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

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.