Beneficial Ownership Requirements in EITI Standards
#EITIOslo2020
EITI Oslo Week
10 – 14 February
#EITIOslo2020
Beneficial Ownership:
Lessons Learned from Tackling Technical Issues
EITI International Secretariat: Andrew Irvine & Oliana Valigura
12 February 2020
Agenda
■
Brief overview of Beneficial
Ownership (BO) Requirement
■
Key legal concerns
■
Key technical issues
–
Verifying BO data
–
Developing BO registers (Thom
Townsend, OpenOwnership)
■
Country examples:
–
Armenia (Lilia Shushanyan)
–
Others
■
Questions & Answers
■
Calls for Support from the EITI
International Secretariat
Beneficial Ownership Requirement
Understanding who profits: Beneficial ownership
The EITI Standard requires:
By 1 January 2020, countries
should request, and companies disclose, the nature of
beneficial ownership of oil, gas and mining companies.
Covers all oil, gas and mining companies that apply for, or
hold a participating interest in an exploration or
production oil, gas or mining license or contract.
Requirement 2.5. Beneficial ownership.
Beneficial Ownership Requirement
■
Information should include the
identity of
the beneficial owner, including the name,
nationality and country of residence
, and
whether the owner is
politically exposed
.
Could also include date of birth, national
identity number, residential address, etc.
■
Implementing countries are
recommended to maintain a
public
register
of beneficial owners. The
information must at least be published in
EITI reports.
Who is a beneficial owner?
“A beneficial owner in respect of a
company means the
natural
person(s)
who directly or indirectly
ultimately owns or controls the
corporate entity.”
EITI Standard 2.5.f.i.
Key Legal Concerns
■
Beneficial Ownership Definition
–
EITI Standard requires each MSG to agree an
appropriate definition of the term “beneficial
owner,” referring to the natural person(s) who
directly or indirectly ultimately owns or controls
the corporate entity. Req. 2.5.f.ii.
–
The definition should consider international
norms and relevant national laws and should
include ownership thresholds.
■
The lack of appropriate
beneficial ownership
definitions has been
identified as a key
challenge in obtaining
useful beneficial
ownership data in EITI
countries.
Key Legal Concerns
■
Beneficial Ownership Definition
–
Shareholder / share capital / ownership
interest / interest in mining title
–
Voting rights or ability to assign voting
rights
–
Right to benefit / receipt of economic
interest
–
Ability to hire and fire company officers
–
Right to decide
–
Legal representative of entity
–
On whose behalf transaction is
conducted
■
Details of BO Information
■
Name
■
Name used, pseudonym
■
First names
■
Last name
■
Patronymic
■
Date of birth
■
Place of birth
■
Country of residence
■
Nationality/citizenship
■
Personal address of beneficial owner
■
Service/registered address
■
Foreign address
■
Nature/means of control
■
Nature of ownership, relationship between owner and company
■
Particulars of the person in whose name the share is registered
■
Date of becoming a beneficial owner
■
Information on identity documents,
■
Company/trade name
■
Corporate/legal form and identification
■
Information about executives
Key Legal Concerns
■
Control
–
Direct and/or indirect
■
Politically Exposed Persons (PEPs)
–
The EITI Standard states the
definition of beneficial
ownership should specify
reporting obligations for PEPs.
Req. 2.5.f.i.
■
Thresholds
–
% of share/capital ownership
–
% of voting rights
–
% of profit-sharing/distributed
net income
“The multi-stakeholder group should
assess any existing mechanisms for
assuring the reliability of beneficial ownership information
and agree an
approach for corporate entities … to assure the accuracy of beneficial
ownership information they provide. This could include requiring
companies to
attest the beneficial ownership declaration form
through
sign-off by a member of the senior management team or senior legal
counsel, or
submit supporting documentation
.” Req. 2.5(e).
Beneficial Ownership Verification:
What the EITI Standard provides:
■
Gives MSG mandate to agree an appropriate approach, which could be tested and refined
over time.
■
Should be agreed and communicated prior to data collection, in consultation with
government agencies already collecting and maintaining beneficial ownership data and
reporting companies.
■
EITI Validation will assess whether the
relevant government entity or the MSG established
an approach for participating companies to assure the accuracy of the beneficial
ownership information they provide, and whether companies have complied with the
established assurances.
Beneficial Ownership Verification:
What the EITI Standard provides:
•
Attestation:
requiring company to certify beneficial ownership declaration form.
•
Supporting documentation:
requiring company to attach supporting documentation
to the declaration form verifying correctness of the information (copies of
shareholder registers, powers of attorney, etc.).
•
Authentication:
requiring company to provide verification of the identify of the
beneficial owner by attaching proof of identity.
•
Authorisation:
requiring that company requests and provides written confirmation
from the beneficial owner.
Verification Mechanisms
•
Validation:
ensuring the data submitted is a legitimate possible value and cross-
checking with other databases and official records.
•
Truth-verification/red-flagging:
identifying and documenting red flags as part of data
verification, and notifying relevant government agencies depending on the red flag.
•
Other approaches?
Verification Mechanisms
#EITIOslo2020
The EITI Standard requires countries to disclose the beneficial ownership information of oil, gas, and mining companies by January 2020. This includes details of the beneficial owner's identity, nationality, and any politically exposed status. Maintaining a public register of beneficial owners is recommended, with information to be included in EITI reports. Lack of clear definitions for beneficial ownership poses key legal concerns.
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Presentation Transcript
#EITIOslo2020 10 14 February EITI Oslo Week EITI Oslo Week
#EITIOslo2020 12 February 2020 Beneficial Ownership: Beneficial Ownership: Lessons Learned from Tackling Technical Issues Lessons Learned from Tackling Technical Issues EITI International Secretariat: Andrew Irvine & Oliana Valigura EITI International Secretariat: Andrew Irvine & Oliana Valigura
Agenda Agenda Brief overview of Beneficial Ownership (BO) Requirement Key legal concerns Key technical issues Verifying BO data Developing BO registers (Thom Townsend, OpenOwnership) Country examples: Armenia (Lilia Shushanyan) Others Questions & Answers Questions & Answers Calls for Support from the EITI Calls for Support from the EITI International Secretariat International Secretariat
Beneficial Ownership Requirement Beneficial Ownership Requirement Understanding who profits: Beneficial ownership Understanding who profits: Beneficial ownership The EITI Standard requires: By 1 January 2020, countries By 1 January 2020, countries should request, and companies disclose, the nature of should request, and companies disclose, the nature of beneficial ownership of oil, gas and mining companies. beneficial ownership of oil, gas and mining companies. Covers all oil, gas and mining companies that apply for, or hold a participating interest in an exploration or production oil, gas or mining license or contract. Requirement 2.5. Beneficial ownership.
Beneficial Ownership Requirement Beneficial Ownership Requirement Information should include the identity of the beneficial owner, including the name, the beneficial owner, including the name, nationality and country of residence nationality and country of residence, and whether the owner is politically exposed Could also include date of birth, national identity number, residential address, etc. Implementing countries are recommended to maintain a public register register of beneficial owners. The information must at least be published in EITI reports. identity of Who is a beneficial owner? A beneficial owner in respect of a company means the natural person(s) who directly or indirectly ultimately owns or controls the corporate entity. EITI Standard 2.5.f.i. politically exposed. public
Key Legal Concerns Key Legal Concerns The lack of appropriate beneficial ownership definitions has been identified as a key challenge in obtaining useful beneficial ownership data in EITI countries. Beneficial Ownership Definition Beneficial Ownership Definition EITI Standard requires each MSG to agree an appropriate definition of the term beneficial owner, referring to the natural person(s) who directly or indirectly ultimately owns or controls the corporate entity. Req. 2.5.f.ii. The definition should consider international norms and relevant national laws and should include ownership thresholds.
Details of BO Information Details of BO Information Name Name used, pseudonym Key Legal Concerns Key Legal Concerns First names Last name Patronymic Beneficial Ownership Definition Beneficial Ownership Definition Shareholder / share capital / ownership interest / interest in mining title Voting rights or ability to assign voting rights Right to benefit / receipt of economic interest Ability to hire and fire company officers Right to decide Legal representative of entity On whose behalf transaction is conducted Date of birth Place of birth Country of residence Nationality/citizenship Personal address of beneficial owner Service/registered address Foreign address Nature/means of control Nature of ownership, relationship between owner and company Particulars of the person in whose name the share is registered Date of becoming a beneficial owner Information on identity documents, Company/trade name Corporate/legal form and identification Information about executives
Key Legal Concerns Key Legal Concerns Control Control Direct and/or indirect Politically Exposed Persons (PEPs) Politically Exposed Persons (PEPs) The EITI Standard states the definition of beneficial ownership should specify reporting obligations for PEPs. Req. 2.5.f.i. Thresholds Thresholds % of share/capital ownership % of voting rights % of profit-sharing/distributed net income
Beneficial Ownership Verification: Beneficial Ownership Verification: What the EITI Standard provides: What the EITI Standard provides: The multi-stakeholder group should assess any existing mechanisms for assuring the reliability of beneficial ownership information assuring the reliability of beneficial ownership information and agree an approach for corporate entities to assure the accuracy of beneficial ownership information they provide. This could include requiring companies to attest the beneficial ownership declaration form attest the beneficial ownership declaration form through sign-off by a member of the senior management team or senior legal counsel, or submit supporting documentation submit supporting documentation. Req. 2.5(e). assess any existing mechanisms for The global standard for the good governance of oil, gas and mineral resources.
Beneficial Ownership Verification: Beneficial Ownership Verification: What the EITI Standard provides: What the EITI Standard provides: Gives MSG mandate to agree an appropriate approach, which could be tested and refined over time. Should be agreed and communicated prior to data collection, in consultation with government agencies already collecting and maintaining beneficial ownership data and reporting companies. EITI Validation will assess whether the relevant government entity or the MSG established an approach for participating companies to assure the accuracy of the beneficial ownership information they provide, and whether companies have complied with the established assurances. The global standard for the good governance of oil, gas and mineral resources.
Verification Mechanisms Verification Mechanisms Attestation: Attestation: requiring company to certify beneficial ownership declaration form. Supporting documentation: Supporting documentation: requiring company to attach supporting documentation to the declaration form verifying correctness of the information (copies of shareholder registers, powers of attorney, etc.). Authentication: Authentication: requiring company to provide verification of the identify of the beneficial owner by attaching proof of identity. Authorisation Authorisation: : requiring that company requests and provides written confirmation from the beneficial owner. The global standard for the good governance of oil, gas and mineral resources.
Verification Mechanisms Verification Mechanisms Validation: Validation: ensuring the data submitted is a legitimate possible value and cross- checking with other databases and official records. Truth Truth- -verification/red verification/red- -flagging: flagging: identifying and documenting red flags as part of data verification, and notifying relevant government agencies depending on the red flag. Other approaches? Other approaches? The global standard for the good governance of oil, gas and mineral resources.
