Beneficial Ownership Research Articles

Another Italian Supreme Court Decision on the “Beneficial Ownership” Concept for the Purposes of the EU Parent-Subsidiary Directive (2011/96)

In this note, the authors discuss a recent decision of the Italian Supreme Court, which introduced a new “beneficial ownership” condition, allegedly derived from case law of the Court of Justice of the European Union, as a condition for the application of the EU Parent-Subsidiary Directive (2011/96).

Changing Forms of Ownership in a Democratic Corporatist Media System — How Digitalization Leads to Less Transparency and the Risk of Media Capture

Digitalization has led to a crisis in news media and an upheaval in media ownership. A research concern has been that the motives driving media owners will shift from financial and public service to overtly political and ideological. The term “media capture” has been suggested to describe how various interests may take control over news media outlets. This paper adds to the study of digitalization and media ownership in three ways. First, our analysis is based on new analytical parameters developed as part of the Euromedia Ownership Monitor. Second, we compare types of ownership across legacy news media and digital news media, as each media type runs a different risk regarding capture. Third, we focus on ownership transparency, especially that of beneficial owners. Our case study is Denmark, which is part of the democratic corporatist media system and, based on international ratings, is one of the most democratic and transparent media systems in Europe. We find that private legacy news media is mostly owned by nonprofit foundations, while legacy public service news media is owned by the State or is listed as self-owned. Regarding new digital news media, we find different ownership forms. However, only new digital news media have ownership by a sole proprietor. Regarding transparency, we find the transparency of direct and beneficial owners is more accessible in legacy news media than in new, digital news media. We find no tradition for publishing “natural persons” possible affiliations to either political or other commercial interests. This seems especially relevant, as new digital news media outlets, unlike legacy media, sometimes are owned and funded by private investors, whose main business interests lie outside the news media and whose motives for owning a news media may differ from traditional ownership thus leading to a risk of media capture by ownership.

Equity in Tax—All Change after 1873?

Until the late 19th century, equity and common law courts were separate. Tax courts emerged from equity, and today equitable principles and maxims govern the tax legislation, as well as His Majesty’s Revenue & Customs guidance and the tribunals. Even though the equity and common law courts “fused” in 1873, there has only ever been one law: common law tempered by equity. Only the courts, remedies and procedures were different prior to 1873 (though a unified Court of Exchequer with equity and common law jurisdiction existed before 1841). The law was already a single entity by the late 19th century. There was no fusion of actual laws in 1873, only of courts and procedure. Equity already moderated tax law, with beneficial ownership being all that mattered for tax purposes then and today. Keywords: equity; common law; fusion; tax; beneficial ownership; Supreme Court of Judicature Act 1873.

Who owns reefer vessels? Uncovering the ecosystem of transshipment in fisheries.

A central barrier to effective governance and accountability in fisheries is the limited transparency of corporate ownership. Transshipment-the transfer of catches, fuel, parts, or crew between fishing and cargo vessels known as reefers-is often criticized for its opacity and poor governance. Better insight into the beneficial ownership of vessels involved in transshipment and their operational patterns could lead to more effective management. Our study presents a publicly accessible database of reefers' owners, operators, and flags. We identified 569 individual reefers and found that Russian and Chinese owners control 26 and 20% of the global reefer fleet, respectively. Results also show that 65% of all reefer vessels fly the flags of Russia, Panama, or China. This high level of consolidation suggests considerable leverage for enhancing transparency and governance. Our findings highlight the potential for reforming existing transshipment practices through collaboration among owners, flag states, fishery regulators, and scientists.

Transparency of asset ownership and its importance for the real sector of the economy

Beneficial ownership creates risks for third parties and the beneficiaries themselves, as well as for the international and national economy as a whole. Transparency of asset ownership is of particular importance for the real sector, which contains the most important production and other resources for the interests of the country. The global trend towards transparency as a condition for access to various transactions and legal actions is manifested in domestic legislation and judicial practice through the use of various legal mechanisms (mainly encouraging beneficiaries to disclose the ownership structure of assets). The interdisciplinary significance of the category of “beneficial ownership” requires the development of a uniform approach to determining the legal status of beneficial owners and controlling persons.

Juridical Analysis of Foundation Beneficial Owner based on Presidential Regulations Number 13 of 2018

This thesis aims to analyze the legal conflict between the foundation law and Presidential Regulation Number 13 of 2018 concerning beneficial owners in foundations, where foundations shouldn’t have a beneficial owner. The issues raised are: (1) What’s the juridical analysis of the Criteria for Beneficial Owners of Foundations based on Article 5 of Presidential Regulation Number 13 of 2018 from the perspective of the Foundation Law? and (2) What’s the legal certainty regarding Notaries obligations in listing the beneficial owners in the process of ratifying, establishing or changing the foundation's legal entity, based on Minister of Law and Human Rights Regulation Number 9 of 2017? Research methods used are statute approach and conceptual approach. Resulting in a conclusion that a foundation doesn’t have a beneficial owner, and legal certainty for notaries remains uncertain. Therefore, this Presidential Decree should be created and aimed at corporations formed as companies, with profit-oriented activities.

О двойных (множественных) косвенных исках бенефициарных владельцев в интересах подконтрольных корпораций

The current stage of economic development requires transparency of asset ownership, which implies disclosure of all levels of corporate structures and final beneficiaries. This trend can be traced in tax, anti-sanction, and bankruptcy legislation. Disclosure of the corporate ownership structure is the main prerequisite for the realisation of the beneficial owner’s right to sue in the interests of a controlled corporation. A formal legal approach that denies such a right creates an imbalance between the interests of investors and the economy as a whole, strengthens the agency problem, which negatively affects the activities of diversified holdings. The circumstances testifying to the violation of the subjective rights of the beneficiary are the unfair actions of the prevailing beneficiary and the management controlled by him in the context of a corporate conflict. The choice between the recovery of the reflected losses in favour of the beneficiary (parent company) and the recovery of losses in favour of the controlled company at the claim of the beneficiary is the main debatable issue. The domestic legal order generally recognises the admissibility of protecting the interests of beneficiaries when making insignificant corporate decisions at the operational level of the holding and making unprofitable transactions by management in collusion with a counterparty.

How Botswana and Mauritius Exited the EU High-Risk Third Country List by Adapting Their Approaches to Beneficial Ownership and Residence

On 22 February 2022, the Mauritian Ministry of Financial Services and Good Governance issued a communique reporting the country’s removal from the European Union (‘EU’) List of High-Risk Third Countries. This list is also called the Anti-money Laundering and Countering Terrorist Financing List (‘AML/CTF’); or, less affectionately, the Blacklist. Mauritius issued this report a month after the European Union released its Commission Delegated Regulation (EU) 2022/229, removing Botswana and Mauritius from the AML/CTF. The EU placed Mauritius and Botswana on the Blacklist in May 2020 after adopting updated criteria for assessing high-risk third countries and publishing its revised methodology for identifying these high-risk jurisdictions. These updated criteria and procedures relegated the tax regimes of Mauritius and Botswana as strategically ‘[deficient] on anti-money laundering and counter-terrorist financing…,’ such that they ‘pose significant threats to the financial system of the Union.’ Placement on the Blacklist encumbers States with increased monitoring, regulatory requirements, and global trade restrictions that can result in a heavy economic toll. Moreover, to exit the list, countries must remediate deficiencies in cooperation with the EU and Financial Action Task Force (‘FATF’), each of which must be satisfied with the improvements made. Mauritius and Botswana passed a bevy of substantial laws in just over a year to satisfy the EU and FATF, earning an exit from the Blacklist. Among the many changes, enhancements to each country’s transparency measures were central. Adopting new approaches to beneficial ownership and residence in each country is at the core of this transparency. This work will explore how Mauritius and Botswana leveraged new approaches to beneficial ownership and residence to meet EU standards for tax regime transparency, resulting in each country’s removal from the EU Blacklist. This analysis will begin with an economic overview of Mauritius and Botswana. What follows will be an introduction to the EU AML/CTF list, followed by how and why the EU placed Mauritius and Botswana on the list. Finally, this work will look at how Mauritius and Botswana exited the list, and what that exit means for each country and other countries like them.

How are Practitioners Coping with the US Corporate Transparency Act?

In 2021 the United States enacted the Corporate Transparency Act (CTA), creating a beneficial ownership registry within the FinCEN unit of the Treasury. The regulations required by the CTA have finally taken effect and, while they address many questions posed by practitioners, they still place the compliance burden on the clients. In this Talking Points, Alicea Castellanos explains what practitioners need to know about the CTA and the regulations and cautions them to seek help from experts before attempting to advise their clients on the technical requirements.

Are beneficial ownership laws important? Exploring the impact of Panama, FinCEN, and Pandora Papers on beneficial ownership laws in the UK and the US

Money laundering and reverse money laundering, also known as terrorism financing, have emerged as critical issues in the 21st century, posing threats to security, economic stability, and the integrity of financial systems. This article explores the growing use of anonymous shell companies as a method for executing money laundering and reverse money laundering. It focuses on two key jurisdictions: the United Kingdom (UK) and the United States of America (US).The research draws on case studies published by the International Consortium of Investigative Journalists, including the Panama Papers, FinCEN Files, and Pandora Papers. These case studies have prompted regulatory changes in beneficial ownership This study examines the practical implementation of laws, comparing the approaches of the UK and the US. It addresses the vulnerabilities revealed by the aforementioned case studies and assesses the actions taken by these countries in response to the leaks. The study evaluates the progress achieved in enhancing beneficial ownership regulations and reducing anonymity in shell company creation.In conclusion, this article provides insights and recommendations for future developments in this critical area.

Strengthening Corporate Crime Prevention In The Digital Economy In ASEAN

Economic growth and development in the digital era have presented new challenges in structuring business between countries, especially countries in ASEAN. Relations and cooperation between corporations are no longer limited to being within the scope of one country but across countries. Such conditions certainly produce new threats. In addition to the positive impact on corporations by presenting wider markets and development opportunities in ASEAN countries, economic developments in the digital era are also accompanied by negative impacts. This can be seen from the opportunity to commit transnational corporate crimes, such as corruption, and market abuse by conducting covert monopolies and creating an unhealthy economic climate for market growth by presenting unfair competition between capital owners. Such a situation will certainly damage the spirit of solidarity presented by ASEAN when initiating the MEA. Therefore, it is necessary to have an integrated system between countries in ASEAN that covers cooperation between corporations in preventing corporate crime in the era of the digital economy. Furthermore, the government and society can find out every beneficial ownership behind each of corporate crime. This integrated system will help economic actors, communities, and governments to map out the dangers and opportunities that cooperation between corporations in ASEAN countries can provide. A healthy economic climate can be created by presenting a system acceptable to all parties (government, corporate, and society). This research is focus on enhancing measures to prevent corporate crime within the digital economy across ASEAN countries.

Shrinking the 13D disclosure window will benefit non-activist investors

PurposeThis study aims to examine the Securities and Exchange Commission’s final rule in Modernization of Beneficial Ownership Reporting, which reduced the time for significant public company shareholders to file Schedule 13D (effective February 5, 2024). The authors corroborate prior results under the historic 10-day maximum reporting regime and provide updated academic analysis regarding how the five-day deadline between the “triggering” event, accumulating 5% of the outstanding shares and public disclosure of that event will affect abnormal returns.Design/methodology/approachThis empirical archival study uses publicly available data.FindingsThe analyses show that changing from a 10-day to a 5-day Schedule 13 disclosure window will reduce activist investors’ opportunity to profit by legally delaying the filing of Schedule 13D. These excess returns for delay exist regardless of the profitability or size of the target firm or the shareholder’s disclosed reason for filing. The authors conclude that accelerating the timing of the disclosure window is an improvement that is in the best interest of the general investing public.Originality/valueTo the authors’ knowledge, this is the only academic study of Schedule 13D filings to include the postpandemic period. As such, the authors establish an updated “baseline projection” for expectations regarding how the Modernization final rule will impact activist investors and stock returns under a five-day reporting regime. In addition, the authors measure and test abnormal returns after considering differences between “triggering” events and filing dates of Schedule 13Ds in the sample rather than grouping all filings. This approach allows the authors to account for the time difference between the triggering event and the filing date.

A First Belgian Judgment on the Interpretation of the Term “Beneficial Owner” in a Tax Treaty and the EU Interest and Royalties Directive (2003/49)

A First Belgian Judgment on the Interpretation of the Term “Beneficial Owner” in a Tax Treaty and the EU Interest and Royalties Directive (2003/49)

Optimasi Pembiayaan Haji Di Indonesia: Peran Kontrak Wakalah

The increase in Hajj registrants in Indonesia has led to the need for efficient and transparent management of Hajj funds. State regulations and Sharia principles must be adhered to when using Wakalah contracts for efficient management of Hajj funds. The aim of this research is to clarify the legal framework surrounding the Wakalah contract so that its implementation is more effective and optimizes the management of Hajj funds both in the context of sharia and state law. This research uses a normative juridical method, namely data is analyzed and processed systematically, logically and critically, using a normative approach and based on regulations, doctrine, legal principles and other relevant supplementary materials. Based on these findings, data was analyzed and a strong legal framework and sharia principles can maximize benefits for Hajj pilgrims and encourage cost-effective management of funds. Collaboration between Islamic banking institutions and Hajj regulators can also help overcome existing challenges. This research offers a deeper understanding of the benefits of ownership, Wakalah principles, as well as relevant legal and Sharia aspects, thanks to its careful methodological approach. Its unique contribution lies in its focus on beneficial ownership, a comprehensive examination of legal and sharia considerations, and the development of a practical framework for improving Hajj financial management in Indonesia.

Editorial: Unmasking who controls illicit wealth through beneficial ownership transparency

Editorial: Unmasking who controls illicit wealth through beneficial ownership transparency

Added Value and Challenges of the Follow-the-Money Approach in Environmental Crimes

Environmental crimes have a wide impact on the country's losses in social and economic development and threaten the sustainability of living things and the ecosystem. In addition, environmental crimes also produce follow-up crimes, namely criminal acts of money laundering (TPPU). Based on the Financial Action Task Force (FATF) July 2021 Report on Money Laundering from Environmental Crimes, environmental crime is one of the crimes that is estimated to generate the most profitable income in the world, which is around USD 110 to 281 billion annually. Unfortunately, the handling of money laundering cases related to environmental crimes in Indonesia remains suboptimal, as evidenced by the disproportionate number of environmental crimes addressed by money laundering authorities in this sector. This study examines how law enforcement of forestry and environmental crimes needs to be strengthened by a follow-the-money approach. This study used descriptive and qualitative analysis methods involving secondary data from various related institutions and primary data from unstructured interviews with several investigators in the field of environment and forestry. The findings of this study indicate that law enforcement in the areas of forestry and environmental protection, particularly in the application of anti-money laundering measures, remains suboptimal. This inadequacy is largely attributed to the limited experience of investigators in handling environmental cases. Whereas, adopting a follow-the-money approach in environmental investigations could significantly enhance the effectiveness of these efforts, allowing for a more comprehensive uncovering of past illegal activities. Additionally, this approach has the potential to identify a broader network of involved parties, including the identification of beneficial owners.

Beneficiary Ownership in Financial Services Sector Conglomerates in Indonesia

This research aims to explore the implications of beneficiary ownership in financial services sector conglomerates in Indonesia on financial system stability. Because financial services sector conglomerates can obscure the true beneficiaries within the conglomerate in Indonesia. This can pose risks to the financial system. If one financial institution within the conglomerate fails, it can have cascading effects on other institutions within the conglomerate. This can lead to systemic crises, which can harm the overall economy. Therefore, the problem lies in how to uncover the true beneficiaries within a financial services sector conglomerate in Indonesia. This is a normative legal research, prescriptive in nature, employing a legislative and legal comparison approach. Secondary data used includes legislation such as the Limited Liability Company Law, Banking Law, Financial Sector Development and Strengthening Law, as well as the Financial Services Authority Regulation on Financial Conglomerates. Additionally, international journals and legal dictionaries are used as references, supported by empirical data in the form of interviews with the Financial Services Authority. Data is analyzed qualitatively, with conclusions drawn using deductive-inductive reasoning. An individual or legal entity as a primary entity that can control changes in the Articles of Association, Share Ownership Structure, replacement of directors, board of commissioners, control the company's finances, but the individual/legal entity is not listed in the company's articles, then can be categorized as a beneficial owner of a limited liability company. Similarly, in a financial services sector conglomerate existing in Indonesia, it can be proven by finding out who controls the conglomerate.

ANALISIS PUTUSAN PENGADILAN TINGGI MEDAN NOMOR 66/PID.SUS/2018/PT.MDN TERKAIT TINDAK PIDANA PERPAJAKAN

If in the activities of a company there is a criminal element, then in this case there is a criminal act of taxation, even if it is committed by the company itself, and although it is subject to responsibility, there is no legal basis for the theory of piercing the veil of the corporation Justified. To other parties such as directors or shareholders. Provisions regarding beneficial rights have not been regulated in the Criminal Procedure Code and the Tax Procedure Law, but beneficial owners can be held accountable as parties who have the power to control the company, such as giving instructions to the company's directors. In Indonesia, beneficiary ownership rights include Financial Services Authority Regulation No.12/POJK. 01/2017 dated March 16, 2017 concerning the Implementation of Anti-Money Laundering and Anti-Terrorist Financing Programs in Financial Services; It is strictly regulated by several laws. Unfortunately, this provision does not apply in the Presidential Regulation of the Republic of Indonesia Number 13 of 2018 concerning the Application of the Principle of Recognizing Business Excellence in the Framework of Prevention and Eradication of Money Laundering and Terrorist Financing. Crime in the field of taxation. In the field of taxation, the regulation regarding beneficial owners is very limited and only applies to foreign taxpayers, so it still provides opportunities for beneficiaries in the sense of actual beneficial owners to commit tax crimes.

What’s on the Cayman Islands regulatory horizon for trustees?

Abstract The article outlines the main regulatory changes on the horizon in the Cayman Islands that are of relevance to trustees. It provides an update as to Cayman Islands Monetary Authority’s (CIMA) priorities, based on a presentation given by the Managing Director of CIMA at Mourant’s 2024 Regulatory Seminar, the overriding concern being to ensure that the Cayman Islands remains at the forefront of technical compliance with the Financial Action Task Force 40 Recommendations. It also considers one of the larger regulatory changes on the horizon, the incoming changes to the Cayman Islands beneficial ownership regime.

Problems of legal regulation of thin capitalization in Ukraine

The proliferation of multinational companies is lengthening global value chains, and the development of the digital economy is giving them even more opportunities to shift profits. Intra-group loans are often used to shift profits to a jurisdiction with low tax rates to minimize overall tax liability. In order to combat the illegal transfer of profits, most countries introduce thin capitalization rules. Ukraine joined the BEPS plan, action 4 of which summarized the best practices for regulating debt obligations to non-residents. Most countries limit the total amount of loans, interest payments on which are deducted from the corporate tax base. The Tax Code of Ukraine establishes a double tax barrier - it limits both the amount of debt and the share of profit before deduction. However, the established barriers not only do not prevent profit shifting, but encourage the widespread use of this method to reduce tax liabilities due to profit shifting. The main drawback of thin capitalization rules is that allowed excessive amounts of loans from non-residents do not oblige the borrower to improve the financial results of the enterprise. Instead, they provide an opportunity to reduce the corporate tax base by 30% indefinitely and move them to jurisdictions with low tax rates. The method of regulation provided for by the Tax Code of Ukraine can be considered as an incentive for the misuse of State budget funds. In order to eliminate these shortcomings, it is proposed to significantly reduce both barriers and to oblige the borrower to ensure the effective use of loans to stimulate the socio-economic development of the country, i.e. to deduct interest from taxable profit only if there is an actual increase in the produced added value, the introduction of new products and/or processes. Existing shortcomings in the legal regulation of debt obligations prevent legal resolution of the case in court. New criteria for identification of the resident with regard to individuals and legal entities and the beneficial owner of income have been proposed.