Beneficial ownership transparency in Liberia

Beneficial Ownership Regime in Liberia

Robust Definitions

The Open Ownership Principle 1

Beneficial ownership should be clearly and robustly defined in law, with sufficiently low thresholds set to ensure all relevant ownership and control interests are disclosed.

• Robust and clear definitions should state that a beneficial owner is a natural person.
• All forms of ownership and control should be covered and the definition should specify that ownership and control can be held directly and indirectly.
• There should be a single unified definition in primary legislation, with additional secondary legislation referring to this definition.
• Thresholds should be sufficiently low so as to ensure the disclosure of all relevant ownership and control and a risk-based approach should be used to set lower thresholds for particular sectors.
• Particular consideration should be given to thresholds that apply to ownership by PEPs, with a clear definition used to determine what constitutes a PEP.

In-country assessment

In Liberia, there are four definitions of a beneficial owner which are outlined variously in: the 2020 Associations Law of Liberia , the 2020 Disclosure of Ultimate Beneficial Ownership Regulation [2] (DUBO Regulation) , the 2013 AML/CFT Regulations for Financial Institutions in Liberia and the [3] [4] Regulation on Enhanced Due Diligence in the Provision of Financial Services for Politically Exposed Persons (PEPs). While the definition in the Associations Law is targeted at all entities in Liberia [5] registered at the LBR including trusts and foundations, the other three definitions are specific to companies within the extractives sector (oil and gas), financial institutions, and designated [6] non-financial businesses and professions, respectively. Our assessment of the four definitions reveals the common understanding that in Liberia, a beneficial owner is indeed a natural person that exercises ownership and control over an entity. Although only by implication, all definitions also suggest that ownership and control can be held directly or indirectly.

Another common and noteworthy trend is that the Associations Law and the DUBO Regulation also define key concepts and terms used in, or directly relevant to, their own definition of a beneficial owner to provide clarity and guidance on how a beneficial owner can be easily identified. For example, the Associations Law defines “ultimate effective control” and “ultimate ownership” to provide guidance and clarity on what constitutes the ultimate control and ownership referred to in the definition of a beneficial owner. However, examples of the forms of ownership and control that exist, such as ownership of shares, control over voting rights, or the right to appoint members, were not provided.

Similarly, the DUBO Regulation defines “controlling person” and provides examples of how a controlling person can be identified in a partnership or a trust. A controlling person is defined as any natural person who directly or indirectly holds more than 25% of the shares or voting rights of an entity as a beneficial owner. Separately, within the context of explaining partnerships or similar arrangements, it explains a controlling person as a natural person who exercises direct or indirect ownership of the capital, profits or voting rights, or control over the management of the partnership or similar structure. This provides guidance on what forms of control disclosing entities should consider when identifying who a beneficial owner or a controlling person is.

In relation to threshold, the DUBO Regulation is the only legislation that prescribes a threshold for identifying a beneficial owner. Regulation 8.0 prescribes “companies to disclose the details of individuals who own 5% shares or stock in the company” which is consistent with international best practice, and recommendations for high-risk sectors such as the extractives industry. Low thresholds are crucial to ensure that most or all people with relevant BO and control interests are identified in disclosures. That said, it is important to highlight that although the intention of the draftsman is to set 5% as the disclosure threshold, the literal interpretation of Regulation 8.0 suggests that only “individuals who own 5% shares or stock” in a petroleum company should be disclosed. A clearer approach would be to specify that individuals who own at least 5% shares or stock, votes, profits or assets should be disclosed. Thus, the 5% should be qualified to include those who own more than 5% of the company and the subject of ownership should be expanded to include votes, profits or assets.

The definition in the Associations Law does not set a specific threshold for the disclosure of BO information. However, it is expected that the Registrar/Deputy Registrar will exercise the powers in [7] Section 1.10 of the Associations Law to make the comprehensive regulations necessary to give effect to the provisions of the Law on BO. To ensure that most or all people with relevant BO and control interests are identified in disclosures, it is recommended that governments should adopt a risk-based approach to determining thresholds. An example of a country that has adopted this approach is Ghana. In Ghana, the thresholds for BO disclosure are set thus: 5% for high-risk sectors including extractives, banking, insurance, and gaming, among others, 20% for all other sectors, a 5% threshold for foreign PEPs, and a mandatory disclosure for local PEPs. For ease of understanding, the four definitions from the four different laws are laid out in detail in the table below.

Table 1: Examining the definitions of BO in Liberia

Component of the definition	Associations Law 2020 [8]	Disclosure of Ultimate Beneficial Ownership Regulation 2020 [9]	AML/CFT Regulations for Financial Institutions in Liberia, 2013 [10]	Regulation on Enhanced Due Diligence in the Provision of Financial Services for Politically Exposed Persons (PEPs)	Multi Stakeholder Group of the LEITI [11]
Natural person	Yes	Yes	Yes	Yes	Yes
Ownership and control interests	Yes	Yes	Yes	Yes	Yes
Indirect and direct interests	Implied but not specified	Yes	Implied but not specified	Implied but not specified	Yes
Disclosure threshold	No	“Companies are required to disclose the details of individuals who own 5% shares or stock in the company” [12]	No	No	5% for companies in the agriculture, mining (only for those with MDAs) and oil sectors; and up to 10% for companies in the forestry sector, including companies in the mining sector holding rights below MDAs.
Forms of economic or control interest	No	“..(shares or voting rights)” [13]	“right to and/or benefits from assets, including an account or property”	No	No
Mechanisms of holding interest	“…such as control through relationships, financial power or contractual associations”	No	No	No	No

What is evident from our assessment of the above definitions is that some key best practice recommendations such as setting a low threshold, adopting a risk-based approach to determining thresholds, capturing how a beneficial owner can exercise ownership or control over an entity, and the mechanisms through which these interests can be held, are not included.

That said, the LEITI BO roadmap, developed out of learnings from the BO Pilot Phase in 2013, provides an indication of the MSGs approach to setting thresholds based on the aggregate dollar value of the sector. During the BO Pilot Phase, the disclosure threshold was 5% for companies [14] operating in agriculture, mining, and oil, and 10% for companies in the forestry sector (including companies holding other rights below a MDA in the mining sector). Additionally, the MSG agreed that, for BO disclosure, PEPs should be identified to highlight any case of potential conflict of interest and corruption. Although the threshold was not expressly prescribed, the intention of the 15 MSG was to capture all PEPs who are beneficial owners regardless of their percentage of ownership and/or control. This sector-specific approach to thresholds is exemplary of how Liberia can approach setting low thresholds during future reforms.

Thus, while the amendment of the Associations Law to create a legal basis for BO is no doubt a laudable step, more needs to be done to align the definition with international best practice recommendations. We note that the Regulations published by the Ministry of Foreign affairs in furtherance of the Associations Law attempts to provide some clarification on the BO provisions in the primary legislation, however, the highlighted gaps persist. This much-needed alignment can be achieved through the publication of planned BO regulations.

It is common for jurisdictions to have more than one definition of beneficial ownership set by different government agencies. However, it is recommended for a jurisdiction to have a single and unified definition in a primary legislation, to which the other definitions in sector legislation can refer. This is integral to setting a clear standard of what BO means and how a beneficial owner can be identified. Multiple definitions with multiple thresholds can create confusion, duplicate reporting obligations and create an opportunity for disclosing entities to cherry-pick their declarations and only comply with specific components of the definitions. Therefore, BO definitions in Liberia need to be harmonised as much as possible to ensure that there is a single and unified definition of what constitutes a beneficial owner consisting of a broad catch-all definition.

Also, given that the Associations Law does not define PEPs, it is important that a definition set in another law such as the Regulation on Enhanced Due Diligence in the Provision of Financial Services for Politically Exposed Persons (PEPs) is adopted to enable disclosing entities determine what constitutes a PEP. Having a comprehensive regulation on BO to clarify the gaps in the definition highlighted above will improve the efficacy of the definition. Given that the LBR is the implementing government agency for BO reforms in Liberia and is responsible for the “coordination and implementation of the processes of enterprise formalisation in Liberia”, the primary definition of a beneficial owner should be the definition in the Associations Law, which we recommend should be expanded through the planned BO regulation. In the development of the BO regulation, the LBR should utilise the BO roadmap published by the LEITI, which is valuable in providing a steer on how the MSG has approached implementation issues such as thresholds and the definition of PEPs.

Comprehensive Coverage

The Open Ownership Principle 2

Disclosure of BO data should comprehensively cover all relevant types of legal entities and natural persons.

• All types of entities and arrangements through which a natural person can exercise ownership and control should be included in declarations.
• Particular consideration should be given to disclosure requirements for entities such as SOEs, and PLCs. Natural persons such as non-residents or foreigners should be included in declarations.
• Any exemptions from full declaration requirements should be clearly defined, justified and reassessed on an ongoing basis.

In-country assessment

The beneficial ownership regime under the Associations Law is applicable to companies and entities that are registered and authorised to do business in the jurisdiction. The Associations Law specifies that “ …the term beneficial owner shall be applicable to all forms of businesses incorporated and/or organized under the laws of Liberia or authorized to do business within the Republic of Liberia, inclusive of resident and non-resident corporations, foreign corporations authorized to do business in Liberia, limited liability companies, partnerships, limited partnerships, trusts, foundations, and other legal entities organized under the laws of Liberia or authorized to do business in Liberia”. [16]

However, while the structure of entities such as limited liability companies, partnerships and limited partnerships are generally straightforward, entities such as trusts and foundations have more complex structures and may require a more nuanced approach to establishing a BO disclosure regime. A clear example is the Liberia International Shipping Corporate Registry (LISCR), – a US-based privately-owned but global-corporation – which administers the Liberian Corporate Registry, pursuant to an act of law of the Liberian legislature, the Associations Law. The Liberian Corporate Registry then, through its parent LISCR Trust Company, provides the exclusive agent service to register all non-resident Liberian entities. This includes corporations, LLCs, General and Limited Partnerships, Private Foundations, Foreign Maritime Entities and Shelf Companies. The principal role of the registered agent is to receive filing instructions, issue annual invoices, and to provide a registered office address for receiving service of process and legal notices on an entity’s behalf.

The 2020 amendment to the Associations Law has imposed new statutory and regulatory requirements for not only resident domestic entities but also non-resident Liberian entities which includes the requirement to keep up-to-date records of beneficial ownership information. The law 17 makes the statutory registered agent, which is the LISCR Trust Company, responsible for ensuring that its non-resident domestic business entities comply with these record-keeping obligations in Section 8.1.4 of the Associations Law, and make such information available and accessible to relevant competent authorities.

Hence the amendment to the association's law has brought the activities of the LISCR Trust Company and non-resident Liberian entities under the BO disclosure regime, which neatly closes the loophole which may have otherwise existed. However, from an implementation perspective, the question that immediately arises is how the LBR will collect BO information of non-resident Liberian entities. This ensures that its compliance efforts are not limited to domestic entities registered with the LBR, but also covers non-resident entities for which LISCR Trust Company acts as registered agent.

Statutory registered agents are also subject to AML standards and are mandatorily required to ensure that entities for which they act record ownership information annually, and are in full compliance with the law. Given that the law is fairly new, it may be premature to assess the LISCR Trust Company’s compliance levels. However, as a starting point for compliance, the registration forms issued by the LISCR – which currently makes the provision of ownership information 18 optional – will have to be updated to capture legal and beneficial ownership information in order to comply with the law. Additionally, the LBR will have to create a system that will enable it to collect records of BO information kept by non-resident Liberian entities for publication on its planned BO Central Register.

In an attempt to provide clarity on some of the amendments made to the Associations Law, the Ministry of Foreign Affairs published Regulations for the purpose of clarifying, inter alia, the application of the term beneficial owner. The Regulation echoes the excerpted provision in Pages 17 and 18 above and emphasises that the intention of the legislature is for the beneficial ownership regime to apply to all entities operating in Liberia. That said, the BO regime under the Associations Law can be made more comprehensive through the use of the planned Regulations. It could specify that the BO regime applies to PLCs and SOEs, and provide sufficient clarity on how BO information should be disclosed, particularly for complex structures like Private Foundations.

The principle of Comprehensive Coverage primarily aims to ensure that there is, as much as practicably possible, little or no loophole through which BO disclosures can be avoided. The case study above clearly shows how the exemption of an entity from BO disclosure can pose significant risks to BO reforms. The preference would be for all entities and persons to be captured, however, there are peculiar instances where an entity or a person may have a legitimate and justifiable reason for being exempted from full BO disclosures. For example, listed companies are sometimes exempted from BO disclosure requirements if adequate and enforced BO disclosure requirements exist for the stock exchange(s) on which the declaring company is listed. Such peculiarities are [19] currently not contemplated in the Associations Law. Thus, in addition to paying attention to the applicability of the BO regime to PLCs and Entities, the planned BO regulations should provide sufficient guidance on any exemptions to BO disclosure.

From a more practical standpoint, we understand the difficulty and complexity involved with establishing an efficient BO disclosure regime for domestic and foreign corporations authorised to do business in Liberia and for entities such as limited liability companies, partnerships, limited partnerships, trusts, foundations, which have different corporate structures. To ensure that the key agencies, particularly the LBR, prioritise and deploy their limited financial and human resources optimally, Liberia may adopt a phased approach to BO implementation. It could pilot the extractives register with domestic and non-resident domestic entities doing business in Liberia, and with all entities save for trusts and foundations. Our consultation sessions with the LBR Steering Committee have revealed that this is an approach that the LBR is keen to explore.

Sufficient Detail

The Open Ownership Principle 3

Beneficial ownership declarations should collect sufficient detail to allow users to understand and use the data.

• Key information sufficient to identify the beneficial owner, the declaring entity and the means through which ownership or control is held, should be collected.
• To facilitate compliance, information should be collected using online declaration forms which should be accompanied with clear guidance on how to fill the form.
• Clear identifiers should be assigned to natural persons, legal entities and arrangements to aid data utilisation and analysis.
• Where BO is held indirectly through multiple legal entities, sufficient information should be published to understand full ownership chains.

In-country assessment

At the moment, the LBR has not published any BO declaration forms. The only form (publicly accessible) that contains a section for the collection of BO information is the 2020 Licensing Round Prequalification form. This is because the provision of BO information is a prerequisite for oil and gas companies who wish to apply for a petroleum agreement in a bidding round. [20] However, the form [21] only requires the applying entity to provide the name and address of companies or individuals who own more than 5% voting or equity interest in the company applying for a licence. Information relating to the nature of the economic or control interest, the mechanisms through which such interests are held, and information relating to instances where beneficial ownership is held indirectly through a chain of entities are not included in the form. Evidently, there is a clear need for the LBR to develop BO declaration forms to collect sufficient information relating to the beneficial owner, the declaring entity, what form of control or ownership is exercised and the means through which such interests are held.

Our consultations with the key stakeholders such as the LBR Steering Committee and LEITI MSG reveal that a key priority activity for the LBR is to develop the forms before the end of the third quarter of 2022. The BO forms will contain information on the beneficial owners, entities and means through which ownership and control is held. In terms of how these forms will be distributed, we understand that the LBR will initially adopt a hybrid approach, with simultaneous use of paper-based and online forms, subsequently transitioning into a fully-automated online data collection process.

BO declaration forms that contain sufficient information should be created for the collection of BO data for companies within the extractives sector and other sectors. The BO declaration form should also be accompanied with a Data Submission Manual that will provide sufficient guidance on how to complete the declaration form. This will facilitate compliance amongst entities and individuals with reporting obligations. It is also important that in the course of developing these forms, key stakeholders including the companies who will be providing BO data are consulted. This will ensure that the forms are user-friendly, and request information that the LBR can reasonably expect companies to have. [22]

Having sufficient data is also instrumental to the use of data. The data collated should be sufficient for data users such as CSOs, companies, and competent authorities (LBR, FIU, MoJ, LPRA etc) to meaningfully engage with and use for investigative, due diligence and other related purposes.

Central Register

The Open Ownership Principle 4

BO data should be collated in a central register.

• Research shows that central (and public) registers are the easiest way to ensure timely access to beneficial ownership information to the widest number of actors fighting financial crime, including sharing information with international counterparts.

In-country assessment

Currently, there is no central register in Liberia that hosts BO information. However, the Government of Liberia has mandated the LBR to work in concert with the LEITI, LPRA and other relevant government agencies to develop, design and establish a beneficial ownership register. The LBR is set to establish a BO register, first for the extractives sector and subsequently for the full economy. The LPRA has purchased software for the BO register and is working with the LBR and the LEITI to ensure that a BO register for the extractives sector is developed within the first year of the OE programme.

The recently-amended FATF Recommendation 24 takes an important step towards requiring central beneficial ownership registers. It requires countries to ensure the availability of adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons, which can be obtained or accessed rapidly and efficiently by competent authorities, through either a register of beneficial ownership or an alternative mechanism. Evidently, collating BO data in a central register meets international best practice. To this end, the LBR should strengthen its efforts to develop, design and launch the planned centralised and public BO register, beginning with a pilot register for the extractive industry. This is a common approach adopted in a number of countries, including Nigeria and Armenia. Learning from the extractives pilot will be crucial to maximise the impact of Liberia’s economy-wide disclosures.

Public Access

The Open Ownership Principle 5

Sufficient data should be freely accessible to the public.

• The BO data in the central register should be accessible to the public without barriers such as access fee, registration or restriction to domestic access.
• The data made accessible to the public should be sufficient for users to understand and use the data.
• Where information about certain classes of persons (e.g. minors) or entities are exempt from publication, the exemption should be clearly defined and justified.
• Where data has been exempted from publication, the publicly available data should indicate that BO information is held by authorities but has been exempt from publication.

In-country assessment

Research we have done revealed that Liberia does not have any privacy and data protection legislation, however, the right to privacy is entrenched in Article 16 of the 1986 Constitution of the Republic of Liberia. The respect for one’s private life is indeed central to the notion of freedom and individual autonomy. It has been explained as “respect for a person’s sexuality; respect for private and confidential information – notably the storing and sharing of such information; the right to not be subject to unlawful state surveillance; and the right to control the dissemination of information about one’s private life…” [emphasis ours]. We understand that privacy and security [23] concerns are common arguments made against the public access to BO data, and implementing agencies are usually saddled with the responsibility of striking a fair balance between privacy and transparency. This was one of the concerns raised by the stakeholders during the consultation sessions.

While there is no blanket approach in resolving this conflict, it is generally recommended that the data collected and published by governments should be limited to data that is directly relevant to the national objectives of the government in question. What is disclosed to the public can be a [24] subset of the data that is collected and available to public authorities, provided that enough information is made publicly available to allow for meaningful oversight and transparency. An [25] implementing country can also mitigate potential negative effects of publication by implementing a protection regime that allows for exemptions to publication in circumstances where someone is exposed to disproportionate risks.

In the Liberian context, the Freedom of Information Act (FOIA) creates a basis for the publication of data collected by government agencies. The FOIA is premised on Article 15(c) of the Constitution which guarantees the right to access to public information. The FOIA essentially outlines the regime and process whereby the public can exercise their right to request, receive, review, reproduce and retain records and documents held by public bodies. This right is specifically guaranteed in Section 3.2 of the FOIA. Although (at the time of publication), there is no BO register available to enable us to make relevant assessments on the principle of public access, currently, the LBR provides basic information on its online portal – the name of the business, registration number, date of registration and the address of business.

The provisions of the DUBOR also provide some insights on the Liberia Petroleum Revenue Authority (LPRA)’s approach to public access. Regulation 15.0 of the DUBOR provides that “there shall be nothing confidential about the information received through the filing by companies as far as making such information publicly available and the need to promote transparency are concerned.” This is a clear indication that public access to information is embraced in Liberia, particularly within the extractives sector. Another provision of interest is Regulation 17.0 which creates an enabling environment for BO data to be freely shared across government entities on an Automatic Exchange of Information (AEOI) basis.

Our recommendation on this principle mirrors the MSG’s recommendation for BO information to be “made public online, and through other accessible means to the public without restrictions and /or hindrance.” The goal for this is to ensure that BO information becomes a true accountability tool, [26] as unrestricted access and usage by stakeholders will support and build CSO’s capacity to use and mainstream BO information. In line with the principle of data minimisation recommendations, the LBR should only collect data that is directly relevant to achieving its national objectives. Overall, the LBR should leverage its legislative-enabling environment to ensure that BO data is publicly available and accessible in a central register.

Structured Data

The Open Ownership Principle 6

Data should be structured and interoperable.

• BO data should be available as structured data, with declarations conforming to a specified model or template.
• Data should be available digitally, including in a machine-readable format.
• Data should be available in bulk, as well as on a per-record basis, free of charge.

In-country assessment

Liberia is still at an early stage of implementing BO reforms and at the date of this report, no BO register is available on which we can make the relevant assessments on the data collection format in which. However, the OE programme team will be providing specific technical support on the structure and interoperability of the data collected by the LBR as it creates a register. In the interim, it is worth highlighting that the real impact of BO data lies in its utility. The extent to which the public, CSOs, and competent government authorities can use the data will largely determine the efficacy of BOT reforms. Thus, it is paramount that BO data is available in a structured format which allows the data to be easily analysed and linked with other datasets. This enhances the data’s ability to expose cross-border networks of illicit financial flows and support effective and timely due diligence.

It is imperative that the data intended to be included on the BO portal is published in a structured and interoperable format. During the development of the BO register, the LBR should adopt the specific guidance in OO's database design consideration document which focuses on the requirements for publishing data to meet the Beneficial Ownership Data Standard (BODS).

Verification

The Open Ownership Principle 7

Measures should be taken to verify the data.

• When data is submitted, checks should be done to ensure that the data sets (on the beneficial owner, the entity and the ownership or control relationship between the beneficial owner and the entity) conform to known and expected patterns.
• Where possible, there should be intergovernmental coordination across other existing authoritative systems to cross-check the data sets.
• Submitted data should be pro-actively checked/reviewed to identify potential errors, inconsistencies or any anomalies in the data and disclosing entities should be required to update the data sets.
• Mechanisms should be in place to raise red flags, both by requiring entities (private and public) dealing with BO data to report discrepancies and by setting up systems to detect suspicious patterns.

In-country assessment

One of the major concerns with the use of public registers is the accuracy of the data. For a BO register to have real impact, data users should be able to trust that the data in the BO register is a true and accurate representation of who truly owns or controls an entity at the time of submission. Therefore, as governments invest financial and human capital towards the development of a BO register, it is crucial that mechanisms and systems which will create a reasonable level of assurance that the BO data is reliable, are planned for and deployed. These checks can be deployed at different stages in a declaration system to ensure that the quality of data is high, and create the much-needed governmental and public confidence in the register.

Although the LBR is yet to launch the extractives sector BO register or publish BO regulations, we can glean insights from the LPRA's approach taken to verification in the DUBO Regulation. For the purpose of verification, Regulation 12 requires companies to execute a verified affidavit attesting to the adequacy, accuracy and correctness of the information provided. Liberia’s current position in the formative stages of implementation of BO reforms presents an opportunity for the stakeholders to (a) consider what type of systems can be put in place to improve the quality of the data collected and disclosed, and (b) secure intergovernmental cooperation and integration with authoritative systems from the outset.

In the development of the planned BO register and regulations, systems should be put in place to ensure that the data published is reliable. These systems should include processes to (a) authenticate data collected and identify/remove data entry errors, (b) allow the public to report discrepancies between information held in the register and information that a person has obtained lawfully from other sources, and (c) allow cross-checking of data between authoritative data systems.

Up-to-date and auditable

The Open Ownership Principle 8

Data should be kept up to date and historical records maintained.

• Initial registration and subsequent changes to BO should be legally required to be submitted in a timely manner, with information updated within a short, defined time period after changes occur.
• Disclosing entities should be required to confirm the accuracy of BO data on an annual basis and report any changes in BO data.
• An auditable record of the BO of companies should be available by dating declarations and storing and publishing historical records, including for dormant and dissolved companies.

In-country assessment

Section 8.1.4 of the Associations Law requires every domestic and foreign corporation to keep a record of beneficial owners. However, it does not provide any timeline for keeping these records up to date. Interestingly, apart from the obligation to maintain record of shareholders, there is no provision that specifically requires companies to make BO disclosures to the LBR or update BO disclosures periodically.

That said, it is expected that the Regulations will create specific reporting obligations for entities and a timeline for compliance. The LBR should also incorporate the provision of BO information at the point of registration. Other West African countries implementing BO reforms such as Nigeria [27[ and Ghana [28] require information on beneficial owners or persons with significant control at the point of registration, and also set a deadline for the submission of BO information for already existing companies.

For example, in Nigeria, companies are required to, within one month of being aware, notify the Corporate Affairs Commission of new information or any change therein. Under the DUBOR, [29] companies within the petroleum sector are required to make disclosures when an entity is (a) seeking pre-qualification, (b) bidding for a petroleum right, (c) admitted as a new participant or operator in an already existing Petroleum Agreement and when there is an amendment in the Petroleum Agreement. [30]

Liberia should retain and publish information regarding changes in a company’s beneficial owners. A series of beneficial ownership declarations should contain a reproducible audit trail of changes made over time. In drafting the planned regulations, companies should be required to make disclosures on an annual basis, and within a specified number of days where there are changes to the beneficial owners.

Sanctions and enforcement

The Open Ownership Principle 9

Adequate sanctions and enforcement should exist for noncompliance.

• Effective, proportionate, dissuasive and enforceable sanctions should exist for noncompliance with disclosure requirements, including non-submission, late submission, incomplete submission or false submission.
• Sanctions should be applicable to the person making the declaration, the beneficial owner, registered officers of the company, and the declaring company.
• Sanctions should include both monetary and non-monetary penalties.
• Relevant agencies should be empowered and resourced to enforce the provisions on sanctions.

In-country assessment

Although there are currently no BO disclosure obligations mandated by the Associations Law or the LBR, the LBR has existing powers for sanctions and enforcement for noncompliance, due to existing provisions within the Associations Law. Such powers can be seen in Section 8.1(7), which prescribes a number of penalties for companies who fail to maintain records, including records of beneficial owners. Such penalties include a fine, withdrawal of the legal status of good standing, revocation of incorporation documents, or any combination of the penalties that the registrar may deem appropriate.

In the DUBO Regulation, the sanction for failure to disclose beneficial owners during the submission of a bid document, or anytime thereafter, is USD 5,000. Where a company makes a false declaration, the entity shall be disqualified from the bid round and shall lose its petroleum right (if the false declaration was discovered after the grant of the petroleum right). [31]

The LEITI sanctions regime provides precedent on how Liberia has approached sanctions and enforcement. In 2009, LEITI introduced a sanctions regime to address the failure or refusal of some companies to comply with reporting requirements. LEITI adopted a regime of progressive sanctions which ranges from a demand to comply, to legal action, and also incorporates fines capped at USD1,000. However, there is no confirmed case where LEITI enforced these sanctions [32] on a non-compliant entity.

In drafting the regulation, evidence of the efficacy of sanctions imposed by regulators such as the LBR, LPRA and similar government agencies should be examined, so as to determine what has worked in Liberia, and what sanctions and enforcement should be included in the new regulations.

Footnotes

[2] Section 1.2 of the Associations Law on the definition of ”beneficial owner”

[3] Regulation 3.0 of the 2020 Disclosure of Ultimate Beneficial Ownership Regulation

[4] Regulations 1.3.1 of the AML/CFT Regulation for Financial Institutions

[5] Regulation on Enhanced Due Diligence in the Provision of Financial Services for Politically Exposed Persons (PEPs) (Reference No: FIU/OR3APEP/10/2019)

[6] As defined in Section 15.1 of the Anti-Money Laundering and Terrorist Financing Act, 2012

[7] “Registrar” means the Minister of Foreign Affairs or a Deputy Registrar appointed by the Minister of Foreign Affairs with authority to register and regulate business associations in the Republic of Liberia. See Section 1.2 (s) of the Associations Law

[8] Section 1.2 of The Associations Law

[9] Regulation 3.0 of the DUBO Regulation. The DUBO Regulation was made further to section 15.8 OF LPEPA which requires the LPRA to issue regulations as to the disclosure of BO information

[10] Regulations 1.3.1 of the AML/CFT Regulation for Financial Institutions

[11] LEITI Beneficial Ownership Roadmap, https://eiti.org/files/documents/leiti_bo_roadmap.pdf <accessed on 3 April 2022>

[12] Regulation 8.0 of the DUBO Regulation

[13] Regulation 3.0 of the DUBO Regulation defines a “controlling person” as “…any natural person who holds directly or indirectly (eg. through a chain of entities) more than 25 percent of the shares or voting rights of an entity as a beneficial owner

[14] LEITI Beneficial Ownership Roadmap, https://eiti.org/files/documents/leiti_bo_roadmap.pdf <accessed on 3 April 2022>

[15] Ibid.

[16] Section 1.2 of the Associations Law on the definition of ”beneficial owner”

[17] Section 3.1(1)(c) of the Associations Law

[18] Liberia Corporate Registry: Instructions & Model Forms <https://liberiancorporations.com/resources/instructions-model-forms/> accessed on 22 March 2022

[19] Jack Lord and Kadie Armstrong, ‘Beneficial Ownership Transparency and Listed Companies’, 2020 <https://www.openownership.org/uploads/oo-guidance-technical-note-beneficial-ownership-and-listed-companies-2020-09.pdf> accessed 12 January 2022

[20] Section 15.2d of the Liberia Petroleum (Exploration and Production) 2014

[21] See “Corporate Structure, Ownership” Page 4 of the 2020 Licensing Rounds Prequalification Form (Page 4)

[22] Detailed guidance on how to execute effective consultation sessions can be found here.

[23] Aloysius Toe and Jean Conte, ‘Applying Human Rights Principles to the Liberian Security Sector, Practical Guide for Legislators (2020) Geneva Centre for Security Sector Governance (DCAF), 20

[24] See Open Ownership’s Policy Brief on Making Beneficial Ownership Registers Public, May 2021

[25] Open Ownership, The B Team and Engine Room, ‘Data Protection and Privacy in Beneficial Ownership Disclosure’ <https://www.openownership.org/uploads/oo-report-data-protection-and-privacy-2019-05.pdf> accessed 10 January 2022

[26] LEITI Beneficial Ownership Roadmap, https://eiti.org/files/documents/leiti_bo_roadmap.pdf <accessed on 3 April 2022>

[27] Form CAC 1.1, Companies Regulations, 2021 <https://www.cac.gov.ng/wp-content/uploads/2021/01/COMPANIES-REGULATIONS-2021-published.pdf> accessed 27 December 2021

[28] Section 13 (2) (m) of the Ghana Companies Act 2019

[29] Section 119(2) of the Companies and Allied Matters Act, 2021

[30] Regulation 10, DUBO Regulation

[31] Regulation 20 and 21, DUBO Regulation

[32] LEITI Regulation # 001/11/09: Enforcement of Compliance with LEITI Disclosure and Reporting Requirements

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