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What is beneficial ownership?
The beneficial owner is the private person having ultimate control over the business entity. The controlling relationship is usually defined via direct or indirect ownership, but in some cases, the persons having significant control over the business entity without being their shareholders (eg the rights to replace the majority of the management or supervisory board), are considered to be beneficial owners of the entity.
The beneficial ownership can be either direct or indirect:
- for direct ownership, the private person is directly owning the controlling share in the company;
- for indirect ownership, the private person is having a controlling share in the company via a chain of one or several intermediaries.
For the direct beneficial ownership, a beneficial owner is a private person, who has more than 50% ownership in the company or, as stated above, can otherwise replace the majority of the company’s governing bodies.
If the ultimate beneficial owner can not be identified in the manner described above, the beneficial owner is a private person, owning a total of 25% or more of the company via all direct or indirect shareholdings.
What does this mean to financial institutions?
The requirements for identifying beneficial owners of the business entity arise from the laws regulating anti-money laundering and the prevention of terrorist financing activities. All financial institutions are required to obtain information on the ultimate beneficial owners of their corporate clients.
What does it mean to you?
If you are investing with Crowdestate as a private person and have opened a private investment account with us, the requirements of providing additional proof of beneficial owners do not apply to you.
If you are investing with Crowdestate via your company, and have opened a corporate investment account with us, you are required to provide us with an excerpt from the official register (usually the Commercial Register) displaying the beneficial owners of the company.
When opening the corporate investment account, you would need to upload the beneficial owners’ document to your investment account. The document is reviewed by Crowdestate’s investor support and your corporate investment account is opened after the approval of beneficial ownership documents.
While the form of the ultimate beneficial ownership documents varies from country to country, the contents are usually very much the same.
Please see the following sample beneficial ownership documents issued by various countries.
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