AUSTRALIA: Government Issues Consultation on Proposed Beneficial Ownership Register

Monday February 13 2017

In May 2016 the Australian Government announced at the UK Anti-Corruption Summit that it would explore, via public consultation, options for a beneficial ownership register for companies.

They have now released a consultation seeking feedback on what information needs to be collected to achieve this objective and how it should be collected, stored and kept up to date. They are also seeking responses from interested parties on the expected compliance costs for affected parties.

The deadline for submissions is 13 March 2017.

Comparisions with the UK Persons of Significant Control Register

In the Uk, Persons of Significant Control (PSCs) have been defined as individuals who meet one or more of the following five conditions:

• Directly or indirectly holds more than 25% of shares in the company;
• Directly or indirectly holds more than 25% of voting rights in the company;
• Directly or indirectly holds the right to appoint or remove a majority of the directors of the company;
• Has the right to exercise, or actually exercises, significant influence or control over the company; and
• Where a trust or firm would satisfy one of the first four conditions if it were an individual, any individual holding the right to exercise, or actually exercising, significant influence or control over the activities of that trust or firm. This is not limited to the trustee of the trust.

Since April 2016 companies have been required to maintain their own PSC register. Companies must keep their PSC register accessible. Anyone with a proper purpose may have access to information on the register (except for a PSC’s usual residential address) free of charge.

As set out in Chapter 2, listed companies are already subject to requirements under the Corporations law which result in the market, including the general public, being informed as to the persons who have a significant level of control or ownership of such companies. In the UK, companies which are comparable to Australian listed companies are excluded from the obligations to report on people of significant control because of other transparency requirements which applied to them already.

Responses requested in the consultation on Beneficial Ownership Reporting in Australia

The following questions are included in the consultation paper:

• Should listed companies be exempt from any new requirements to report on its beneficial owners, given existing obligations on such companies? If so, should an exemption apply to companies listed on all exchanges or only to specific exchanges?
• Does the existing ownership information collected for listed companies allow for timely access to adequate and accurate information by relevant authorities?
• How should a beneficial owner who has a controlling ownership interest in a company be defined?
• what tests or threshold do you think Australia should adopt to determine which beneficial owners have controlling ownership interest in a company?
  (i) Should there be a test based on ownership of, or otherwise having (together with any associates) a ‘relevant interest’ in a certain percentage of shares?
  (ii) Alternative to the percentage ownership test, or in addition to, should there be tests based on control that is exerted via means other than owning or having interests in shares, or by a position held in the company?
• How would the natural persons exercising indirect control or ownership (that is, not through share ownership or voting rights) be identified (other than through self-reporting) and how could such an obligation be enforced?
• Should the process for identification of beneficial owners operate in such a way that reporting must occur on all entities through to and including the ultimate beneficial owner?
• What details should be collected and reported for each natural or legal person identified as a beneficial owner who has a controlling ownership interest in a company?
• What steps should be undertaken to verify the information provided to a central register by companies or their relevant beneficial owners? Who should have responsibility for undertaking such steps?

Please submit responses by Monday 13 March 2017 to beneficialownership@treasury.gov.au (in word or RTF format).

Please follow the link at the top of the page to view the consultation and make a submission.