‘Beneficial Ownership’ information to be published soon as data collection begins

 

Adnan Adams Mohammed

In meeting the March 2020 deadline to have a full information on companies’ beneficial owners, the Registrar General Department (RGD) will begin collecting data of beneficial owners and upload it to its electronic registry.

The RGD is almost done with the works on the upgrading of its electronic registrar system to help create an interface that will receive the beneficial ownership data from companies. Additionally, the RGD has designed forms to facilitate the collection of beneficial ownership data as well as a series of sensitization programmes being rolled out targeting some specific sectors and industries in order to limit implementation gaps and challenges.

These forms part of the processes towards the RGD achieving its resolve to help disclose all beneficial owners of companies registered under the Companies’ Act.

The identity of the real owners, the ‘beneficial owners’, of the companies that have obtained rights to extract oil, gas and minerals is often unknown, hidden by a chain of unaccountable corporate entities. This problem also affects other sectors and often helps feed corruption and tax evasion. The RGD will publish information on the beneficial owners of entities winning public contracts as part of EITI requirements, according information on the OGP website.

As part of global efforts to fight corruption, tax evasion and money laundering, every country is to be committed to collect and publish beneficial owners of all companies.

This commitment builds on the Open Governance Practice (OGP) second action plan’s commitment on Open Contracting. The commitment is to provide information on the beneficial owners winning public contracts. The commitment will make public all information on the beneficial owners of public contracts to enable citizens support government to fight corruption as well as minimize tax evasion. It will also help Ghana meet other international requirements.

The commitment is relevant to increasing the level of transparency by improving accessibility of information on the beneficial owners of entities winning public contracts. It will also help to improve rules, regulations, and mechanisms ensure full disclosure of beneficial owners of public contracts.

In achieving this, the current Companies’ Act, 2019 is expected to streamline the corporate regulatory framework to contribute immensely in ensuring transparency in the ease of doing business in the country as well as assisting authorities to counteract money laundering, tax evasion, and stemming of illicit financial flows.

A key plan of the Act is the development of an electronic company registry to ensure an improvement in the collection of and access to beneficial ownership data.

However, where a person fails to provide the information required or gives false and misleading information, it will be deemed as an offence liable on summary conviction to a fine of not less than fifty penalty units and not more than two hundred and fifty penalty units. Such persons can also face imprisonment for not less than one year and not more than two years or even both fines and imprisonment.

Where a company defaults in complying, it is liable to pay an administrative penalty of twenty-five penalty units for each day beginning from the first day the offence was committed. In monetary value, twenty-five penalty units is equivalent to GHc300.00.

Also, the Registrar General, Madam Jemima Oware has already constituted a technical stakeholder forum to fix thresholds for beneficial ownership disclosure for all the various sectors that will be incorporated into the new Companies Law, 2019 for implementation next year.

This is on the basis that the Registrar General’s Department (RGD) made provision for threshold’s to be set in the new regime to effectively govern beneficial ownership disclosure.

Aside the intent of beneficial ownership regime in assisting authorities to counteract money laundering, tax evasion, and stemming illicit financial flows, it is part of strategic measures towards complying with the 2016 Extractive Industries Transparency Initiative (EITI) global conference resolution which made beneficial ownership disclosure mandatory for all EITI implementing countries, of which Ghana is a member. It gave countries up to January 2020 to fully operationalize the disclosure regime.

Consequently, the Department brought together technocrats drawn from key sectors of the economy including members who took part in drafting the Companies Act, representatives from the Ministries, Departments and Agencies (MDAs) as well as officials from key sectors such as extractive, real estate gaming, banking, Civil Society Organisations among others to make effective contributions into the setting up of thresholds for disclosure of beneficial ownership.

Key among the discussions was the setting up of different thresholds for different sectors on the basis that the average enterprise of some sectors were considered as high value as against others in relatively low value areas. Most of the participants pushed for zero percent stake, meaning that all persons having a stake more than this figure in a business enterprise must disclose beneficial ownership including politically exposed persons.

Importantly, having such mechanisms in place was seen as the right implementing factor in the regard that having one percent stake in an enterprise in the extractive or oil and gas sector could amount to over US$100 million dollars.

Different countries and international organisations have used and prescribed varying percentages of thresholds to address their respective beneficial ownership disclosure. For instance, the United Kingdom and the European Union’s Anti-money Laundering Directive have threshold of 25 percent.

“But assuming you set a threshold of 25 percent as other countries have done, then you are going to let go as much as maybe US$500 billion because there may be more owners who fall below the 25 percent threshold”, Dr. Steve Manteaw, Co-Chair of Ghana Extractive Industries Transparency Initiative (GHEITI) warned.