Who really controls your company? Can you present this at your next general assembly as new regulations require?
Last year the Danish company law (Selskabsloven) was changed. The changes were based on EU regulation, and their goal was to make the fight against financial crime more efficient.
The changes contain more specific requirements for companies to identify, disclose, and document Beneficial Owners. On top of the new requirements, the Business Authority’s ability to punish or even terminate companies will be strengthened.
If your company has a yearly general assembly planned before summer, you should already be considering how to handle the changes.
A short overview of the requirements in the Danish company law §58a:
- Companies are legally obligated to collect information from beneficial owners (UBOs). The obligation includes owner voting rights.
- Owners of a company must provide the company with relevant information that will allow the company to determine the level of ownership and control that the person holds over the company.
- Companies are legally obligated to register beneficial owners in the public business register immediately after a company has become aware of a new beneficial owner. If there are no beneficial owners, then the senior management (the registered management — §10,1) will be seen as beneficial owners.
- At a minimum, companies are legally obligated to check at least once a year to see if there are changes to the registered beneficial owners. The result must be documented and presented for the body (normally the yearly general assembly) that approves the company’s annual report.
- Companies are legally obligated to store information and documentation collected from Beneficial Owners for five years after cessation of ownership.
- Companies are legally obligated to share information of the beneficial owners with relevant authorities on request.
The changes mean more work for companies, but it also gives companies a useful tool in that it adds legal requirements that Beneficial Owners provide information when companies request them.
Why this change in regulation?
Money launderers love to use a series of shell companies to hide the real people behind cash flows. The regulation changes will be an extra layer to strengthen the fight against Financial Crime by ensuring more transparency of who actually owns and control companies.
The changes set minimum standards for all companies and also set requirements for companies to share information about Beneficial Owners with the authorities.
We see an ongoing change to regulation to strengthen the fight against financial crime, and we will expect to see this trend continue going forward. Not just banks and other financial institutions are legally required to fight financial crime; companies are also increasingly being held responsible.
Most people will agree that this sort of transparency is a social good, but some corporate treasurers may throw up their hands at having to deal with yet another disclosure obligation. However, everybody should remember that this is not about being compliant; the end goal is to fight financial crime.
Not only in Denmark
The new regulation in Denmark is based on the EU 5th AML directive. This means that this is not only relevant to Danish companies. Similar regulations have been or will be implemented in all EU countries.
Companies are already obligated to register all UBO information in the official business registry — best known in Denmark as cvr.dk — as soon as the company becomes aware of it.
As a minimum, companies in Denmark (there are some smaller differences between countries) should collect the following information from their Beneficial Owners:
Domestic Beneficial Owners:
- Full name
- CPR number
- Owner % (direct, indirect, and total)
- Voting right % (direct, indirect, and total)
- Other rights (such as the right to veto — the reason for “self-identified UBO”)
- UBO start date
Foreign Beneficial Owners:
- Full name
- Address
- Country
- Personal ID number (passport number or National ID card number)
- Owner % (direct, indirect, and total)
- Voting right % (direct, indirect, and total)
- Other rights (e.g., right to veto — the reason for “self-identified UBO”)
- UBO start date
If companies do not receive the required information from a Beneficial Owner, it has to document that it has made reasonable attempts to get the information. This process must be documented for a minimum of five years.
UBO information must also be available to share with authorities if requested. And under paragraph 58c, which is also new, they must be able to disclose their UBO information to third parties undergoing a Know Your Customer (KYC) process.
Avallone can help
At Avallone, we are ready to help our customers document the process of identifying their UBOs and to map, collect, and document all Beneficial Owners.
The Avallone platform automatically identifies who has significant ownership or control percentage to constitute a UBO. This enables companies to use the Avallone platform to request the required information and documentation from the UBOs and other company officers.
Furthermore, the platform can create the documentation flow to make sure that companies have this information ready for their annual meeting and annual report.
The platform also secures that companies comply with the requirements for storing data, which must be kept for a minimum of five years after the UBO has ceased ownership.
WRITTEN BY
Avallone.io
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