A new law concerning registration of beneficial owners has entered into force in Sweden (Sw. Lag (2017:631) om registrering av verkliga huvudmän). The new law obliges Swedish companies, associations and legal entities to register their beneficial owner, or lack thereof, at the Swedish Companies Registration Office (Sw. Bolagsverket). The last day to submit the first notification of beneficial owner for most companies is February 1, 2018.
The new Swedish law on registration of beneficial ownership is an implementation of the Fourth Anti-Money Laundering Directive, which aims at ensuring effective transparency among companies to prevent money laundering and terrorist financing. According the Directive, the identification of a natural person who exercises ownership or control over a company, association or other legal entity, is a key factor when tracing criminals, who might otherwise hide their identity behind a corporate structure.
The obligation to register beneficial ownership applies to approx. 800,000 Swedish companies, associations and legal entities. It also applies to foreign legal entities operating in Sweden and natural persons with domicile in Sweden, who administer trusts or similar legal structures. Exempted from the obligation to register beneficial owner are, inter alia, limited companies listed on a regulated market within the EEA or an equivalent market outside the EEA, non-profit associations, which do not have any beneficial owners, the government, county councils and municipalities as well as legal entities over which any of these entities have a significant control.
A beneficial owner can be any natural person(s) who ultimately owns or controls a company, association or other type of legal entity and the natural person(s) on whose behalf a transaction or activity is being conducted. The law contains a presumption that a natural person(s) exercises the ultimate control over a legal entity, if he or she controls more than 25 percent of the total number of votes in the legal entity.
In case of a group of legal entities, the natural person who controls the parent company, provided that the parent company controls a sufficient part of the subsidiary in question, will be considered as having indirect ownership over the subsidiarity. Consequently, the beneficial owner of the parent company will be regarded as the beneficial owner of the subsidiary. Please note, that even if the parent company is listed on a regulated market and therefore exempted under the law, the subsidiarity is obliged to register its beneficial owner(s) if the subsidiarity itself is not listed on such a market.
Furthermore, a beneficial owner might also be a natural person(s) who exercise control through the right to appoint or resign more than half of the legal entity’s board members or corresponding management or when a person can exercise equivalent control through agreements with the owners, members or the legal entity itself, or through the provisions in the articles of association, through shareholder agreements or similar documents.
A natural person is assumed to ultimately own or control a legal entity if he or she is able to exercise such control as explained above together with one or several close relatives. In that case, each relative will be regarded as beneficial owners of the legal entity. Close relatives are spouses, registered partners, cohabitants, children and their spouses, cohabitants or registered partners.
A legal entity is obliged to submit reliable information regarding their beneficial owner(s) and the nature and extent of the beneficial owner’s interest in the legal entity to the Swedish Companies Registration Office. In addition to basic information, such as the company name, address and proof of incorporation, the notification should provide information regarding name, personal identity number, citizenship and country of domicile of the beneficial owner(s).
Furthermore, the notification must provide information on the nature and extent of each beneficial owner’s interest in the legal entity as well as an indication of whether the natural person owns or controls the company or association together with a close relative or through other companies. The legal entity must, at the request of an authority, without delay, provide information about its beneficial owner(s) and documentation on the investigation made to assess beneficial ownership.
If the legal entity does not have any beneficial owner(s), or reliable information on who the beneficial owner(s) is cannot be obtained, the Swedish Companies Registration Office must be informed thereof. In addition, the obliged entities must keep records of the actions taken in order to identify beneficial ownership. This information must be accurate and up-to-date.
Old information obtained by the legal entity should be maintained for at least five years.
Pre-existing legal entities must submit their first notification of beneficial owner(s) within six (6) months after the date the law entered into force (1 August 2017), i.e., no later than 1 February 2018. Legal entities which were founded after 1 August 2017 should submit their notification within four (4) weeks after incorporation.
In case of any change in beneficial ownership, the legal entity must notify the Swedish Companies Registration Office without delay. As a practical matter, this has been interpreted as meaning within a few days of the company becoming aware of a new beneficial owner(s).
It is compulsory to register beneficial ownership information online by using the Swedish Companies Registration Office’s electronic service. The registration must be authorised by signature of the legal entity and signed with Swedish electronic identification, such as Mobile BankID. If you do not have a Swedish electronic identification, you may use an agent (such as Moll Wendén) or apply for dispensation from the requirement to register the information online.
The registration is free of charge until 1 February 2018.