Austrian Act on the Registry of Beneficial Owners

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Austrian Act on the Registry of Beneficial Owners

Monday, 11 September, 2017

The Austrian Act on the Registry of Beneficial Owners constitutes the legal basis for the implementation of the registry of the beneficial owners of legal entities and trusts in Austria. In general, according to the provisions of the new law, beneficial owners are natural persons who own or control a legal entity and shall therefore be reported to the registry. The central registry and the available data of beneficial owners shall make an important contribution in the context of the prevention of money laundering and financing of terrorism.

1. Competent authority

The registry shall be established with the Ministry of Finance (Bundesminsterium für Finanzen) as the competent registry authority. The Austrian Federal Agency for Statistics (Bundesanstalt Statistik Austria) shall provide the Ministry of Finance with the respective services to operate the database.

The majority of the Austrian legal entities are subject to the new law (e.g. partnerships, stock corporations, limited liability companies, private foundations, etc.).

2. Beneficial owners

According to the provision of the law, beneficial owners are natural persons who own or control a legal entity. In case of companies the beneficial owners are defined as natural persons who hold directly or indirectly (i) an adequate amount of shares, or (ii) respective voting rights, or (iii) exercise control over the management of the company.

A natural person shall be seen as direct beneficial owner if he/she holds a participation of more than 25 % in the company. A natural person shall be seen as indirect beneficial owner if a legal entity holds a participation of more than 25 % in the company and this holding company is directly or indirectly controlled by the respective natural person. Control is defined (i) as a direct or indirect shareholding in the company of more than 50 % or (ii) as any similar rights (e.g. voting rights, nomination rights, control through trusteeship, etc.) which grant a dominant influence on the company.

In case that a natural person holds a stake in several shareholders (entities) of the Austrian company (i.e. indirect participations) and together these participations amount to more than 25 %, then this natural person shall be identified as beneficial owner of the company. Any direct shareholding of this natural person shall also be added to the total participation. In case that no beneficial owner according to the above stated parameters can be identified, the top-level management of the company shall be seen as beneficial owner.

3. Reporting

The legal entities are obliged to determine the identity of the beneficial owner, to collect data about this person and to make respective records each year. The beneficial owners have to cooperate with the legal entities and have to provide the required information.

The registry shall be informed about the first and last name of the beneficial owner, the place of residence, the address, the birth date, the birth place and the nationality. In addition, the number and type of the identity card has to be stated if the beneficial owner has no residence in Austria. Indirect beneficial owners shall be identified by providing the registry with the above stated data and the name and seat of the holding companies, the specification of the shareholdings, the indication of the voting rights and the participation amount of the beneficial owner regarding the top-level company.

The reporting shall be executed within four weeks of the incorporation of the company. Further, any amendments shall be reported within four weeks.

4. Exemption from the reporting obligation

There are a few exemptions from the reporting obligation. For example limited liability companies are exempted from the obligation to render information to the registry if all shareholders are natural persons. In this cases the Austrian Federal Agency for Statistics (Bundesanstalt Statistik Austria) will use the data of the commercial register to furnish the database of the beneficial owners without requesting the respective entities.

5. Penalties and entry into force

In case that a legal entity does not comply with the reporting obligation, the authority may impose penalties up to EUR 200,000.00.

The Austrian Act on the Register of Beneficial Owners will come into force as of 15 January 2018. However, the legal entities will have to report and fulfill their obligation to inform the authority about the beneficial owner for the first time until 1 June 2018 at the latest.