Register of Beneficial Owners and provident societies

The CCAB-I Insolvency Committee published Technical Alert 04/2021 Register of Beneficial Owners and Provident Societies – Guidance for Insolvency Practitioners in December 2021. 

The following questions and answers have been prepared based on this technical alert.

Key definitions:

The following key definitions will act as a reference throughout the questions and answers below:

• RBO – Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies.
• Relevant entities – Irish companies and provident societies.

1. What is the purpose of the RBO?
2. What are the requirements for relevant entities?
3. Who is a beneficial owner?
4. What are the implications of the RBO for insolvency practitioners?
5. What are the obligations for an insolvency practitioner appointed as Examiner?
6. What are the obligations for an insolvency practitioner appointed as Receiver under a fixed and floating charge?
7. What are the obligations for an insolvency practitioner appointed as Receiver under a fixed charge?
8. What steps should an insolvency practitioner take to ensure compliance with the RBO requirements?
9. Is it possible for insolvency practitioners to be exempted from the RBO requirements?

1. What is the purpose of the RBO?

   The purpose of the RBO is to improve corporate trust and transparency in Ireland and the EU by making it clear to law enforcement agencies, regulatory, obliged entities, other businesses and the public about who ultimately owns and controls relevant entities.

   It is aimed at deterring money laundering and terrorist financing and to help sanction those who hide their ownership or control for the purpose of facilitating illegal activities.

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2. What are the requirements for relevant entities?

   The relevant entity must identify their beneficial owners, keep their details on their own internal register and register these details with the RBO (or the “Central Register”).  The obligation to submit details and to update details on the RBO is on the relevant entity. 

   There are significant fines and potential imprisonment for relevant entities that do not comply, and liability can be imposed on any person being a director, manager, secretary or other officer of a corporate entity if it is proved that those persons consented to or connived with any offence committed.

   The filing of beneficial ownership data must be done through the on-line portal on the RBO website and is therefore a process separate to the registration of information / forms under the Companies Acts etc.

   Any changes to the relevant entities’ own list of beneficial owners must be notified to the RBO within 14 days of the change.  This is defined as the relevant entities’ “follow up obligation”.

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3. Who is a beneficial owner?

   The definition of the beneficial owner of a corporate entity includes:

   1. the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in the entity, including through bearer shareholdings, or through control via other means other than a company listed on a regulated market that is subject to disclosure requirements consistent with European Union law or subject to equivalent international standards which ensure adequate transparency of ownership information.

      A shareholding of 25% plus one share or an ownership interest of more than 25% of a relevant company shall be an indication of direct ownership.

      A shareholding of 25% plus one share or an ownership interest of more than 25% in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s) shall be an indication of indirect ownership. 

      Control by other means is where an individual, who does not hold more than 25% of the shares or voting rights or ownership interest of an entity, still exercises significant control or influence over the entity.  Examples of a person exercising control by other means include the exercise of control through a shareholders' agreement, the exercise of dominant influence or the power to appoint senior management.

   2. If, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s) (“SMO”) shall be entered on the register as its beneficial owner.

   It is a natural person(s) who must be identified and entered on the RBO as the beneficial owner(s) of the relevant entity, irrespective of how many layers of ownership there are in the company’s / society’s structure. The name of another company or society cannot be entered on the RBO.

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4. What are the implications of the RBO for insolvency practitioners?

   Prior to appointment, an insolvency practitioner should make enquiries as to whether the directors of the company have complied with the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (the "2019 Regulations") as amended by Statutory Instrument No. 233/2020.

   A Liquidator is not, in his capacity as a Liquidator, a natural person who ultimately owns or controls a legal entity through direct or indirect ownership of shares or voting rights.

   The appointment of a Liquidator, either solvent or insolvent, triggers a change in a relevant entity’s beneficial owners. As such, there is an obligation on the insolvency practitioner to update the internal register and the Central Register. 

   The beneficial owners are those identified by the relevant entity prior to appointment and the Liquidator is also a Beneficial Owner based on their control of the Company given the powers conferred on the Liquidator under the Companies Acts.

   If no ultimate beneficial owner is identified or if there is any doubt that the persons identified are the beneficial owners, then the names of one or more natural persons who hold the position of SMO of the relevant entity shall be entered on the register as its beneficial owner. 

   If an SMO was included on the register prior to appointment given their control in the absence of identified beneficial owners, the Liquidator is deemed the SMO from the date of appointment based on their control of the Company given the powers conferred on the Liquidator under the Companies Acts.

   Where a Liquidator is identified as a SMO then the register should make it clear that he or she has been identified as the beneficial owner ex-officio and not through any ownership interest held or control exercised by other means.

   This is on the basis that the Liquidator is the sole executive authority of the company and the officers of the company have no authority to manage the company’s affairs.

   Any changes to the relevant entities’ list of beneficial owners must be registered on the internal register and notified to the RBO within 14 days of the change.  A Liquidator should comply with this obligation within 14 days of appointment.

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5. What are the obligations for an insolvency practitioner appointed as Examiner?

   The appointment of an Examiner does not trigger a change in the beneficial ownership of a relevant entity. As such, there is no obligation on the insolvency practitioner or the officers of the company to update the internal register and Central Register.

   The existing beneficial owners retain control as the Examiner’s function is to formulate a scheme of arrangement.

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6. What are the obligations for an insolvency practitioner appointed as Receiver under a fixed and floating charge?

   The appointment of a Receiver under a fixed and floating charge triggers a change in a relevant entity’s beneficial owners. As such, there is an obligation on the insolvency practitioner to update the internal register and the Central Register.  

   The beneficial owners are those identified by the relevant entity prior to appointment and the Receiver is also a beneficial owner based on their control of the Company given the powers conferred on the Receiver under the Companies Acts and the secured debenture.

   If an SMO was included on the register prior to appointment given their control in the absence of identified beneficial owners, the Receiver is deemed the SMO from the date of appointment based on their control of the relevant entity given the powers conferred on the Receiver under the Companies Acts and the secured debenture.

   What are the obligations for an insolvency practitioner appointed as Receiver under a fixed charge?

   The appointment of a Receiver under a fixed charge does not trigger a change in a relevant entity’s beneficial owners assuming the property in question subject to the fixed charge is not material to the relevant entity.

   As such, there is no obligation on the insolvency practitioner or the officers of the company to update the internal register and Central Register.

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7. What steps should an insolvency practitioner take to ensure compliance with the RBO requirements?

   In the event that the Company has not complied and a Liquidator is appointed, the Liquidator is required to identify natural persons who are beneficial owners –

   1. Liquidator issues a “Regulation 7 Notice” to provide one months’ notice to the identified individuals believed to be beneficial owners, and request information to complete the registration.
   2. Liquidator issues a “Regulation 9 Notice” where the company is unaware as to who the individual beneficial owners are. The notice must be issued to any person or company, to provide one months’ notice requesting the person / company to confirm the beneficial owners.

   If the beneficial owners are identified, the Liquidator should create the Register of Beneficial Owners and file the beneficial owner’s information with the RBO.

   If no beneficial owners are identified, i.e., do not meet the relevant beneficial ownership criteria or if no responses are received to the notices issued above, the Liquidator should create the Register of Beneficial Owners to be filed with the RBO as per the guidance outlined above.

   The Liquidator is required to maintain the Register of Beneficial Ownership for each company until its dissolution.

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8. Is it possible for insolvency practitioners to be exempted from the RBO requirements?

   At the time of publication, the CCAB-I Insolvency Committee has made a submission to the Minister for Justice seeking an exemption for insolvency practitioners from certain provisions under the Data Protection Act 2018.

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