The many interconnected aspects around the beneficial owner

The registration of the person identified as “beneficial owner” in a proper section of the companies’ register is not a mere short-term fulfilment, but it rather implies interconnected and operating aspects.

Both articles in this issue of TopHic point out specific technical aspects.

In this article, we would like to focus on the fact that the identification of the beneficial owner and the registration of the same in a proper section of the Companies’ register is not a newly introduced provision, but it rather completes a process which started some years ago.

This means that the regulation on beneficial owners has been already in force in our legal system and companies are already aware of the relevant disclosure obligations. Therefore, it is necessary to coordinate with former fulfilments before proceeding with the registration of the beneficial owner with the Companies’ Register.

The regulation on beneficial owners derives from Legislative Decree no. 231 of 2007, known as “anti-money laundering” law.

However, some specifications need to be made. 

The beneficial owner is the individual who holds a share higher than 25% in the capital of companies, private legal persons, trusts producing legal effects being relevant for tax purposes, and, more generally, of entities (art. 3 of Ministerial Decree no. 55/2002). In other words, it is the person holding “control on management”.

As already mentioned, there are already some specific situations in which entities are obliged to declare their beneficial owner: the most frequent one is that requiring entities to notify banks and credit institutions the person qualified as beneficial owner. The same obligation is valid in case of advisory received from notaries, chartered accountants, lawyers, and other professionals that are required by law to identify the beneficial owner before starting their professional/commercial relationship.

Another important specification is that the law provides that the main effort to acquire data needed to identify the person qualified as beneficial owner is on the client who starts the relationship, who, as said above, needs to disclose the relevant information to banks, professionals, or other entities who are subject by law to the beneficial owner identification fulfilment. In other words, the main source of data and information needed to fulfil the obligations provided by law is represented by the declarations of clients under their personal liability (art. 22 of Legislative Decree no. 231/07).

Law specifically provides that should it not be possible to identify the beneficial owner, the legal representative of the concerned company or entity must be indicated.

Furthermore, the latest regulatory updates that have led to the obligation to register the beneficial owners in the proper section of the Companies’ register imply for directors of companies the requirement to obtain proper, accurate and updated information on the beneficial owners and to keep them for at least 5 years. The collection of such information clearly give rise to the subsequent registration of the person identified as beneficial owner with the proper section of the Companies’ register.

One last aspect we would like to specify regards the case in which the beneficial owner is on top of a participating chain of related companies, which is usually the case of groups. In such cases, it is necessary to reach the top (e.g. in case the identification is on the last subsidiary at the bottom of the chain) and there is a doubt on whether the >25% share is to be calculated by dividing the share percentage at any level of the chain starting from the ultimate subsidiary up do the beneficial owner, or by only considering the >25% share, where present, without any reducing calculation; The prevailing opinion is that the >25% share should be calculated without any reduction and by tracing the beneficial owner “step by step”, checking for the presence of a share higher than 25% at each step of the group, from the bottom to the top.

As it can be understood, the issue is quite complicated and involves corporate law, tax, as well as other principles, thus requiring a careful coordination.

In fact, the obligation to disclose information on the beneficial owner is provided for the first time (in some cases) starting from tax returns relevant to year 2022, to be filed within November 2023.

In compliance with the provisions of EU regulations for recovery and resilience to safeguard EU financial interests, information is required to identify the beneficial owners of recipients of funds, in compliance with the no double financing rule. Specifically, data on beneficial owners of funds must be indicated in a proper section of the tax return – the tax authorities specify that the beneficial owner is meant as the person qualified as such under the anti-money laundering regulation.

Therefore, a coordination between the corporate fulfilment relevant to the registration of the beneficial owner in the Companies’ register and the tax fulfilment concerning the indication of the same beneficial owner in the tax return is required.

Moreover, the registration of the beneficial owner in the Companies’ register must coordinate with the disclosure of data on the beneficial owner to credit institutions, banks, and professional advisors. This implies that these subjects will need to ascertain the correspondence between the beneficial owner declared at the beginning of the financial and/or professional relationship and the beneficial owner indicated in the proper section of the Companies’ register.

Lastly, the registration of the beneficial owner with the Companies’ register should also coordinate with corporate operating fulfilments. Specifically, the law provides that, starting from the registration of the beneficial owner in the Companies’ register, the same beneficial owner must also be recorded in the minutes of shareholders’ meetings (and also declared at the beginning of the meeting), since any possible irregularity makes it impossible to exercise the voting right and to contest resolutions under art. 2377 of the Italian Civil Code.

In the light of the above, is clear that the new fulfilment is not a mere registration with the Companies’ register, but rather a more complex requirement involving corporate, tax, financial, and professional aspects, besides liability issues (related to the disclosure of required information by the concerned persons and the retention of information by directors) that need to be carefully coordinated.