Structure chart

Back to basics: What is a UBO?

Who truly has control within an organisation? That is what the concept of the UBO is all about. The abbreviation stands for Ultimate Beneficial Owner. A UBO is a natural person who ultimately owns or controls an organisation, such as a company, foundation or association. In most cases, this concerns someone who directly or indirectly holds more than 25% of the shares or voting rights.

There may be more than one UBO. When identifying a UBO, it is not only the legal owner who plays an important role. Often, multiple layers of management must be analysed to determine the ultimate beneficial owner(s). Ownership is not always visible. Sometimes, an individual exercises influence through contracts or arrangements without being the formal owner on paper.

In certain situations, no clear UBO can be identified. In that case, so-called pseudo-UBOs are designated: members of the statutory management board who formally bear ultimate responsibility.

Ownership and control: what is the difference?

Ownership interest: to who holds shares or capital. Anyone holding more than 25% will generally qualify as a UBO.

Beneficial control concerns influence: who determines the organisation’s direction. It relates to the influence a person exercises over decisions and policy within the organisation. This may exist independently of formal ownership.

Both are important. Regulations require you to establish not only who owns the organisation on paper, but also who effectively controls it in practice.

How do I gain insight into the structure chart?

Insight begins with an organisational chart. This provides a clear overview of the structure and allows you to quickly determine who the UBOs are. It maps out how the organisation is structured, showing who holds shares, which intermediary layers exist, and who ultimately pulls the strings. This enables you to determine who should be designated as a UBO.

You should also assess the nature and extent of a person’s interest and verify their identity. The higher the risk, the more in-depth your investigation should be. This ensures compliance with the regulations while maintaining efficiency.

What is included in the UBO register?

The UBO register, maintained by the Chamber of Commerce (KvK), promotes transparency regarding ownership and control structures. The register contains important information about the individuals who ultimately hold control within an organisation.

Information such as their name, date of birth, nationality and the extent of ownership or control they exercise is recorded. Organisations are required to register this information and keep it up to date. This ensures that the ultimate beneficial owner is clearly identifiable and helps prevent concealed ownership structures.

Please note: from 1 October 2024 onwards, you are required to report discrepancies between the information recorded in the UBO register and your own findings, for example based on an organisational chart or shareholders’ register. If you identify a discrepancy, you must report it to the Chamber of Commerce.

When is a UBO difficult to identify?

There are situations in which identifying a UBO can be challenging. In such cases, enhanced investigation and professional advice may be required to comply with statutory UBO identification and registration obligations. In practice, five situations commonly create difficulty:

• Multiple ownership layers
  This is particularly common where a firm operates through a layered ownership structure. When an organisation is structured through multiple entities, it becomes challenging to trace through all levels to identify the ultimate owner. Cross-border structures can make this even more complex.

• Complex legal structures
  Complicated governance arrangements or voting rights constructions can make it difficult to determine who genuinely exercises control. Trusts, foundations and joint ventures, among others, may involve ownership structures that are less transparent.
  
  

• Fragmented shareholding
  Where there are many shareholders with small interests (for example, ten individuals each holding 10% of the shares), no individual qualifies as a UBO. In such cases, multiple pseudo-UBOs will need to be designated.
  
  

• Pseudo-UBOs:
  Where no clear UBO can be identified, members of senior management may be designated as ‘pseudo-UBOs’. This does not necessarily reflect the actual beneficial owner. The entire statutory management board should be classified as pseudo-UBOs.
  
  

• Insufficient transparency
  Some entities may be reluctant to provide information about their ownership structure. Within Europe, this is relatively uncommon due to the EU Anti-Money Laundering Directive.

What is the role of (our) gatekeepers?

Lawyers, notaries, accountants and tax advisers play a significant role in the identification of UBOs. They assist clients in analysing complex ownership structures and management layers. Such structures are often intricate and not always fully understood, which makes structured documentation all the more important.

When analysing management layers and ownership structures, careful review of historical contracts and arrangements is essential. In some cases, an adviser or other stakeholder may exercise effective control without being formally recognised as an owner. This may arise through contractual provisions or special rights. For this reason, a compliance officer will conduct thorough due diligence, reviewing not only formal ownership documents but also the underlying structures.

Support from RegLab in complex structures

Our AML specialists and the RegLab application support you in identifying ultimate beneficial owners.

The application simplifies the process of collecting, verifying and analysing data, giving you better insight into who truly holds control. This enables you to advise clients with confidence and support compliance with statutory UBO registration requirements.

Our AML specialists share their in-depth expertise with your firm. They assist with collecting, analysing and verifying client information, contributing to a structured and efficient process.