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Lessons from the Sovim judgment: Crown Dependencies and British Overseas Territories stop introduction of public registers of beneficial ownership

Posted on 15 December 2023

On 13 December 2023, the Crown Dependencies of Jersey, Guernsey and the Isle of Man announced that they would not introduce Public BO-Registers. This development follows the British Virgin Island's similar announcement on 8 December 2023. 

The decisions are based on a significant 2022 ruling, in WM and Sovim SA v Luxembourg Business Registers, whereby the European Court of Justice (CJEU) struck down Public Registers of Beneficial Ownership following a number of appeals. 

Previously, the Crown Dependencies had announced their commitment to introduce Public BO-Registers, as did the UK's Overseas Territories, following indications from the UK Government that it would force the introduction of such registers through an Order in Council. 

Filippo Noseda, a Partner at Mishcon Private, has been leading on the Luxembourg appeals on behalf of clients of the firm. 

He commented: "The debate about public access to registers started in October 2013, when then UK Prime Minister David Cameron announced that rather than interconnected registers – an idea floated at a G8 meeting hosted by Mr Cameron in Northern Ireland – the UK would opt for fully public registers. The first such registers for UK companies, PSC Registers, were introduced in 2016, with an additional public register for foreign entities holding UK land (ROE Register) introduced 'at breakneck speed' following Russia's invasion of Ukraine in 2022. Following the Sovim judgment, the UK Government published a policy document in which it concluded that the PSC and RBO disclosure regimes were compatible with the European Convention on Human Rights.  

"The debate is unlikely to die out any time soon, and large sections of public society point at recent scandals – such as the Panama Papers, Paradise Papers and Pandora Papers – as a reason for having public registers. However, following the Sovim judgment and a more recent judgment from the European Court of Human Rights, it is important to recognise that fully public registers may expose compliant citizens who, for one reason or another own a stake in a UK company, to threats, abuse and even scams from criminals.  

"Nobody doubts the need to fight crime, but this cannot be done at the expense of the fundamental right to privacy and data protection of millions of compliant citizens. There are almost five million companies registered in the UK. Experts recognise that this issue is more nuanced than some campaigners are portraying. Data minimisation is not a bad principle to strive for with public records and the ruling does not automatically ban beneficial-owner registers; it restricts the public’s access to them in all cases. 

"One year on from the Sovim judgment, it is important to start a balanced debate about transparency versus privacy. This has been privately acknowledged by the UK Government in a letter to a Conservative Peer, in which it warned about the risks of a 'publish by default' model and the Government's concerns about risks of a legal challenge." 

Filippo's correspondence with the EU regarding Registers of Beneficial Ownership and Automatic Exchange of Information is available online. In 2018, Mishcon de Reya published the report, The Big Debate: Transparency Versus Privacy. Read here

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