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Governance: Beneficial ownership

To what extent do relevant laws, regulations, policies, and guidance provide a basis for collecting and publishing beneficial ownership data on companies?

Definitions and Identification

"A beneficial owner is a natural person who has the right to some share or enjoyment of a legal entity’s income or assets (ownership) or the right to direct or influence the entity’s activities (control). Ownership and control can be exerted either directly or indirectly." (Open Ownership, 2020)

A public register of the beneficial owners of companies extends beyond registration of the immediate shareholders or directors of a company to require identification and disclosure of the natural persons (individual named people) who exercise ultimate ownership or control—even if this ownership or control involves multiple intermediate companies or relationships. (For more information on beneficial ownership concepts, please review this primer.)

Beneficial ownership disclosure laws and frameworks are relatively new, and may have only been created in the last few years. Frameworks for beneficial ownership disclosure may cover all companies in a jurisdiction or may only cover specific sectors, such as extractives or companies involved in public procurement. Some frameworks do not require a central register, and some do not allow public access to the collected data.

If there is no framework in place, but your research identifies ongoing campaigns, advocacy, or legislative processes that could create such a framework, please make a note of this in the justification section.

Starting points

  • Sources:
  • Search:
    • European Union countries were required by the 5th Anti-Money Laundering Directive to introduce measures for central beneficial ownership registers. Search for information on transposition of AMLD5 into national legislation.
    • 'Beneficial ownership' + [country]—look for news of recent consultations, laws, or debates. Often corporate service firms will report on new regulations or frameworks being introduced for a given country.
  • Consult:
    • Company transparency advocates (e.g., Transparency International chapters).
    • Company registration agents.

What to look for?

Look for evidence that can answer the following questions:

  • Is there a current or planned requirement for companies to disclose their beneficial ownership to authorities, and will some or all of this information be made available to the public?
  • Does the framework clearly define the types of entity that must report their beneficial ownership? Does it cover both ownership and control held directly or indirectly, including through informal agreements or financial instruments?
  • Does the framework cover both ownership (e.g., shares, rights to profit) and control (e.g., voting rights, other influence)?
  • Does the framework include exemptions for public disclosure of the identity of natural persons? Are any such exemptions clear and limited?
  • Does a company declaring their beneficial ownership only have to do this once, or is there a process set out in the framework for regular updates? (E.g., when ownership changes, or through annual reporting)
  • Does the framework seek to ensure the quality of the data? For example, are any bodies empowered to ensure accurate and timely data? Is a verification process required?
  • Does the framework cover the majority of limited companies in the country or only a limited selection? (E.g., only companies operating in a single sector or in a single sub-national jurisdiction/state)?

National and sub-national considerations

Where company registration is a sub-national responsibility, beneficial ownership disclosure may also take place sub-nationally. If you identify a sub-national unit with a stronger frameworks than any national framework that might exist (or not), assess this and choose the appropriate answer to the "How widely do these laws, regulations, policies, or guidance apply?" question.

Show/hide supporting questions

Existence

  • Are there laws, policies, or regulations requiring collection or publication of this information in any form?

    • No.
    • They are being drafted, or are not yet implemented.
      Supporting questions: Please provide brief details.
    • They exist and are operational.
      Supporting questions: Please provide brief details.

  • Do relevant laws, policies, regulations, or guidance discuss the publication of open data?

    • There is no mention of data or the publication of data in relevant laws, policies, or guidance.
    • Requirements to publish data are set out in non-binding policy or guidance.
      Supporting questions: Please provide a URL to the most relevant legislation, policy, or guidance.
    • Requirements to publish data are set out in binding policy, regulations, or law.
      Supporting questions: Please provide a URL to the most relevant legislation, policy, or guidance.
    • Requirements to publish this information as open data are set out in binding policy, regulations, or law.
      Supporting questions: Please provide a URL to the most relevant legislation, policy, or guidance.

Elements

  • Provisions for definitions, kinds, and fields:

  • Definitions comprehensively cover ownership. (No, Partially, Yes) Answer 'Partially' if only direct ownership is covered. Answer 'Yes' if definitions require disclosure interests that are held indirectly as well as directly.

    Supporting questions (conditional)

    If Partially or Yes: Please indicate which section of the framework refers to this issue.

    If Partially or Yes: If the framework sets a threshold below which a share of ownership does not need to be disclosed, please provide it here (e.g., 25%).

  • Definitions cover control. (No, Partially, Yes) Answer 'Partially' if the definition only specifies a limited set of forms of control. Answer 'Yes' if definitions have a provision to capture 'other significant methods of control' beyond those explicitly listed in order to limit loopholes.

    Supporting questions (conditional)

    If Partially or Yes: Please indicate which section of the framework refers to this issue.

    If Partially or Yes: If the framework sets a threshold below which a share of control does not need to be disclosed, please provide it here (e.g., 25%).

  • Rules or processes exist to protect certain natural persons who are beneficial owners from having their data published. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially: Please indicate which section of the framework refers to this issue and explain your 'Partially' response.

    If Yes: Please indicate which section of the framework refers to this issue.

  • Provisions for data quality:

  • The framework requires a verification process. (No, Partially, Yes) There are many different kinds of verification processes. In some cases, data is required from multiple parties engaged in an activity and that data is then cross-verified. In others, a dedicated agency or official has the authority to conduct audits, engaging with other agencies or external parties to verify information received.

    Supporting questions (conditional)

    If Partially: Please briefly explain the verification process used, and which parts of collected data the framework requires to be verified and which parts it does not.

    If Yes: Please briefly explain the verification process used.

  • The rules/guidance empower an agency or official to ensure the accurate and timely collection and publication of required data. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially: Please indicate which section of the framework refers to this issue and explain your 'Partially' response.

    If Yes: Please indicate which section of the framework refers to this issue.

  • Provisions for openness, timing, and structure:

  • The rules/guidance require beneficial ownership data to be collected in a central register or database. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially: Please indicate which section of the framework refers to this issue and explain your 'Partially' response.

    If Yes: Please indicate which section of the framework refers to this issue.

  • The rules/guidance require that data is regularly updated. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially: Please indicate which section of the framework refers to this issue and explain your 'Partially' response.

    If Yes: Please indicate which section of the framework refers to this issue.

  • The rules/guidance support the collection of structured data. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially: Please indicate which section of the framework refers to this issue and explain your 'Partially' response.

    If Yes: Please indicate which section of the framework refers to this issue.

Extent

  • How widely do these laws, regulations, policies, or guidance apply?
    • They cover a limited number of localities or companies (e.g., only companies operating in a single sector or in a single sub-national jurisdiction/state).
      Supporting questions: Please briefly describe limits on coverage (e.g., which locality, type of company, or context for registration).
    • They cover, or are representative of those covering, many localities or companies.
      Supporting questions: Please briefly describe limits on coverage (e.g., which locality, type of company, or context for registration).
    • They cover the majority of limited companies in the country.
      Supporting questions: Please briefly describe limits on coverage (e.g., which locality, type of company, or context for registration).

Beneficial ownership data is valuable for a wide range of use cases, including:

  • Supporting anti-corruption and anti–money laundering investigations;
  • Enabling business intelligence and corporate due diligence;
  • Supporting cross-border and wealth taxation;
  • Governance of extractive industries and other high-risk sectors.

Lord (2019) describes how, over the last decade, three issues have come together to support a push for improved corporate data sharing, and in particular, better collection and sharing of data on beneficial owners: the 2008 financial crisis brought into relief the “dangers of uncertain information and unknown actors in financial markets”; a 2011 World Bank report on the abuse of anonymous companies; and international taxation and anti-money laundering reforms. These have all highlighted the need for interchangeable data not only on firms, but also on their ownership structures and the natural persons behind them.

Within the corporate information landscape, the concept of beneficial ownership has rapidly gained traction. Increasingly, countries require companies to disclose the identities of the individuals who hold ultimate ownership or control over legal entities, cutting through layers of shell corporations and other complex arrangements (Low and Kiepe 2020; Russell-Prywata 2020).

Some countries have responded to new requirements for beneficial ownership disclosure by updating existing corporate registers; others have developed parallel beneficial ownership registers or disclosure regimes (Financial Accountability Task Force/OECD 2019). Virtually all of the legal and regulatory frameworks for beneficial ownership transparency will have originated in an era in which administrations should be aware of the potential value of structured data. Consequently, tracking the extent to which these frameworks—and their related datasets—explicitly incorporate awareness of data can offer important insights into the degree to which countries are integrating a data-aware approach into new regulatory activities.

This indicator pairs with a related availability indicator to compare frameworks and actual practice.