International Journal of Law And Criminology
54
https://theusajournals.com/index.php/ijlc
VOLUME
Vol.05 Issue02 2025
PAGE NO.
54-57
10.37547/ijlc/Volume05Issue02-11
Beneficial ownership registers and protection
mechanisms for beneficial ownership rights in foreign
countries and in our country
Raximova Dilorom Xaitbayevna
Independent researcher, Tashkent State University of Law, Uzbekistan
Received:
24 December 2024;
Accepted:
26 January 2025;
Published:
28 February 2025
Abstract:
Many countries around the world are promoting the increase of transparency regarding the ultimate
ownership of companies. Indeed, this is a useful tool for stopping illicit financial flows and creating fair markets.
However, it must also be considered that such measures may violate the right to privacy and pose threats to
personal security. The need to protect this privacy may lead some companies and owners to refuse to disclose
this information.
Furthermore, many organizations and individuals have warned that disclosing beneficial ownership information
may be ineffective or could lead to the spread of incorrect information.
Keywords:
Beneficial Ownership, beneficial property, public register.
Introduction:
Many countries around the world have
adopted the concept of beneficial ownership as an
economic term. In Spain, however, the idea of
beneficial ownership, or beneficial property, was
mistakenly interpreted as an economic term and
considered as a rule for the distribution of income.
However, the reference to the economic term was
removed by the OECD (Organisation for Economic Co-
operation and Development) in 2023, and it was
concluded that in common law systems, beneficial
ownership
is
nothing
more
than
a
"legal
interpretation."
Beneficial ownership originated in England, and several
years ago, a group of experts in England discussed the
meaning of beneficial ownership and beneficial
ownership rights, with much uncertainty surrounding
the issue.
In Russia, cases related to beneficial ownership are
often resolved through corporate decisions and
transactions, such as the "Doctrine of Shareholder
Restoration," "Doctrine of Lifting the Corporate Veil,"
and the "Doctrine of Beneficial Ownership.
Today, many countries around the world, particularly
India, the United Kingdom, Germany, France, Spain,
and Italy, have started to introduce stricter regimes or
mechanisms for companies to disclose the beneficial
ownership rights of their owners. The goal is to increase
transparency in corporate activities and combat money
laundering, financing terrorism, tax evasion, and other
illegal activities.
It is important to create mechanisms to identify
individuals hidden behind complex corporate
structures.
Failure to provide information on the ultimate
beneficial owners or failing to do so in a timely manner,
or knowingly submitting false information, is subject to
varying penalties under national legislations.
O. Fridman and others confirmed that legal ownership
is recognized as the right of an individual to control and
possess something. For example, if someone buys a
vehicle or a house with full payment, they have the
right to alter and use it as they wish (within legal
boundaries).
Similarly, the legal owner is recognized by law as the
owner of something, specifically, an individual who
holds the legal title to property for the benefit of
another.
International Journal of Law And Criminology
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International Journal of Law And Criminology (ISSN: 2771-2214)
On the other hand, as M. Graziadei emphasized,
beneficial ownership can be traced back to the history
of trust law, which emerged from the principle of
equality in the 12th-13th centuries.
This term is used differently from the term "legal
ownership." Additionally, other terms are often used to
convey the same meaning, such as beneficial right,
equal right, beneficial interest, and equal ownership.
According to E.A. Sukhankov, although the trustee
exercises the powers (orders) of the property owner,
they do not acquire these rights based on the waiver of
the trustee's claim.
According to U.S.A law, beneficial ownership refers to
the true, primary ownership rights to an asset or
property, even if the legal or title ownership is under a
different name. This concept is particularly important
for transparency and compliance with regulatory
documents in finance and legal fields. The beneficial
owner enjoys privileges such as earning income from or
controlling the asset, while the nominal owner may act
on behalf of the beneficial owner but does not benefit
from these privileges.
However, in many states, including the notably
prominent state of Delaware, corporate entities are
allowed to form without disclosing information about
their ownership structure to the public.
In 2015, the European Union's Fourth Anti-Money
Laundering Directive was adopted. According to it, each
country must have a centralized registry of beneficial
owners and owners.
In January 2021, the U.S. Congress passed the
"Corporate Transparency Act." On September 29, 2022,
the FinCEN organization issued a final rule setting forth
the requirement to report information about beneficial
owners in accordance with the Corporate Transparency
Act. FinCEN's Deputy Secretary, Himamauli Das,
described the final rule as "a significant step in
supporting our national security, intelligence, and law
enforcement agencies in curbing illegal activities."
The new rule requires reporting companies to provide
information about their beneficial owners, including
controlling persons, to FinCEN. The new rule came into
effect on January 1, 2024.
In the United Kingdom, to be considered a beneficial
owner of a company, an individual must hold at least
25% of the shares or voting rights, or have significant
influence over the company. Additionally, there is a
public register known as the People with Significant
Control (PSC) register.
Accordingly, the United Kingdom launched a beneficial
ownership register in 2015. This public register also
includes the company's internal documents.
On September 1, 2019, Luxembourg notably launched
a public register of beneficial owners. Anyone can
access the website (https://www.lbr.lu/) and obtain
free information about any company. The site even
offers an option to access anonymous data.
Beneficial ownership registers exist in many countries,
including Germany, Belgium, Austria, Ireland, Latvia,
Luxembourg, Slovenia, and Latvia. In the CIS region,
such registers are also present in Russia, Ukraine,
Belarus, and Armenia.
In Japan, as part of measures to identify beneficial
owners of legal entities, a system for listing the
beneficial owners of legal entities was established on
January 31, 2022.
the nominal owner may act on behalf of the beneficial
owner but does not benefit from these privileges.
However, in many states, including the notably
prominent state of Delaware, corporate entities are
allowed to form without disclosing information about
their ownership structure to the public.
In 2015, the European Union's Fourth Anti-Money
Laundering Directive was adopted. According to it, each
country must have a centralized registry of beneficial
owners and owners.
In January 2021, the U.S. Congress passed the
"Corporate Transparency Act." On September 29, 2022,
the FinCEN organization issued a final rule setting forth
the requirement to report information about beneficial
owners in accordance with the Corporate Transparency
Act. FinCEN's Deputy Secretary, Himamauli Das,
described the final rule as "a significant step in
supporting our national security, intelligence, and law
enforcement agencies in curbing illegal activities."
The new rule requires reporting companies to provide
information about their beneficial owners, including
controlling persons, to FinCEN. The new rule came into
effect on January 1, 2024.
In the United Kingdom, to be considered a beneficial
owner of a company, an individual must hold at least
25% of the shares or voting rights, or have significant
influence over the company. Additionally, there is a
public register known as the People with Significant
Control (PSC) register.
Accordingly, the United Kingdom launched a beneficial
ownership register in 2015. This public register also
includes the company's internal documents.
On September 1, 2019, Luxembourg notably launched
a public register of beneficial owners. Anyone can
access the website (https://www.lbr.lu/) and obtain
free information about any company. The site even
offers an option to access anonymous data.
International Journal of Law And Criminology
56
https://theusajournals.com/index.php/ijlc
International Journal of Law And Criminology (ISSN: 2771-2214)
Beneficial ownership registers exist in many countries,
including Germany, Belgium, Austria, Ireland, Latvia,
Luxembourg, Slovenia, and Latvia. In the CIS region,
such registers are also present in Russia, Ukraine,
Belarus, and Armenia.
In Japan, as part of measures to identify beneficial
owners of legal entities, a system for listing the
beneficial owners of legal entities was established on
January 31, 2022.
The register for the state registration and re-
registration of business entities is formed and
maintained by the State Services Centers (hereinafter
referred to as registration authorities) and is updated
daily.
Due to the priority of the information in the register, it
is considered relevant and accurate, which, in turn,
encourages the preservation of the timeliness and
validity of legal entities' information in the register.
When submitting an application for the state
registration of a business entity, it is required to fill out
a questionnaire regarding the beneficial owner of the
legal entity in the register.
Changes made to the registration documents of legal
entities are subject to administrative responsibility
under our legislation if the registration authorities
violate the conditions and procedures for providing
information.
According to Article 1762 of the Administrative Liability
Code of the Republic of Uzbekistan, failure to provide
or the submission of false information regarding
changes in the address, bank details, or re-registration
of a business entity will result in a fine for responsible
persons, ranging from ten to fifteen times the base
calculation amount.
The disclosure of information may pose a threat to
individuals' personal rights and the protection of their
personal data. This raises new legal issues. Do
beneficial ownership registers conflict with personal
data protection and privacy laws, or do they oppose
them?
The right to privacy is guaranteed in a number of
international human rights documents, including the
Universal Declaration of Human Rights, and in the
constitutions of over 100 countries around the world.
The right to privacy demands that all individuals be free
from arbitrary or unlawful interference with their
privacy, home, correspondence, and family, as well as
attacks on their honor and reputation.
The Law of the Republic of Uzbekistan "On Personal
Data" includes provisions for the protection of personal
data, stating that personal data should not be disclosed
or distributed without the subject's consent or a legal
basis, and that the owner and/or operator or any other
person permitted to use personal data must ensure
confidentiality.
The owner and/or operator, along with others
authorized to use personal data, must not disclose or
distribute personal data to third parties without the
subject’s consent.
For a long time, Russian law ignored beneficiaries as
legal entities, and they were not legalized. However,
with the widespread use of offshore companies and
trusts in Russia, there has been a growing trend
towards recognizing beneficiaries. Russian courts,
therefore, cannot disregard the doctrine of beneficial
ownership.
The legal status of beneficial ownership should
encompass not only obligations and responsibilities but
also legal rights and guarantees. Therefore, it is
considered necessary for the possibility of holding a
beneficiary liable for the debts of a controlled company
to be fully effective.
Mathias Rinhard-DeRoo in his book "Beneficial Owner"
approaches the concept from two perspectives: legal
grounds and the scope of US federal law. In order to
better understand the basic concepts and features of
beneficial ownership, both legal theories and judicial
practices are carefully examined. Rosko Pound, in what
he calls "the law in action," has selected federal Indian
law to study the exact implications of the concept of
beneficial ownership. For some, this choice of law may
seem unusual. How might India's federal law address
pressing financial sector issues? As usual, there are
short and long answers. The short answer is that
analyzing such a complex area of law could open new
perspectives in a particular field of law.
Slovakia and Denmark were the first European Union
countries to implement a beneficial ownership registry.
In Slovakia, registration began on November 1, 2015,
and it was initially mandatory only for private
companies participating in public procurement. This
obligation expanded to all companies with contracts
worth at least 100,000 euros with the government,
effective from February 1, 2017.
The primary reason for establishing the registry was to
ensure the transparency of the ownership structures of
companies involved in public procurement. According
to the law, if a company fails to register but still
participates in public procurement, it is subject to a fine
ranging from 10,000 euros to 1,000,000 euros and a
three-year
ban
from
participating
in
public
procurement.
In the Republic of Uzbekistan, the term "beneficiary"
can be found in relationships related to trust
International Journal of Law And Criminology
57
https://theusajournals.com/index.php/ijlc
International Journal of Law And Criminology (ISSN: 2771-2214)
management
agreements,
guarantees,
public
procurement, banking relations, and securities
transactions.
It is worth noting that although this term is frequently
encountered in national legislation, there are still issues
regarding the identification of who the beneficiary is
and which properties should be classified as beneficial
ownership.
In relation to a legal entity, the form of beneficial
ownership is considered to be the ownership share
(such as a specific share of shares, capital share, voting
rights percentage, or information about direct or
indirect ownership). The property of a legal entity
(assets) or other forms of control (whether physical
persons have provided indirect financial support or
exert decisive influence on decision-making or control
over management) determine the impact on the
control of the legal entity; or clarifying whether an
individual is a senior executive of the legal entity.
According to the Presidential Decree of the Republic of
Uzbekistan (UP-6191) dated March 23, 2021, starting
from June 1, 2021, law enforcement agencies and other
state bodies were granted unrestricted access to
information related to state registration systems.
REFERENCES
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refer, but one of them was the 1990 Spain-United
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Tikhon P. Podshivalov @ South Ural State University,
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Graziadei, M. (2017). The structure of property
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Bakhromjon Topildiev. Doctor Of Juridical Science,
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Publication
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2023
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