From 23 May 2017 companies must register information about their ultimate personal owners (”beneficial owners”). The deadline for registration of beneficial owners is 1 December 2017. Registration can be made from now on.
Registration of beneficial owners is a supplement to the existing rules on registration of ownership in the company’s register of shareholders and the Public Register of Shareholders in the IT system of the Danish Business Authority on www.virk.dk. The purpose is to increase transparency regarding the beneficial ownership structure of Danish companies in order to ensure that Danish companies are not used for tax fraud and other financial crime – including money laundering.
We anticipate that identification of the beneficial owners in certain companies may prove to be complicated, and consequently we recommend that our clients start identifying and registering their beneficial owners now.
Which companies must make a registration?
The following companies are required to register their beneficial owners:
- Limited companies (“A/S” (public limited company), “P/S” (partnership company), “ApS” (private limited company) and “IVS” (entrepreneurial company)
- Personal companies (“K/S” (limited partnership) and “I/S” (partnership)
- Commercial and private foundations
- Financial services companies
- Companies with limited liability (“AMBA”, “FMBA”, “SMBA”)
- European business forms (SE, SCE, EØFG)
Listed companies, one-man businesses, branch offices and employee investment companies are not comprised by the rules.
Who are the beneficial owners?
According to legislation a beneficial owner is defined as a natural person, who ultimately, directly or indirectly, owns or controls a sufficient part of the shares or voting rights or who exercises control through other means. The act does not determine how large a percentage “a sufficient part” constitutes.
Beneficial ownership is indicated if the natural person owns or controls approx. 25 % of the company’s shares or voting rights.
However, you may also be regarded as a beneficial owner if the shareholding or voting rights are less than 25 %. This may be the case e.g. if you own 25 % of the capital, but still have a right to appoint members for the board of directors.
Beneficial ownership can be linked to both shareholdings, voting rights or be exercised through other means, for example through the articles of associations, shareholders’ agreements or share pledge agreements. If a shareholders’ agreement has been entered into regarding the company, it will often be necessary for the company to review the shareholders’ agreement in order to establish the distribution of rights regarding the company.
Beneficial ownership may be direct or indirect through the natural person’s shareholding or voting rights in one or more holding companies.
Legal entities, such as companies and foundations, can never be beneficial owners. If there are no beneficial owners, or the beneficial owners cannot be defined, the registered members of the company’s executive board must be registered as beneficial owners in the IT system of the Danish Business Authority.
Which information is required for registration?
Companies are required to obtain information on the company’s beneficial owners and the rights of the beneficial owners and on this basis make a specific assessment of who the company’s beneficial owners are.
The company is required to register the following information regarding its beneficial owners:
- Name
- CPR no. (civil registration number)
- For persons without a CPR number passport number or information about date of birth and citizenship at the time of birth and a copy of passport or ID card must be obtained.
- Nationality
- Address and country of residence
- Information regarding the beneficial owners’ rights in the company
If shares are owned through a chain of controlled companies, the ownership chain must also be registered.
When must the information about beneficial owners be registered?
The company is required to register information about beneficial owners as soon as possible after the company has become aware that a person has become a beneficial owner and after any amendment of the registered information.
Information about beneficial owners and the rights of the beneficial owners must be registered on VIRK/Indberet.
For how long must information about beneficial owners be maintained?
Companies must maintain information about its beneficial owners for five years after the end of the beneficial ownership. Companies must further maintain information on any attempted identification of beneficial owners for five years after the identification sequence. Public authorities, including the Public Prosecutor for Serious Economic and International Crime, are entitled to request that the information is handed over.
Guidelines from the Danish Business Authority
The Danish Business authority has published guidelines regarding the registration of beneficial owners. You can read about registration of beneficial owners in the guidelines (in Danish): https://indberet.virk.dk/myndigheder/stat/ERST/Det_Offentlige_Ejerregister
For additional information and advice please contact
Henriette la Cour, Attorney-at-law/hlc@nrlaw.dk
Karin Absalonsen, Attorney-at-law/kab@nrlaw.dk
Ida Hauge Thaning, Attorney-at-law/iht@nrlaw.dk
This newsletter cannot replace legal counselling. Nyborg & Rørdam Law Firm accepts no liability for damage or loss directly or indirectly attributable to the use of the newsletter. This applies regardless of whether such damage or loss results from misinformation in the newsletter or any other circumstances related to the newsletter.
