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Governance: Beneficial ownership of companies

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

Definitions and Identification

A beneficial owner is a natural person who has the right to some share or enjoyment of a corporate vehicle’s income or assets, or the right to direct or influence the entity’s activities. An individual can own control, or benefit from a corporate vehicle either directly or indirectly. (Open Ownership)

Legally, both humans (natural persons) and companies (legal persons) can own, control, or benefit from companies. Sometimes, for purposes such as corruption, crime, or tax evasion, a human will seek to hide their ownership or control by using corporate vehicles like shell companies to obscure their identity. Beneficial owners are thus the individual human beings who ultimately own, wield control, or benefit, whether that’s openly or through corporate vehicles.

The term “beneficial owner” can seem confusing. Different countries and languages have their own variations; sometimes, the same jurisdiction will use multiple terms. For example:

  • Bolivia: beneficiario final (final beneficiary)

  • Brazil: beneficiário efetivo (effective beneficiary)

  • Brunei: controllers

  • Canada: individual with significant control

  • Chile: beneficiario efectivo (effective beneficiary), beneficiario final (final beneficiary)

  • Colombia: beneficiario final (final beneficiary)

  • Czech Republic: skutečných majitelů (real owners)

  • Denmark: reelle ejer (real owner)

  • Ecuador: beneficiario final (final beneficiary)

  • France: bénéficiaires effectifs (effective beneficiary)

  • Gibraltar: ultimate beneficiary

  • Iceland: raunverulegur eigandi (actual owner)

  • Luxembourg: bénéficiaires effectifs (effective beneficiary)

  • Macedonia: ultimate beneficial owner

  • Malta: ultimate beneficial owner

  • Mexico: beneficiario real (real beneficiary), beneficiario controlador (controlling beneficiary)

  • Morocco: bénéficiaires effectifs (effective beneficiary)

  • Netherlands: ultimate beneficial owner

  • Nigeria: person of significant control

  • Norway: reell rettshavar (real right holder)

  • Panama: beneficiario real (real beneficiary)

  • Paraguay: beneficiario final (final beneficiary)

  • Peru: beneficiario final (final beneficiary)

  • Portugal: beneficiário efetivo (effective beneficiary)

  • Romania: beneficiarilor reali (real beneficiary)

  • Singapore: controllers

  • Spain: beneficiario ultimo (ultimate beneficiary)

  • Sweden: verklig huvudman (real principal)

  • UK: person of significant control

  • Venezuela: beneficiario controlador (controlling beneficiary)

Most important is the substantive concept:  the de facto power of real, living humans over a company.

It’s important to recognize that the focus of this indicator is on beneficial ownership, rather than legal ownership, shareholders, or directors. In most countries, information on the legal ownership (shareholders) and day-to-day control (directors) of a company has long been available. However, because individuals could often stay anonymous—for example, by linking companies that own each other across jurisdictions with different disclosure requirements—countries have started to legislate separately for beneficial ownership registers.

A  register of the beneficial owners of companies thus extends beyond registration of the immediate legal owners, shareholders, or directors of a company to require identification and disclosure of the natural persons (individual, named human beings) who exercise ultimate ownership or control or derive economic benefit—even if this ownership, control, or benefiting involves multiple intermediate companies or relationships.

Sometimes frameworks do not require a centralized register at all; instead, companies may be required to maintain their own registers without any more centralized disclosure. This indicator prioritizes disclosure. Disclosure doesn’t necessarily mean unfettered public access: sometimes frameworks establish a central register—or other unified access point—that law enforcement or other designated entities can access, but the general public cannot.

Examples

  • In Ghana, the Companies Act of 2019 (Act 992) defines a beneficial owner to include direct and indirect ownership and control, as well as receiving substantial economic benefit (Section 383). The Act also includes a protection regime (Section 47) and states that information must be updated within 28 days of changes and confirmed to be correct on an annual basis.

  • Austria’s Beneficial Owners Register Act, which took effect in 2018, authorizes the registrar to automatically cross-check beneficial ownership information with data held in other state databases. The Act also mandates the registrar to perform risk-based supervision of its records, including auditing a random sample of higher-risk corporate vehicles. Further, the registrar is empowered to collaborate with the tax agency to apply financial sanctions for non-compliance.

  • Armenia, which previously had limited sector-specific beneficial ownership registers, in 2021 passed legislation requiring disclosures for the full economy from early 2023. The law mandates that information in the unified state register be made publicly available, with specific exceptions.

Beneficial ownership disclosure laws and frameworks are relatively new, and may have only been created in the last few years. Early frameworks for beneficial ownership disclosure were often sector-specific and limited—for example, covering extractives or companies involved in public procurement. Increasingly, however, such frameworks cover the entire economy. They may be broken down by type of corporate vehicle (e.g., there may be separate registers for companies, foundations, and trusts); some countries may also treat high-risk sectors differently. (For more information on beneficial ownership concepts, please review this primer.)

Typically, you will find legislation for beneficial ownership registers either in a dedicated section of company law or anti–money laundering legislation, or in standalone legislation about beneficial ownership. There may also be an act with “beneficial ownership” (or the appropriate term in your country or language) in its name that legislates such changes to company law and/or anti–money laundering law. However, bear in mind: company law also covers information about legal ownership—so please check carefully to make sure you’re looking at beneficial ownership.

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.

Note: This indicator pairs with a related indicator that assesses availability of beneficial ownership data in order to compare frameworks and actual practice. While completing each one, you will likely discover further information that will help answer the sub-questions of the other, so it is suggested that you work on the pair together.

Starting points

  • Sources:

  • Search:

    • European Union countries were required by the 4th Anti-Money Laundering Directive to introduce measures for central beneficial ownership registers. Search for information on transposition of AMLD4 into national legislation.

    • 'Beneficial ownership' + [country], and ‘beneficial ownership register’ + [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.

    • Check the terminology list in the definitions and identification section for other terms that might also make relevant search terms in your country and language. Note: the terminology examples provided are not necessarily the only terms in use in a 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 it also cover other forms of deriving substantial or significant economic benefit from companies?

  • 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)?

Show/hide supporting questions

Existence

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

    • No.
    • They are being drafted, or are not yet implemented.
      Supporting questions: Please provide brief details.If the framework exists only in draft form, please provide the date of any relevant drafts.Please provide a URL(s) for where evidence can be found.
    • They exist and are operational.
      Supporting questions: Please provide brief details.Please provide a URL(s) for where evidence can be found.

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

    • No.
    • They are being drafted, or are not yet implemented.
      Supporting questions: Please provide brief details.If the framework exists only in draft form, please provide the date of any relevant drafts.Please provide a URL(s) for where evidence can be found.
    • They exist and are operational.
      Supporting questions: Please provide brief details.Please provide a URL(s) for where evidence can be found.

  • Extent of existence:

  • How comprehensive, in terms of jurisdiction, is the coverage of the framework assessed for this question? (The framework covers one or more localities, but there are many other localities without such a framework, or with a framework of a lesser quality., The framework covers one or more localities and is representative of the kind of frameworks that can be found for all, or most, localities., The framework provides national coverage.)

    Supporting questions (conditional)

    If The framework covers one or more localities, but there are many other localities without such a framework, or with a framework of a lesser quality. or The framework covers one or more localities and is representative of the kind of frameworks that can be found for all, or most, localities.: Which locality or localities does this framework cover?

    If The framework covers one or more localities, but there are many other localities without such a framework, or with a framework of a lesser quality. or The framework covers one or more localities and is representative of the kind of frameworks that can be found for all, or most, localities.: Please explain your response.

    If The framework covers one or more localities, but there are many other localities without such a framework, or with a framework of a lesser quality. or The framework covers one or more localities and is representative of the kind of frameworks that can be found for all, or most, localities.: Please provide supporting URL(s) as necessary.

  • How comprehensive, in terms of sectors and types of companies, is this framework? (The framework covers a limited number of companies (e.g., only companies operating in a single sector or only a certain type of company)., The framework covers, or is representative of frameworks covering, many companies but there are many others not covered (e.g., in terms of sectors or types of companies)., The framework covers the majority of companies in the country.)

    Supporting questions (conditional)

    If The framework covers a limited number of companies (e.g., only companies operating in a single sector or only a certain type of company). or The framework covers, or is representative of frameworks covering, many companies but there are many others not covered (e.g., in terms of sectors or types of companies). or The framework covers the majority of companies in the country.: Please describe limits on coverage (e.g., which type of company, sector, or other context for registration).

  • Existence summary:

  • Please summarize your answers to the preceding existence sub-questions, including the extent of existence. [Open Text] Drawing on the research you have conducted and the evidence you have gathered for this section, describe what you have found (or not found) when answering the existence sub-questions for this indicator.

    Supporting questions

    Please provide the URL(s) for the evidence that supports the summary provided.

Elements

  • Provisions for definitions, kinds, and fields:

  • Definitions cover ownership. (No, Partially, Yes) Answer “Partially” if the definition doesn’t treat ownership as separate from control; for example, if it only specifies “controlling ownership.”

    Supporting questions (conditional)

    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%).

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

  • 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: 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%).

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

  • Definitions cover “benefiting from.” (No, Partially, Yes) Answer “Partially” if the definition only specifies material benefits (e.g., dividends). Answer “Yes” if definitions specify both material and immaterial (e.g., enjoyment of assets) benefits.

    Supporting questions (conditional)

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

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

  • Rules or processes exist to protect certain natural persons who are beneficial owners from having some or all of their data published. (No, Partially, Yes) Typically, such protections will apply to people who face disproportionate risk; for example, related to stalking. Answer “Partially” if relevant protections exist but have obvious flaws; for example, if a victim of stalking who runs a business out of their home wouldn’t be protected, but a company employee would.

    Supporting questions (conditional)

    If Partially: Please explain your “Partially” response.

    If Partially or 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. Some processes are automated, some involve direct human review, some combine the two. For example, in some cases, data is required from multiple parties engaged in an activity and that data is then cross-verified automatically. 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 or Yes: Please briefly explain the verification process used.

    If Partially: Please explain your “Partially” response, including which parts of the collected data the framework requires to be verified and which parts it does not.

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

  • The framework empowers an agency or official to ensure the accurate and timely collection and publication of required data. (No, Partially, Yes) For example, a framework might establish or resource offices for data verification, grant an agency sanction powers for noncompliance, etc.

    Supporting questions (conditional)

    If Partially: Please explain your “Partially” response.

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

  • Provisions for collection and access:

  • The framework supports the digital collection of data. (No, Partially, Yes) For example, entities submitting information may be required to use digital forms.

    Supporting questions (conditional)

    If Partially: Please explain your “Partially” response.

    If Partially or Yes: Does the framework support the collection of structured data? Please explain your response.

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

  • The framework requires that data is regularly updated. (No, Partially, Yes) For example, a framework may establish a specific collection and publication schedule relevant to its intended use.

    Supporting questions (conditional)

    If Partially: Please explain your “Partially” response.

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

  • The framework requires beneficial ownership data to be collected in a central register or database. (No, Partially, Yes) Note that such a unified access point may not provide public access, but rather may be accessible only to groups with a legitimate interest, such as law enforcement or journalists.

    Supporting questions (conditional)

    If Partially: Please explain your “Partially” response.

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

  • The framework discusses public access to the data. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially: Please explain your “Partially” response.

    If Partially or Yes: Does the framework support the publication of open data? Please explain your response.

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

  • Elements summary:

  • Please summarize your answers to the preceding element sub-questions. [Open Text] Drawing on the research you have conducted and the evidence you have gathered for this section, describe what you have found (or not found) when answering the element sub-questions for this indicator.

    Supporting questions

    Please provide the URL(s) for the evidence that supports the summary provided.

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 preceding decade, three issues came 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 or derive economic benefit from 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 dedicated beneficial ownership registers or disclosure regimes (Financial Action 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.