Beneficial Ownership Registers

On 23 October 2020, Mishcon de Reya LLP filed a claim with the Luxembourg courts to challenge a decision taken by the Luxembourg Business Register (LBR) with respect to making clients' private details public. The case was covered by local media.

Following a number of appeals, including from Mishcon de Reya LLP, on 13 November 2020 the Luxembourg courts referred the question relating to the validity of public registers of beneficial ownership to the Court of Justice of the European Union (CJEU).

On 21 January 2021, the EU's Advocate General published his opinion, arguing that beneficial ownership information 'is not particularly sensitive', so that its publication in public registers 'does not lead to [a] substantial limitation of fundamental rights.'

What we say

In addition to filing appeals, we have been active in spearheading a discussion on the repercussions of public registers of beneficial information for compliant individuals, including a reasoned article on the Advocate General's opinion. In 2018, Mishcon de Reya published the report, The Big Debate: Transparency Versus Privacy, the findings of which have been critical in bringing these issues to light.

What the experts say

Commenting on the new rules enabling public access to beneficial ownership data, the European Data Protection Supervisor concluded: "We see, in the way such solution is implemented, a lack of proportionality, with significant and unnecessary risks for the individual rights to privacy and data protection". In addition, internal EU documents show that the European Commission and the Council of the EU (which represents the Governments of EU Member States) were firmly opposed to making central registers available to the public at large.

What the rules say

Under rules introduced with the 5th EU Anti-Money Laundering Directive, EU Member States introduced central registers containing the personal details of any individual who fits the definition of 'beneficial owner' of companies established in the EU. The information includes the nature and extent of the relevant beneficial interest (e.g. '35% ownership', or 'trust beneficiary').

This information is accessible to authorities, financial intelligence units and the public at large. Under the 4th EU Money Laundering Directive, members of the public needed to demonstrate a 'legitimate interest' in the context of the fight against money laundering.

Whilst these rules were first introduced in the EU, beneficial ownership registers are slowly turning into a new gold standard. The UK's Crown Dependencies and Overseas Territories have announced the introduction of public registers of beneficial ownership, as has Canada. In the US, the framework for a central federal register of beneficial ownership was introduced in 2020 as part of the Corporate Transparency Act.

The UK introduced its own version of public registers in 2016. However, the UK registers focus on the concept of 'Controlling Person' as opposed to 'Beneficial Owner'. PSC registers are discussed here.

PSC registers apply to UK companies. In addition, the UK Government is considering the extension of the regime to foreign companies holding UK real estate, as discussed here. Please check our website for updates.

Articles

Correspondence

16 Sept 2024 to the EU following alarm raised by Luxembourg Law Society

This is the Fourth Letter to the EU highlighting concerns about the safety of new access rules introduced by the EU in response to the Sovim judgment.

Click here to view the letter.

2 Sept 2024 Letter to EU discussing the strange story of Pablo González

This letter discusses the implications of a recent news story for the provision of automatic access to information to whole sectors of the population in the light of the Sovim judgment.

Click here to view the letter.

22 Aug 2024 to French CNIL discussing the extent of unregulated access

The attached letter follows the CNIL's decision to order the French government to take public registers offline.

It discusses access to the registers by unregulated persons under the new rules.

Click here to view the English version.

Click here to view the French version.

18 Aug 2024 to EU re legislative process underpinning new rules

This letter to the EU raises concerns about the legality and quality of the legislative process that led to the enactment of wide access rules to beneficial ownership information held on central registers throughout the EU.

Click here to view the letter.

30 Apr 2024 to the EU Council re internal EU documents (Compromise Text)

This letter discusses a Holding Reply from the EU Council, following a formal request to access internal EU documents concerning the negotiations that led to the Compromise Text on the definition of 'legitimate interest' and the mechanism of accessing BO-Registers.

Click here to view the letter.

5 April 2024 – Third Letter to EU on Legitimate Interest (Compromise Text)

This letter to the European Commission, the European Council and the European Data Protection Supervisor (EDPS) contains a request of information in relation to the underlying documents connected to the Compromise Text adopted in response to the CJEU Sovim judgment (C-601/20). It also addresses the risk of abuses.

Click here to view the letter.

31 March 2024 – Second Letter to EU on Legitimate Interest (EU Compromise Text)

This letter to the European Commission, the European Council and the European Data Protection Supervisor (EDPS) discusses the recent approval of our GDPR complaint to the French data protection authority (CNIL) and discusses practical issues concerns concerning the scope and definitions of the Compromise Text.

Click here to view the letter.

9 March 2024 – Letter to EU on Legitimate Interest (EU Compromise Text)

This Letter to the European Commission, the European Council and the European Data Protection Supervisor (EDPS) discusses the compromise text on beneficial ownership published on 14 January 2024 and calls on EU institutions to consider the data protection implications of the proposed "access by default" mechanism for the fundamental rights of compliant beneficial owners.

Click here to view the letter.

21 Jul 2023 - GDPR complaint against France

This letter asks the French data protection authority to order a ban of the processing of personal data under the French public register of beneficial ownership following the French Finance Minister's refusal to implement the ECJ's judgment in the 'Sovim' case.

Click here to view the letter.

21 Jul 2023 - Infringement Proceedings against France

This letter asks the European Commission to start infringement proceedings against France for publicly defying the ECJ's judgment in the 'Sovim' case.

Click here to view the letter.

3 December 2022 Complaint to the EU Ombudsman

The complaint follows a protracted refusal by the European Commission to disclose a position document published in 2016 in which the Commission outlined its opposition to public register of beneficial ownership on legal grounds.

Click here to view the letter.

24 November 2022 letter to the CNPD and the EU

This letter refers to the judgment dated 22 November by which the CJEU declared public registers to be illegal. The letter asks the Luxembourg data protection authority and the EU to suspend data processing under the registers until the remaining outstanding issues have been resolved.

Click here to view the letter.

26 September 2022 to European Commission re internal EU document

This letter requests the European Commission to review a decision to deny the disclosure an additional internal document that shows that the European Commission and the European Council were firmly opposed to the idea of public registers of beneficial ownership.

Click here to view the letter.

10 July 2022 to European Court of Justice (additional 'amicus brief')

This letter sent in support of the claimant in the C-601/20 case discusses two internal documents that show that the European Commission and the European Council were firmly opposed to the idea of beneficial ownership, preferring a system under which members of civil society would need to show a 'legitimate interest' in order to access personal date relating to the 'beneficial owners' of companies established in the EU.

Click here to view the letter.

21 January 2022 to European Court of Justice ('amicus brief')

This letter sent in support of the claimant in the C-601/20 case considers a number of opinions issued by data protection experts in the EU and a number of EU Member States that were ignored in the opinion issued by the EU's Advocate General Giovanni Pitruzzella.

Click here to view the letter.