One of the key features of the newly transposed Fourth Anti- Money Laundering Directive (Directive 2015/849/EU) is the imposition of an obligation on all European Union Member States to ensure that all incorporated corporate and other legal entities maintain sufficient and up to date information on their beneficial ownership.
In this regard, December 2017 saw the publication of the Companies Act (Register of Beneficial Owners) Regulations which imposed a requirement on all Maltese Companies (saving the exceptions listed below) to obtain and hold adequate, accurate and current information on beneficial ownership and to provide such information to the Malta Registry of Companies on an annual basis.
Furthermore, in January 2018 the Trusts and Trustees Act (Register of Beneficial Owners) Regulations were published and imposed similar obligations on every express trust which generates tax consequences under their administration
Definition of a “beneficial owner”
In terms of the regulations applicable to Companies the term “beneficial owners” refers to:
- Natural persons having ownership or control of the company through either direct or indirect ownership of 25% plus one or more of the shares in the Company or more than 25% of the voting rights of the Company or;
- Through other ownership interests amounting to more than 25% in the Company such as the exercise of a power to remove the majority of the board of Directors in the Company
In the case of trusts the beneficial owner refers to:
- the settlor.
- the trustee or trustees.
- the protector.
- the beneficiaries or were the individuals benefiting from the trust have yet to be determined, the class of persons in whose main interest the trust is setup operates.
any other person exercising ultimate and effective control over the trust by any means, including any person whose consent is to be obtained, or whose direction is binding in terms of the trust instrument or of any other instrument in writing, for material actions to be taken by the trustee;
Applicability
to new Companies
With effect from 1 January 2018, all
companies wishing to be registered or re-domiciled into Malta are required to
submit a form signed by at least two of the company’s proposed directors or the
sole director, as the case may be. Such form must clearly identify each
ultimate beneficial owner of the company and the nature and extent of the
beneficial interest held. The form is to be submitted at incorporation stage
along with the draft Memorandum and Articles of Association of the Company.
Applicability
to existing Companies
Existing companies have 6 months within which to comply with the new regulations. A specific form containing a declaration signed by relevant company officers must be submitted along with the Company’s annual return when such falls due after 30 June 2018. This requirement is applicable to all commercial partnerships, including limited liability companies and private limited liability shipping companies formed and registered under the Merchant Shipping (Shipping Organisations – Private Companies) Regulations.
Procedure
to register changes in shareholding
In the case of companies that wish to
register any form of change in shareholding which occurs through either a
transfer, increase or reduction of shares, transmission, restricting of share
capital or changes of voting rights, it is now a requirement to submit a form
confirming whether such change in shareholding will result in the change in the
ultimate beneficial ownership of the Company.
Obligations
for Trustees
Trustees currently authorised under the
Trusts and Trustees act shall submit to the Malta Financial Services Authority
(“MFSA”) information on each beneficial owner of the trust within 6 months from
the coming into force of the Trusts and Trustees Act (Register of Beneficial
Owners) Regulations. In the case of a
change in the beneficial ownership of an express trust generating tax
consequences, the trustee has 14 days from the date of effective change to
inform the MFSA and provide information on the new beneficial owner. It must
also be noted that a trustee is under the obligation to submit an annual
declaration confirming that there have been no changes to the beneficial
ownership.
Exemptions:
The Companies
Act (Register of Beneficial Owners) Regulations also stipulate that the following companies
are exempt from such reporting
obligations:
- Companies
listed on a regulated market subject to transparency requirements
consistent with the EU laws; and - Companies
where all the registered shareholders are natural persons who are
disclosed in the public records at the Registry.
Information
to be stored
Entities that are required to comply with such obligation
are required to maintain an internal database with the following information on
each beneficial owner:
- Name.
- Date of Birth.
- Nationality.
- Country of
residence. - An official identification
document number indicating the type of document and country of issue. - The nature
and extent of the beneficial interest held by each beneficial owner.
Accessibility
to information
Upon compilation of all information, the
Registry of Companies will establish a Register of Beneficial Owners which
shall only be accessible to the following:
- National Competent Authorities with
designated responsibilities for fighting money laundering and terrorist
financing. - Financial Intelligence Analysis
Unit. - National Tax Authorities.
- Any persons subject to
obligations relating to the prevention, combating and detection of money
laundering and combating of financing of terrorism. - Any persons that show
legitimate interest in the requested information following submission of a
written request.
Disclaimer
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Katya Tua or Dr. Luke Mizzi.