, and the current owner of the company in most cases is concealed. It can be obtained for free or for a fee (if the register is public), or on the submission of a court decision. Conditions for obtaining full information about the company are governed by the laws of the country of registration.