Who Is a Beneficial Owner of a Company

/Who Is a Beneficial Owner of a Company

Who Is a Beneficial Owner of a Company

Under the U.S. Securities Exchange Act, a beneficial owner of a security includes any person who directly or indirectly holds or shares voting rights or investment powers. [2] [3] A beneficial owner is a person who enjoys the benefits of ownership even if ownership of one form of property is under another name. Gianni wrote in 2008 that in jurisdictions that allow it, beneficial owners can set up shell companies to be the rightful owners of their vessels,[11]:20 making it difficult, if not impossible, to know who the beneficial owner of the vessel is. The 2003 report stated that the beneficial owner of a ship is legally and financially responsible for the ship and its activities. [15] For a number of reasons, some of which are justified and others suspicious, shipowners who want to hide their assets can use a number of strategies to achieve this objective. The identified beneficial owners must be natural persons, which means that the client may have to search through multiple layers of legal entities to determine whether a real person owns 25% of the legal entity. There must not be a person who owns 25% or more of the legal entity, so no beneficial owner can be listed. Since the bank`s requirement only covers those who own at least 25% of the legal entity, no more than four people are listed as beneficial owners. Although many have been used legally, it appears that some beneficial owners have been hidden for harmful or illegal reasons. The Canadian Department of Finance Canada (CF) Discussion Paper – February 2018 entitled “Review of Canada`s Anti-Money Laundering and Anti-Terrorist Financing Regime”[18] was prepared for the Parliamentary Legislative Review of proceeds of crime (money laundering) and the Terrorist Financing Act (LTCA), the federal legal framework governing the fight against money laundering and the FCA.

[18] The February document called for “stakeholder views on improving Canada`s anti-money laundering and anti-terrorist financing regime. FC called for contributions to “transparency and corporate engagement mechanisms” that would “improve timely access to beneficial ownership information by authorities while facilitating operations in Canada.” [19] The resulting November 2018 report of the Standing Committee on Finance recommended the creation of a “Pan-Canadian Beneficial Ownership Registry for all legal entities and entities, including trusts, that have significant control, defined as those that hold at least 25% of the total ownership or voting rights” that “includes details such as names, addresses, dates of birth and nationalities of persons with significant control would be.” While the registry “should not be publicly available,” it could be accessed “by certain law enforcement agencies,” the Canada Revenue Agency, the Canada Border Services Agency, FINTRAC, “authorized helplines, and other public authorities.” [20]:1 The OECD Report 2003 indicates that in some jurisdictions where the identity of shareholders must be declared, there may be a loophole where the beneficial owner may appoint a candidate as a shareholder and that nominee cannot be legally compelled to disclose the identity of the beneficial owner. [13] Whenever a new or existing business customer opens an account, credit or other service, beneficial ownership information must be obtained. The Bank may require that the information be regularly updated outside the account opening process as part of the Bank`s customer due diligence measures. The 2011 OECD report “Board Practices: Incentives and Governing Risks” cited both the 2009 Financial Information Board (CRF) Review and the Walker Review of “Governance of Banks and Other Financial Institutions”, which “revealed that there were significant concerns about the amount and effectiveness of engagement between institutional investors and the boards of directors of listed companies” and that there was a “need for better engagement between fund managers acting on behalf of their clients, as beneficial owners, and the governing bodies of investment companies.” At the time, these reports “recommended that the RCF ratify a stewardship code based on the Institutional Investor Responsibilities Code prepared by the Institutional Shareholders` Committee. [16] According to the December 2003 OECD report “Ship Ownership and Control”, corporate structures are often multi-tiered, spread across many jurisdictions, making beneficial ownership “almost impenetrable” for law enforcement and tax officials. The standard (BODS) provides a specification for modelling and publishing information on beneficial ownership and control of enterprises. It was created by OpenOwnership and is provided under an open license for reuse. OpenOwnership supports the development of the standard; However, the Standard retains its own independent governance by the working group of international experts. [6] If a custodian bank holds shares in a mutual fund, or if a dealer holds securities with street names, the true owner is the beneficial owner, although the bank or broker retains ownership for security and convenience.

In most countries, real estate registers display the names of owners. In some cases, a beneficial owner may not want their name to appear in public folders. .