In the run up for Malta to implement the 5th Anti-Money laundering Directive issued by the European Union in 2018, an updated subsidiary legislation has been issued. The updated regulations shall be known as S.L. 386.19 Companies Act (Register of Beneficial Owners) (Amendment) Regulations, 2019 of the Laws of Malta.
What are these regulations all about? – a brief reminder
As of 1 January 2018, companies and partnerships were required to disclose specific on their ultimate beneficial owner(s) to the Malta Business Registry. A limited number of companies were exempted from this obligation.
The regulations considered the ultimate beneficial owners to be those individuals who ultimately own or control a legal entity through direct or indirect ownership. In case of companies and partnerships, a specific definition of an ultimate beneficial owner was outlined as follows:
- any natural person who ultimately own or control through indirect or direct ownership of 25% plus 1 share or more; or
- more than 25% of the voting rights; or
- an ownership interest of more than 25%; or
- through control via other means; or
- after having exhausted all possible means to identify the aforementioned, any natural persons holding the position of senior managing officials.
The following information needs to be disclosed to the Registry
- official full name;
- date of birth;
- country of residence;
- official identification number (e.g. passport number or identification card number);
- type of the identification document;
- expiry date of the identification document;
- country of issue of the identification document; and
- the nature and extent of the beneficial interest held by each beneficial owner.
To date, the following entities could view the Register of Beneficial Owners:
- competent authorities;
- subject persons for the purpose of customer due diligence; and
- any person or organisation that upon written request can satisfactorily demonstrate and justify legitimate interest.
Summarising the amendments
In order to be in line with obligations emanating from the European Union, the Regulation was updated to include the following:
- Communication of information to the company or partnership – the amendments specified that any individual who believes to be an ultimate beneficial owner of a particular company must provide the necessary information to the company without delay;
- Access to the Register – the register of beneficial owners will be accessible by any member of the general public, and not limited to authorities, subject persons and anyone who proves legitimate interest. This amendment shall come into force on 1 January 2020;
- Information to be accessed by the public – the public will have visibility of the name, month and year of birth, nationality, country of residence and the extent and nature of beneficial interest of the beneficial owners of a company;
- Limitation of access rights – the amendments clarified the circumstances during which access to the public can be withheld, in full or in part by the Registrar. Further to the existing situations, the following exceptions were added:
- in case of disproportionate risk;
- in case of extortion, harassment risk to the beneficial owner; or
- where the beneficial owner is legally incapable;
- Accuracy of data – competent authorities and subject persons will be required to report any discrepancies they find between the beneficial information available to them and the information held in the register of beneficial owners;
- Powers of the Registrar – if the data submitted on the beneficial owners is not accurate or up-to-date, the registrar may decide to enquire with a company or a partnership about this. In addition, the Registrar may decide to undertake a physical on-site investigation at the premises of the entity to establish the current beneficial ownership;
- New penalties – every officer of the company may become liable to a penalty of not more than € 10,000 if the Registrar identifies that the data is not accurate and/or up-to-date;
- Record keeping – the disclosed data on the beneficial owners shall be kept by Registrar and remain available for 5 years after the name of the company has been struck off the register.
How can Grant Thornton assist?
Grant Thornton can advise existing or prospective customers on the requirements that these Regulations pose on them. For more information please download the following brochures: