Haarlem, 11 juli 2019
As of 2020, companies and legal persons will be required to register their (in)direct owners. Pending legislation, this is when the UBO register will come into force in the Netherlands. The UBO register will have a great impact on the privacy of family business owners. Research by the RSM-Nyenrode Institute shows that the information of over 270,000 Dutch family business owners will become public as a result of this law.
This is in strong contrast with the interest attached to privacy by many Dutch citizens, which is also acknowledged by the government with the recently introduced General Data Protection Regulation (GDPR). A survey among participants of the RSM-Nyenrode Family Businesses research panel shows that nearly half (48%) of the owners of larger family businesses are insufficiently familiar of the UBO register. Only 35% of the owners are aware of the effects of the introduction of the UBO register. The purpose of the register is to counteract financial and economic crime, such as money laundering and terrorist financing, by creating transparency about the Ultimate Beneficial Owner (UBO) of an enterprise.
Infringement of privacy
Of the entrepreneurs who are familiar with the UBO register, no less than 70.8% stated that the UBO register would seriously infringe upon their privacy. In addition, 41.7% are worried about their own and their family's safety once the UBO register has been implemented. Information campaigns and preparations by owners are still at a very early stage.
Laura Bles-Temme, Head of Tax at RSM, explains the outcome of the investigation: “The reactions clearly show that the implementation of the UBO register is not only undesirable but also creates a bigger burden for family businesses. This may also lead to the emergence of a whole new market for consultants to help owners of family businesses ensure their own and their children's privacy to a certain extent as the new UBO legislation is coming into force.” The research shows that the owners of family businesses will mainly (70%) turn to their accountants for any advice.
The problem for family businesses
Roberto Flören, professor of Family Businesses and Business Transfer at RSM and also affiliated with the Nyenrode Business Universiteit, explains: “Probably, very few Dutch people will oppose to any measures that counteract financials and economic crime. However, this does become a problem if many well-intentioned individuals are negatively affected by this measure. The UBO register will include all owners of Dutch family businesses who own at least 25% of their limited liability company. It's not that the initiators of the UBO register suspect the owners of family businesses of something like terrorist financing but, unfortunately, this group just happens to fall under the definition of a UBO as well. The initiators probably did not realise that the register would affect the privacy of a very large group of Dutch entrepreneurs.”