Update - Clarification on the modalities of access to the Register of Beneficial Owners – District Court – 28 February 2020

18/08/20

More than one year after the entry into force of the Law of 13 January 2019 establishing a Register of Beneficial Owners (hereinafter "the Law"), an interesting judgment has been made available regarding its access for the public at large.

1. Facts

A bank incorporated under Russian law granted several loans to three companies also incorporated under Russian law.

Mr S.N. has agreed to guarantee the obligations of the three entities towards the bank. Following the non-repayment of the loans by these three companies, the bank turned against Mr. S.N.

Following numerous Russian court decisions, the liabilities remain unpaid. In order to recover its receivables, the bank therefore intended to gather information on all Luxembourg companies of which Mr S.N. is the beneficial owner through the Register of Beneficial Owners (“RBO”).

2. Claims and arguments of the parties

Plaintiff:

The bank has requested the Luxembourg Commercial Court to enjoin the Register of Beneficial Owners to communicate the information of the various Luxembourg entities in which Mr S.N. is a beneficial owner, since the Register of Beneficial Owners does not offer this possibility of research to the public at large (for which the research on the RBO can only be made through the name of the Luxembourg entities).

The bank explains that the recovery of its claim is seriously threatened because, according to the bank, Mr S.N. is organising his insolvency (e.g. sale of a property owned by Mr S.N. to his family members, etc.).

Defendant: 

The defendant argued that such research is only open to national authorities for a very specific purpose, which is the fight against money laundering and terrorist financing.

3. Decision of the Second Chamber of the District Court of and in Luxembourg

Articles 11 to 15 of the Law regulate access to the RBO by distinguishing between access for national authorities and access for the public at large.

The parliamentary work on the Law proposed to align the modalities of access for consultation of the public at large with those provided for the authorities, while leaving to "a Grand-Ducal regulation” the determination of the search criteria, which may vary according to the different categories of authority and persons.

Thus, the Grand-Ducal Regulation dated 15 February 2019 on the procedures for registration, payment of administrative fees and access to information register with the RBO (hereinafter "the Regulation") opened the possibility for national authorities, and national authorities only, to carry out a research by name of beneficial owner. Such possibility is not opened to the public at large as they may only carry out a research by RCS number or by company's name.

Thus, neither the Law nor the Regulation provide any exception or procedure for the public at large to be granted such access.

In the absence of a legal basis, the judges considered the request of the bank as inadmissible.

4. Takeaway

This judgment is interesting since, by referring to parliamentary work, it reaffirms that it is not possible to search in the RBO for a beneficial owner by his or her name as an individual but only by the name of a company or its Luxembourg business register number. Thus, this judgment points out that an action for recovery of an unpaid debt does not justify a right to override this rule.

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Alain Meunier

Tax Partner, Private Wealth Services Leader, PwC Luxembourg

Tel: +352 49 48 48 3314

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