On 01.08.2021, the new Transparency Financial Information Act on Money Laundering will come into force, which will also lead to far-reaching changes in the transparency register. In the future, all companies must enter their beneficial owners in the transparency register. The previous notification fiction based on entries in other registers no longer applies.
Here you will find the answers to the most important questions.
Is there a need for adjuDoes the change force me to act?
The transparency register is currently designed as a subsidiary register and is now to be transformed into a full register. In future, companies will no longer be able to rely on the fact that their beneficial owners can be found in other public registers (commercial, cooperative, partnership, association, or company registers). Instead, the company must in future actively disclose the beneficial owners to the transparency register. From now on, the companies themselves will bear the responsibility for ensuring the completeness, correctness, and topicality of the data.
Every company should take action out of self-interest alone: Current practice shows that high fines are imposed even for minor violations of existing registration obligations. In individual cases, the fine can amount to up to five million euros or ten percent of the company’s total turnover. In addition, infringing companies are publicly named on the homepage of the Federal Administrative Office according to the motto “naming & shaming”.
Who is the “beneficial owner” to be reported?
In principle, a beneficial owner is any natural person who directly or indirectly holds more than 25 percent of the capital shares or voting rights of a company or exercises control over the company in question in a comparable manner. If there is no such person at a company, foundation or association, the members of the board of directors or management are, in principle, so-called fictitious beneficial owners.
The transparency register is open to public inspection without need for a special reason. As before, beneficial owners have the option of applying to restrict access to the transparency register in order to protect their personal data. The prerequisite for the restriction is that the disclosure is contrary to the beneficial owner’s overriding interests meriting protection. Such a case may exist if the insight would expose the beneficial owner to the risk of falling victim to certain serious criminal offences.
Am I affected by the changes as a listed company?
Since transparency control via the stock exchange listing of a company has not proven itself in practice, the exemption option for listed companies has been removed. Listed companies and their subsidiaries are no longer exempt from the reporting obligation as of 01.08.2021 and must also enter their beneficial owners in the transparency register.
As a foreign company, do I also fall within the sAs a foreign company, do I also fall within the scope of application?
Foreign companies are already subject to the obligation to report to the transparency register in the event of a direct acquisition of a domestic property. In addition, as of 01.08.2021, foreign companies are also subject to the reporting obligation if shares in a company with domestic real estate are transferred to them. The same applies to the acquisition of shares in a company with domestic real estate by foreign trustees.
WhWhat extended information will have to be provided in the future?
The catalog has also been slightly expanded with regard to the data that must be reported. In addition to the first and last name, date of birth, place of residence, type and scope of the beneficial interest, the place of birth and all nationalities of the beneficial owner must henceforth be provided.
Are there transitional periods for the additional reporting requirements?
Depending on their legal form, companies that have not yet reported data to the transparency register due to the previously existing notification fiction or the discontinuation of the reporting obligation (in the case of listed companies) will be granted a transitional period allowing them to comply therewith:
- AG, SE and KGaA until 31.03.2022,
- GmbH, cooperative, European cooperative or partnership until 30.06.2022,
- in all other cases, in particular foundations and partnerships, by 31.12.2022.
The transitional periods only apply to the new reporting obligations and not to reports that should already have been submitted.
What recommendations for action exist in my case?
The renewed tightening of transparency requirements shows how seriously the issue of money laundering and terrorist financing is taken at national and EU level. The changeover to a full register primarily entails two points for companies:
1. insofar as the notification fiction previously applied, an independent notification is now necessary for an entry in the transparency register (taking into account the transition periods).
2. clear internal responsibilities and processes must be implemented for the future, which enable (continuous) identification of the respective beneficial owners.