On 1 November this year, the requirement for identification of beneficial owners will enter into force. The purpose of the new rules is for public authorities, AML(“anti-money-laundering”)-reporting entities and the general public to have better access to information about who actually controls companies in Norway. Below you will find an overview of what actions need to be taken now.
In order to prevent money laundering, terrorist financing and other crime, it is necessary to have sufficient access to information about the beneficial owners of legal persons and institutions.
In 2019, a law was passed on a Register of Beneficial Owners, which will partly enter into force on 1 November 2021. The Act entails that companies are obliged to provide information on who the company's beneficial owners are.
The technical solution for the register is currently not operational. The requirements are firstly to identify, document and store information about beneficial owners, so that the information can be provided to the authorities when needed. Thus, only parts of the law enter into force on 1 November.
The Act and the regulations set out the following requirements for those required to register:
- Identification of beneficial owners
- Obtain information about the beneficial owners
- Obtain and store information about the basis for the persons to be beneficial owners
- Obtain and store information about the size of ownership interests and the scope of voting rights the beneficial owners have
- Register the information obtained on, and the basis for the identification of, beneficial owners in the register (uncertain when this requirement enters into force) .
Provisions on injunctions, coercive fines and penalties are enacted for when information is not collected, stored or registered in accordance with the law.
For a more detailed overview of the new rules, we refer to this article from PwC. (Only available in Norwegian.)
What should you do now?
Firstly, you should check whether the company is affected by the new rules and considered to be subject to registration. As a starting point, the law applies for all legal persons, entities and associations that conduct business or are registered in Norway. The Act thus reaches widely and there are relatively few exceptions to the reporting obligation. Exceptions are granted for branches / Norwegian registered Foreign Enterprise (“NUF”) when the main enterprise abroad is subject to the obligation to register information on beneficial owners in another EEA state. Furthermore, exceptions have been granted for listed companies.
The person required to register must document the basis for the identification of the beneficial owners. A beneficial owner is a natural person who directly or indirectly owns more than 25% of the shares, or directly or indirectly controls more than 25% of the total number of votes in the legal person or association. If a person can directly or indirectly dismiss more than 50% of the company's board members or equivalent, or otherwise control the company, he or she will also be considered a beneficial owner.
Since the act enters into force in November, the work of identifying beneficial owners of the business should not be postponed. For smaller companies and associations, the identification should be straightforward, as the ownership is normally known. However, this can be a demanding exercise in more complex structures where the Norwegian company is part of an international group where beneficial owners at the top of the structure normally reside abroad. The law stipulates that the company must obtain information from any intermediate legal persons, entities and associations in order to be able to document the ownership. If the intermediate company is domiciled in an EU / EEA state, then normally these companies also have a corresponding duty to provide information.
A good tip is to check whether the company has recently provided information about beneficial owners in connection with legal or banking services e.g. in accordance with the requirements of the Money Laundering Act, as this can save you unnecessary work. Please note, however, that the definition of who is to be registered as beneficial owners is somewhat different in the Act on the Register of Beneficial Owners and in the Money Laundering Act. The difference concerns identification via close family members, as well as the approach to indirect control.
If there is no beneficial owner, or one is unable to identify the person, this must be substantiated and documented.
The person required to register must update the information if necessary. Furthermore, it is important that the company can document the ownership in a sufficient way. This may, for example, involve obtaining a founding document, articles of association, shareholder register information, etc. in order to be able to prove that the duty to investigate has been fulfilled.
The documentation must be stored properly and we recommend that it is made available to several people in the company for the ease of providing it to the authorities on request.
We regularly assist companies in identifying beneficial owners, as well as obtaining and systematizing documentation for this. If you need assistance in assessing whether your business sufficiently complies with the new rules, we are happy to help you.
Mitt navn er Erik Stenvik Granly og jeg jobber som advokat i PwC. Jeg ble uteksaminert som jurist fra Universitetet i Oslo i 2014. Jeg har erfaring fra Skatteetaten der jeg jobbet i to år etter fullført juristutdannelse. Min kjernekompetanse er innen nasjonal og internasjonal beskatning av bedrifter, og jeg har bred erfaring fra skatterådgivning for små og store offentlige og private foretak. Jeg jobber til daglig med skattemessige problemstillinger knyttet til bokettersyn, selskapsetableringer og rapporteringsforpliktelser i Norge, restruktureringer og egenkapitaltransaksjoner mv.
Erik works as a lawyer in the law firm PwC. He graduated from the University of Oslo in 2014. He has experience from the Norwegian Tax Administration where he worked for two years after completing his law education. Erik has his core competence in the national and international taxation of businesses, and he has extensive experience from tax advice for small and large public and private companies.
Jeg heter Lars Walby og jobber som advokat i Advokatfirmaet PwC.
Jeg jobber med bedriftsbeskatning nasjonalt og internasjonalt, og har jobbet med skatt siden 1999.
I hovedsak bistår jeg norske og internasjonale industrielle aktører med løpende skatterådgivning, i forbindelse med reorganiseringer, grenseoverskridende transaksjoner og etableringer, samt oppkjøps- og salgsstrukturering, herunder tax due diligence. Jeg har spesialkompetanse på særskatteregimet for vannkraftprodusenter og generasjonsskifter i aksjeselskaper.
Det er mye som skjer på skatteområdet for tiden, ikke minst internasjonalt. Vi jobber hardt for å holde oss oppdatert og deler gjerne erfaringene. Ta gjerne kontakt dersom du har spørsmål, kommentarer eller innspill til innleggene.
My main areas of expertise is national and international corporate taxation and reorganisations.
There is a lot going on at the tax area especially within the field of international taxation. We work hard to keep updated and we would like to share some of our experiences with you. Please feel free to contact me if you have any questions,comments or input to some of the articles.