The consequences of overdue registration
Any company, foundation or the like that is under an obligation to register its beneficial owner(s) but fails to meet this obligation may be fined. The level of the fines imposed is still not known.
Which entities must register their beneficial owners?
The obligation to register the beneficial owner applies to all Danish enterprises, including private limited companies (ApS), public limited companies (A/S), entrepreneurial companies (IVS), limited partnership companies (P/S), limited partnerships (K/S), partnerships (I/S), enterprises with limited liability (Amba, Fmba, Smba), commercial foundations, non-commercial foundations (charities, charitable trusts, trust funds and independent institutions), insurance companies, financial institutions, mortgage credit institutions, investment services companies, pensions funds, savings banks, cooperative savings banks, investment associations, etc.
Who are the beneficial owners?
The beneficial owners are defined as the natural persons who ultimately own or control a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interests in that entity or through control via other means.
Generally, ownership of a sufficient percentage corresponds to a person holding more than 25% of the shares or the voting rights in a legal entity.
A person may also be a beneficial owner if he or she controls the company or other legal entity through other means such as a shareholders' agreement, pledge agreement, the right to appoint members of management, the right to approve the annual report with regard to distribution of dividends, the right of veto or similar means of control. Consequently, it will often be necessary to go through such shareholders' agreements, articles of association or the like to identify the beneficial owners.
All reasonable efforts must be made to identify the relevant beneficial owners.
Once a legal entity has identified its beneficial owner(s), it is under an obligation to make sure that the information is registered in the IT systems of the Danish Business Authority, and thus made available to the public.
For more details about the rules, read our newsletter published in June 2017.