BIPA Presentation on Beneficial Ownership 19 July 2023

BENEFICIAL OWNERSHIP AND THE

REGISTRAR OF LEGAL PERSONS

19 JULY 2023

Presented by: Maggie Likoro

INTRODUCTION

Corporate vehicles such as companies and trusts play an essential and legitimate role in any

economy, However their unique legal status also lends them to be used in schemes.

The misuse of legal vehicles can be significantly reduced if information regarding both the legal

owner and the beneficial owner is made available.

In general, the lack of adequate, accurate and up-to-date BO information facilitates Money

Laundering and Terrorist funding.

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THE CONCEPT OF BENEFICIAL OWNERSHIP

Beneficial ownership was introduced in Namibia via the Financial Intelligence Act and via

recommendation 24 of the Financial Action Task Force (FATF)

Recommendation 24 of FATF defines a Beneficial Owner as:

A natural person who;

a) Ultimately owns or controls a customer or on whose behalf a transaction is being

concluded; or

b) Exercises ultimate effective control over a legal person in which such ultimate ownership

or ultimate effective control may be exercised directly or indirectly or through a chain of

ownership or control other than direct control

Continuation…..

Section 1 of the FIA defines a Beneficial owner as:

a) A natural person who owns or effectively controls a client, including the natural person on

whose behalf a transaction is conducted; or

b) A natural person who exercise effective control over a legal person or trust and a natural

person is deemed to own or exercises effective control over a client when the person-

i. Owns or controls, directly or indirectly, including through trusts or bearer shares holding

for any legal person, 20% or more of the shares or voting rights of the entity

ii. Together with a connected person owns or controls directly or indirectly, including through

trusts or bearer shares holdings for any legal person, 20% or more of the shares or voting

rights of the entity

iii. Despite a less than 20% shareholding or voting rights, receive a large percentage of the

persons’ declared dividends or

iv. Otherwise exercises control over the management of the person in his capacity as

executive officer, non-executive director, independent non-executive director, manager or

partner.

Stop-Gap amendment of the business law and amendment of FIA

The stop-gap amendments of the business law and the FIA aimed to address a

number of the deficiencies that were raised in the Mutual Evaluation Report (MER)

which includes but not limited to:

• The shortcomings of the current definition of BO in the FIA

• Lack of BO provisions in the business laws

• Lack of administrative sanctions for the Registrar to impose on non complying entities

or individuals

In addressing the shortcomings; the definition of the BO has been aligned to that of

recommendation 24 in the FI Amendment Bill;

The requirement for companies and CC to collect and keep accurate and up to date

BO information is now in the companies and CC’s amendment bill;

The Companies and CC’s amendment bills provide for the Registrar to impose

administrative sanctions

Definition of BO in the Amendment BILLS

BO is defined in the FI Amendment Bill and is also referenced in the Companies and

Close Corporation Amendment Bills as:

a natural person who

a) Ultimately owns or controls a customer or on whose behalf a transaction is being

conducted or

b) Exercises ultimate effective control over a legal person in which such ultimate

ownership or ultimate effective control may be exercised directly or indirectly or

through a chain of ownership or control other than direct control

Schedule 5 of the FI Amendment Bill lists the categories of natural persons regarded

as Beneficial Owners as it relates to legal persons:

1. A natural person on whose behalf a transaction is conducted

2. A natural person who directly or indirectly or through a trust, other legal persons or

other legal arrangements holds 25 percent or more of the shares, voting rights or

other ownership interest in the legal person

3. A natural person who holds the position of a senior managing in the legal position

4. A natural person or through a trust, other legal person or other legal arrangements

who jointly exercise direct or indirect control over the legal person

Continuation…………..

5. A natural person who has the right, directly or indirectly, to appoint or remove majority of the

board of directors of the legal person

6. A natural person who has the power to materially influence the decision-making or policy of

the legal person

7. A natural person who derives economic benefits, including dividends, right to profit, enjoyment

of assets of legal person or able to use significant assets of the legal person, even if the

person has no other formal link to the legal person

8. A natural person who influence or ultimate control over the legal person through any other

means

What is the distinction between Basic company information and BO

information?

Basic information is information as it relates to the business entity as a legal person

having its own legal personality, this information includes:

i. The entity name

ii. Registration number

iii. Legal form and status

iv. The address of the registered office

v. Basic regulating powers (Memorandum and Articles of Associations)

vi. Directors information

vii. Shareholders information

Beneficial Ownership information is the information on the identities and extent of the

control exercised over a legal person by the natural person (s) who ultimately have a

controlling ownership interest in the legal person and the natural person exercising ultimate

effective control over the legal person through other means than ownership interest, if any.

I. First name and surname and any other former first name and surname

II. ID Number/ Passport number

III. Date of Birth

Continuation…….

IV. Full Residential address

v. Business address

VI. Contact details (cell phone and email)

VII. Nationality

Distinction between Legal ownership and Beneficial Ownership

A beneficial owner in simple terms refers to individuals ultimately enjoying the rights

and benefits of the legal person. The legal ownership on the other hand is the

individual or entity legally registered with the Registrar as having ownership in the legal

person

While legal ownership and beneficial ownership can overlap, the legal title of a

company may be in the name of an individual or a legal person other than the BO who

ultimately controls or benefits from the entity

Legal ownership in a legal person can be held by either a natural or legal persons

whilst beneficial ownership can only be held by a natural body

Why must entities disclose BO information?

It is a legal requirement under section 4 of FIA that;

a) All companies and CC’s must collect and keep accurate and up to date BO information

b) All companies and CC’s must upon registration and thereafter annually submit accurate and up

to date BO information to the Registrar of Companies and CC

Furthermore, the disclosure of BO information is beneficial in the following ways:

i. The misuse of legal persons can be significantly reduced if information regarding both the legal

ownership and BO information is made available

ii. The source of the legal persons assets and its activities become available to competent

authorities in a timely manner

iii. Identifying the true purpose of an account or property held by a legal person

Who will have access to the BO information?

Beneficial ownership information will be fully available to competent authorities and only the

name and extent of beneficial ownership will be available to the public

When should BO information be disclosed to the Registrar?

The Financial Intelligence Act provides that entities must lodge the BO information upon

registration and annually thereafter.

The Companies and Close Corporations Amendment Bill provides for BO information to be

lodged:

i. At Registrations

ii. Submission of Annual return

iii. Within seven days after there has been any change to the BO information

The BO information will also be required at the point of amendment or any update if the

company has not lodged its BO information with the Registrar.

What are the sanctions/ penalties of failure to keep and disclose BO

information?

The Financial Intelligence Act provides that the Registrar may not register an entity that

fails to provide BO information

The Registrar may deregister an entity that fails to provides the BO information in the

prescribed time

For failing or refusing to provide BO information, the company may be liable fine not

exceeding N$ 10 million or a period not exceeding 10 years or both to such fines or period

The Companies and Close Corporations amendment bills provides for the

following sanctions

Failing to keep a BO registry

The Registrar will issue a written directive instructing the entity to keep a BO registry

If an entity or person fails to comply with the directive, the Registrar shall impose a

financial penalty not exceeding N$ 50 000 and a financial penalty not exceeding N$ 1000

for every day during the contravention continues

The Registrar shall list the entity that fails to comply on an inactive list and thereafter

deregister the entity six months after the date the entity was listed.

Late submission or non-submission of BO

The Registrar will issue a written directive instructing the entity to submit the BO

information

If an entity or person fails to comply with the directive, the Registrar shall impose a

financial penalty not exceeding N$ 50 000 and a financial penalty not exceeding N$ 1000

for every day during the contravention continues

The Registrar shall list the entity that fails to comply on an inactive list and thereafter

deregister the entity six months after the date the entity was listed. 12

Continuation…..

Providing false or misleading information

conviction to a fine not exceeding N$ 10 000 000 or to imprisonment for a period not exceeding

10 years or to both such fine and such imprisonment

How should the BO information be submitted to BIPA?

BIPA has developed a beneficial ownership declaration form (BO1). This form must be

accurately and completed in full before it is submitted to BIPA.

Thank You.

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