This note summarises the main features of the Act which will impact a large number of legal entities registered with the trade and companies register of Luxembourg (Registre de Commerce et des Sociétés de Luxembourg) (the RCS) and updates our note of 19 February 2018.
It should be noted that all bills pertaining to the transposition of the 4AMLD, as amended by the 5AMLD, have been adopted except:
- the bill of law 7216A implementing article 31 4AMLD and pertaining the information to be obtained and kept by the trustees, and
- the bill of law 7216B implementing article 31 4AMLD and pertaining the set-up of a register of ultimate beneficial owners of Luxembourg trusts.
Considering the last amendments of the Luxembourg Government in the bill of law 7217 on 10 October 2018, we can anticipate that bills 7216A and 7216B will follow the Act shortly.
What is RBE?
The Act established a new central register of ultimate beneficial owners (registre des bénéficiaires effectifs) (the RBE) in which the ultimate beneficial owners (the UBOs) of certain Luxembourg entities must be identified.
Who is considered as UBO?
In the case of corporate entities:
- Any natural person 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 that 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% in the customer held by a natural person 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.
If, after having exhausted all possible means and provided there are no grounds for suspicion, no UBO is identified, information must be provided with respect to any natural person holding a senior management position (dirigeant principal) in the relevant entity or group of entities.
Which entities are under the scope?
The Act applies to the entities registered with the RCS as stated in article 1 paragraphs 2 to 15 Loi du 19 décembre 2002 concernant le registre de commerce et des sociétés ainsi que la comptabilité et les comptes annuels des entreprises (the Relevant Entities):
- Commercial companies
- Economic interest groups
- European economic interest groups
- Branches created in the Grand Duchy of Luxembourg by companies governed by the laws of another State
- Civil companies;
- Non-profitable associations
- Pension savings associations
- Agricultural associations
- Public establishments of the State and municipalities
- Mutual insurance associations
- Special limited partnerships
- Investment funds (fonds communs de placement)
- Other legal persons whose registration is required by law.
It should be noted that bill of law 7217 of 10 October 2018 extended the scope of the Relevant Entities, including investments funds, listed companies and branches created in the Grand Duchy of Luxembourg.
What is the information that must be provided?
The following information in respect of the UBO of the Relevant Entity must be provided to the LBR (the Relevant Information):
- name and surname
- date and place of birth
- country of residence
- private address
- identification number
- nature and extent of the effective interests held.
The exception comes with the listed companies, although in scope, are exempt from the obligation to declare their beneficial owners and will only have to indicate the name of the markets on which their securities are admitted to trading.
Functioning of the RBE
The filing of the Relevant Information of the Relevant Information must be done electronically via the website of the Luxembourg Business Registers (the LBR) which is the gestionnaire of the RBE.
The LBR shall refuse any incomplete filing or any filing which is not compliant with the Act. The LBR shall require then the Relevant Entity to amend or complete the information within fifteen (15) days following the LBR’s request. If the request remains non-complete or non-compliant with the Act the LBR shall reject its registration through a decision dully motivated and which includes the possibility to initiate judicial court proceedings. The notifications must be made by registered letter with return receipt.
More technical aspects such as supporting documents to file Relevant Information, procedure to file the Relevant Information, the fees paid to the LBR among other matters are not yet available (not even in draft form). Their regulation will be made by way of Grand-Ducal Regulations.
Obligations for the Relevant Entity
Obligation to set up an internal file on their UBO
The Relevant Entities are required to keep an internal file at the registered office with the Relevant Information and supporting documents. The authorities might request to have access to this internal file, which must be made available within three (3) days of their request.
Any person with access to Relevant Information who notices erroneous data or a failure of any or all data in the RBE must inform the LBR within a period of 30 days. During the process of receiving correct information, the LBR will record provisional data.
The Act distinguishes between, on the one hand, the retention of information on beneficial owners and the retention of supporting documents, on the other hand. Information on beneficial owners must be retained by the RBE for a period of five years after the date of deletion of the registered entity from the Trade and Companies Register. Supporting documents must also be kept by the RBE for five years.
Obligation to file the Relevant Information with the RBE
The Relevant Information must be filed strictly one month, starting from the time when the registered entity becomes aware, or should have become aware, of the event that makes it necessary to register or amend it. In case of new entities, the Relevant Information should be filed in the month following registration with the RCS.
Obligations for the UBO
The person qualified as UBO for a Relevant Entity has the obligation to provide the Relevant Entity with all the Relevant Information so that the Relevant Entity can fulfill its obligations under the Act.
Availability of the Information
The Relevant Information filed with the RBE will be fully available to other national authorities as defined in the Act (i.e. public prosecutor, instruction court, Commission de surveillance du secteur financier, Commissariat aux assurances, tax administration, …). Any other Luxembourg resident will be able to have access to the Relevant Information, excluding the personal address of the beneficial owner and the identity number (national or foreigner).
No information regarding the consultation of the RBE by authorities may be disclosed to the Relevant Entities or beneficial owners.
A Relevant Entity and its UBO have the right to request that their identity is not publicly disclosed under certain conditions:
- Motivation of the request: the requesting party must justify that it would be exposed to a risk, fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation or if it is a minor or otherwise incapable.
- Time limits: any limitations would be applicable for a period of three years (which period may be renewed).
A Relevant Entity or its beneficial owner must address such request for a restriction to the gestionnaire of the RBE. The LBR’s gestionnaire will temporarily restrict access to the information until a final decision is taken.
The Act will enter into force on the first day of the second month following its publication in the Luxembourg Official Journal (presumably on 1 February 2019). The Relevant Entities registered with the RCS have a six months period after the entry into force of the Act to comply with its provisions.
The penalties for non-compliance with the Act’s requirements, notably, with the obligation to set up an internal file, the provision of inexact or outdated information to competent authorities or the non-provision of the Relevant information, is criminally sanctioned with fines between EUR 1,250 to EUR 1,250,000. The penalties will apply to Relevant Entities only and not to their representatives.
Simmons & Simmons can assist you to be compliant with your new obligations. Our corporate team will provide you with a solution specifically adjusted to your needs and specific requirements.