From January 2020, companies and legal entities will be required to register their direct and indirect owners. If the bill is adopted, the UBO register will take effect in the Netherlands at that time. The UBO register will have a major impact on the privacy of family business owners. Research by the RSM-Nyenrode Institute shows that the details of over 270,000 Dutch family business owners will become public under this law.
This is in sharp contrast to the importance that many Dutch citizens attach to their privacy, a protection that is also endorsed by the government in the recently introduced GDPR legislation. The survey of the RSM-Nyenrode Family Businesses Research Panel shows that nearly half (48%) of all owners of larger family businesses are not sufficiently familiar with the UBO register. Only 35% of owners are aware of the consequences of the UBO register’s introduction. The purpose of the register is to combat financial and economic crime, such as money laundering and terrorist financing, by creating transparency about a company’s ultimate beneficial owner (UBO).
Invasion of privacy
Of the business owners who are familiar with the UBO register, a total of 70.8% state that the UBO register constitutes a major invasion of their privacy. In addition, 41.7% are concerned about their safety and the safety of their families once the UBO register is actually introduced. Information for and preparation by owners is therefore still in its infancy.
Laura Bles-Temme, Head of Tax at RSM, explains the survey results: “The responses show that the implementation of the UBO register isn’t just seen as unwanted and burdensome. It could also give rise to an entirely new market for advisors to assist family business owners in safeguarding their privacy and that of their children to some extent once the UBO regulations come into effect.” According to the survey, most family businesses owners (70%) turn to their accountant when seeking advice on these matters.
Problem for family businesses
Roberto Flören, RSM professor of Family Businesses and Business Transfer as well as a professor at Nyenrode Business University, says the following: “Not many Dutch people are likely to have problems with measures aimed at combating financial and economic crime. However, it becomes a problem if a large number of well-intentioned people have to end up suffering under this measure. The UBO register will consequently include all Dutch family business owners who hold at least 25% ownership of their private limited liability company, or BV. This does not mean that the initiator of the UBO register directly suspects family business owners of financing terrorists, for example, but unfortunately this group also falls under the definition of the UBO. The initiator probably did not realize that this concerns a very large group of Dutch citizens whose privacy will be affected.”