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.
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
This reporting obligation also applies to existing companies who 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 within the given deadline and re-submitted annually along with the Company's annual return. 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.
Entities that are required to comply with such obligation are required to maintain an internal database with the following information on each beneficial owner:
- Date of Birth.
- 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.
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.