Legislative proposal regarding UBO register for trusts and FGRs – UPDATE

On 23 November 2021, the Dutch Senate adopted the Implementation Act on Registration of Ultimate Beneficial Owners of Trusts and Similar Legal Arrangements (link) (the ‘Implementation Act’. The Implementation Act regulates the implementation of the obligation to maintain and centrally register information about the ultimate beneficial owner (‘UBO’) of trusts and similar legal arrangements (the ‘Trust Register‘). This obligation stems from the Fourth (and Fifth) Anti-Money Laundering Directive (‘AMLD4‘ and ‘AMLD5‘). In the Netherlands, a fund for joint account (fonds voor gemene rekening, (‘FGR‘) is regarded as a ‘similar legal arrangement’.

In previous news releases we have: (i) we highlighted the most important consequences for investment funds structured as FGR (link); and (ii) discussed the consultation version of the Implementation decree on registration of beneficial owners of trusts and similar legal arrangements (link). The UBO definition was (and is) a hot topic for the fund practice. With the adoption of the Implementation Act, more clarity is created on this subject. Below we briefly discuss who will qualify as the UBO of a FGR, what information will be included in the public section of the Trust Register, and when the Implementation Act (and with it the Trust Register) will enter into force.

 

  1. UBOs of an FGR?

 

In any case, the following (legal) persons should – in sum- be considered as a UBO of an FGR:

  • The manager;
  • The legal title holder; and
  • All participants with an interest of at least 3%.

Ultimately, only natural persons can qualify as UBOs. In practice, this will mean that the UBOs of the manager and the legal title holder will (also) qualify as UBOs of an FGR.

It is worth noting that in cases where none of the participants has an economic interest of at least 3% in an FGR, the registration may be limited to a description of the group on whose behalf the FGR is primarily established or operates. This could, for example, be ‘unitholders in an AIF’.

 

  1. Information to be included in the Trust Register

 

The following information of a trust or FGR will become publicly available:

  • Name and type of trust/FGR;
  • Date and place of establishment; and
  • The purpose for which trust/FGR was created.

The following information of a UBO will become publicly available:

  • Name;
  • Month and year of birth;
  • Country of residence;
  • Nationality; and
  • Nature and size of economic interest (in ranges of probably 3%-25%, >25-50%, >50-75%, >75-100%).

 

  1. Entry into forc

 

The legislator has chosen a relatively short transitional period of three months. This means that market participants will have three months, after the Implementing Act enters into force, to collect the relevant information and submit it to the Chamber of Commerce.

It is expected that the Implementation Act will enter into force on 1 January 2022. This would mean that market participants have until 31 March 2022 to register.