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Company’s Register, a title registry?

| News | Corporate Law and M&A

Ignacio Ariño analyses the deposit of Annual Accounts with the Companies House begins to countdown

The General Meetings of Companies (of any size) are held on these dates in the closing days of June with the aim of approving the 2017 Annual Accounts, and the one-month period set by company law for the deposit of accounts with the Companies House begins to countdown.

As a result of the above, (i) the recent publication in the Official Gazette of the Mercantile Registry of Order JUS/319/2018, of 21 March, approving the new models for the presentation in the Mercantile Registry of the annual accounts of the entities obliged to publish them and (ii) already at a more practical level, the commitment made - on 14 May 2018 - by the College of Registrars to the computer programme that makes it possible to present the Annual Accounts electronically.

Both the Order and the programme mentioned previously include, as a new initiative, the obligation to identify the beneficial owner of all legal persons domiciled in Spain who deposit accounts, except companies listed on a regulated market, and this in accordance with the provisions of Law 10/2010 on the prevention of money laundering and the financing of terrorism.

The term 'beneficial owner' refers to the natural person or persons who comply with the requirements of Directive 2015/849/EC of the European Parliament and of the Council of 20th May 2015. In general, 'beneficial owner' means the 'natural person or persons who ultimately directly or indirectly own or control more than 25 per cent of the capital or voting rights of a legal person or who otherwise exercise direct or indirect control over the management of a legal person'. If control is indirect through a legal entity, the identity of that entity must be indicated, and ultimately to the Company's directors, if there is no real holder.

This measure implies access to a Public Registry such as the Mercantile Registry for information that until now has been requested by the operators affected by the Money Laundering Law - which is entirely logical - and which is now being generalized "indiscriminately" and affects small and medium-sized companies that are going to see information published in the Mercantile Registry that may exceed the laudable task of the fight against money laundering that the legislation on the subject seeks to prevent. The Directive provides that "Member States shall ensure that information (...) on beneficial ownership is kept in a central register in each Member State, for example a commercial register or a register of companies (...) or in a public register", but it does not necessarily have to be kept in a public register", the paradox being that with the adoption of this measure the commercial register may change from a register of companies to a register of title holders.

A similar situation - although at another level - occurred in its day with the publication in 2013 of the well-known Entrepreneurs' Law that imposed the obligation of telematic legalization of the Minutes Books of the General Shareholders' Meeting and Board of Directors and already then sufficient measures were established to guarantee the privacy of the content of the resolutions adopted by the corporate bodies. Thus, providing information to the Registry of beneficial owners, yes, but not public and free access to this sensitive information, and more so at a time when the privacy of personal data is being safeguarded by the legislator.

The problems described above have been well perceived by the General Council of Notaries -which has already fought a great deal against money laundering- and by the Confederation of Businessmen of Small and Medium-sized Enterprises (Cepyme), which have lodged an appeal with the National Court against the innovations made in the Ministerial Order regarding the identification of the real owner, also requesting, as a precautionary measure, the suspension of the aforementioned Order on this point.

Therefore, and pending the resolution of the precautionary measure and, where appropriate, the most prudent appeal, the deadlines for holding the General Shareholders' Meeting before 30th June must be tightened up and the way forward determined.


For further information, please contact:
Ignacio Ariño Sánchez

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