Gender and beneficial ownership transparency

Use cases of sex-disaggregated beneficial ownership data

In most instances, implicitly collecting sex-disaggregated BO data and integrating BO data with other sex-disaggregated datasets suffice as ways to identify beneficial owners and disambiguate between them. Using sex as a data point for these purposes falls within the scope of BOT’s core policy aims. However, the research also identified three potential use cases that may lead governments to want to consider explicitly collecting sex data, either to better identify the beneficial owners of companies to fulfil BOT policy aims or for gender equality policy aims.

Improving the capacity to identify and disambiguate beneficial owners

Sex data can help identify and disambiguate between different beneficial owners, which falls within the scope of BOT policy aims. This may be particularly relevant where women have reduced access to official IDs. If BO disclosure regimes rely on collecting copies of IDs to unambiguously identify beneficial owners, for example, this may present a barrier to women becoming beneficial owners, especially if this information must be disclosed at the point of incorporating a company.

The lack of access to identification may at times necessitate the explicit collection of sex data to help verify the identities of company owners. Current approaches to collecting personal information about beneficial owners of companies often assume access to identity documentation, or registration in government systems using unique identification codes such as tax ID numbers.

However, research conducted on women’s access to identification reveals significant gender gaps in identity documentation, especially for married women.[51] There are also regional lags in birth registration and the subsequent issuing of birth certificates that are often required to obtain adult identity documentation such as national IDs, passports, marriage licences, driving licences, or voter registration cards.[52] The World Bank Group’s Women, Business and the Law project revealed that married women are requested to provide a copy of their marriage certificate in some countries, such as Benin and Namibia, to obtain their national IDs. Other countries, such as Egypt, require married women to include their spouses’ names on their IDs.[53]

It is estimated that about one billion people around the globe lack access to official proof of identity, a factor that excludes many from various aspects of economic, social, and political life, including the ownership of companies and other assets.[54] Where an individual does not have access to official, individual ID, the collection of sex as a datapoint can support identification and verification of the actual owner of a company. Collecting sex data along with additional identifying information that would otherwise be provided on national IDs is a potential means of preventing would-be company owners from being excluded from the formal economy.

Assessing the gendered dimensions of policymaking

Information about the position of women within society and women’s economic empowerment is critical to assessing the effect policies may have on gender, and for developing gender-responsive policies. Women’s beneficial ownership has a bearing on measuring gender equality and women’s empowerment as it is conceptualised by SDG 5, in terms of participation and parity in decision-making processes. Explicitly collecting sex-disaggregated BO data can facilitate the study of characteristics of women’s economic empowerment related to company ownership and control, such as the ownership of shares and voting rights.

Where equality and empowerment are defined as participation in decision-making processes, BO information may provide evidence of the influence of women within a firm.[55] For example, women’s BO including control, such as voting rights, can be a potential proxy indicator for participation in decision-making processes. Whilst sex-disaggregated BO data in and of itself cannot comprehensively capture women’s access to decision-making power within a company, it may show a different side to women’s economic empowerment through the various ways women choose to participate in company ownership that can be captured in BO disclosures, such as shared enjoyment of a company’s income and assets.

In addition, sex-disaggregated BO information can offer insights into gendered aspects of wealth distribution and taxation. Where companies own a significant proportion of wealth and assets, such as real estate, knowing the beneficial owners of companies can increase a society’s understanding of who receives wealth from assets and how they may be differently impacted by policies, such as through wealth taxation (see Box 2).

Gaining sector-specific insights

Over 50 countries are committed to implementing the Extractive Industries Transparency Initiative Standard. Its requirement 2.5 states that implementing countries should disclose the BO information for extractive companies from 1 January 2020.[59] The EITI also promotes a gender-sensitive approach to data disclosures.[60] The EITI gender-responsive guidance note on the implementation of the requirements underlines the importance of understanding the differences in experience for people of different genders in the extractive industries.[61] The Standard includes “provisions that promote diverse participation on multi-stakeholder groups (MSGs), gender-sensitive data disclosures, and outreach and dissemination activities to foster dialogue and improve data accessibility for women and men”.[62]

Meanwhile, Pan African feminist perspectives on IFFs highlight the importance of engaging Black African women as stakeholders in natural resources governance, even when they are not company owners or employees in the extractive sector.[63] Pan African feminist perspectives argue that Black African women are often in a double bind where natural resource governance and natural resource extraction are concerned. Black African women are underrepresented in the extractive industry and rarely engaged as stakeholders in natural resource governance. Yet, their lives are disproportionately affected by the environmental impact of natural resource extraction.

Whilst this illustrates the limitations of data about company ownership to draw far-reaching conclusions about gendered dynamics in the extractive sector, governments can use sex-disaggregated BO information to help improve efforts to monitor, develop, and foster gender-responsive policymaking within high-risk industries. Some of the recommendations include addressing gender balance and gender parity in MSGs and the use of sex-disaggregated data for gender-responsive policymaking. EITI-participating countries could use sex-disaggregated data they already hold to implement sectoral reforms in line with their EITI priorities.[64] However, currently, the EITI Standard only requires governments to disclose employment data disaggregated by sex, and does not require governments to collect or disclose sex-disaggregated BO data.

Enabling specific gender equality policies

Finally, sex-disaggregated BO data can be used directly for gender equality policies. For example, they can help implement policies that are aimed at redressing historical inequalities, where these policies are based on company ownership, such as preferential treatment and affirmative action. These policies could be aimed at redressing specific gender gaps closely related to company ownership, such as women’s access to business financial services.

To illustrate, South Africa’s B-BBEE policy relies on third-party verification agencies to establish the race and gender of company owners, to certify Black women-owned companies for preferential procurement.[65] The most significant risk that private verification agencies face in verifying the ownership score is failing to gain an accurate image of complex ownership structures. The B-BBEE Commission reported that less than 20% of transactions in 2018-2019 included complete certification documents when first submitted.[66] Follow-ups concerning incomplete information were often conducted without any success, which meant having to draw on various documents with varying formats that lacked specific data requirements.[67] Despite hefty sanctions, the current system is highly susceptible to fraud.[68]

Centralised and verified BO registers are a potentially valuable reference dataset that can be used to help verify bidder eligibility at the award stage of procurement regimes that define eligibility based on ownership or control. BO registers can help with simplifying and automating the verification of eligibility and auditing preferential procurement qualification procedures.[69] To avoid self-certification, BO information can be integrated with other sex-disaggregated government datasets, provided that these are available.

It should be noted that the use of quotas (for instance in company ownership) for advancing in gender equality remains controversial. Critics argue that quotas will not, on their own, address barriers faced by women-led businesses (and may reinforce bias in some cases).[70]

Thresholds of ownership and control

A consideration in shaping gender equality policies related to company ownership will be whether thresholds on the percentage of ownership or control an individual holds are used to define women’s business ownership, and how this compares to the thresholds set to determine BO. For example, UN Women defines women-owned businesses in gender-responsive procurement as “legal entities in any field that is more than 51% owned, managed, and controlled by one or more women”.[71] Such a threshold might be too high to capture women’s company ownership because it excludes individuals who hold a significant proportion of shares and have voting rights in a company.

By contrast, the Financial Action Task Force (FATF), the global standard-setting body for anti-money laundering and countering the financing of terrorism, recommends thresholds to determine BO are set no higher than 25%, with many countries implementing lower thresholds.[72] When defining ownership, management, and control according to the specific aims of gender equality policy, lower thresholds may help capture ownership by women that falls outside the UN Women’s threshold. This can inform targeted policies promoting women’s economic empowerment, such as gender-responsive public procurement.

To monitor and promote Black company ownership, B-BBEE uses a cascade of definitions to capture variations in Black enterprise:[73]

• a company that is 50% owned and managed by Black people is called a Black enterprise;
• a company that is 5% owned and 25% managed by Black people is called a Black-influenced enterprise; and
• companies with at least 30% representation of Black women within the Black equity and management portion are called Engendered enterprises.

Similar approaches to define, promote, and monitor women’s enterprise can be used. If centrally collected BO information is used to verify eligibility for gender-responsive procurement, it should ensure thresholds are set sufficiently low to capture useful data. For example, in the case of B-BBEE, a threshold of 25% would be too high to assist in verifying Black-influenced enterprises.

Notes

[51] Savita Bailur, “‘Without an ID, you don’t exist’: Gender and identity on International Women’s Day 2018”, Caribou Digital, Medium, 8 March 2018, https://medium.com/caribou-digital/without-an-id-you-dont-exist-gender-and-identity-on-international-women-s-day-2018-3aa90e45ee0c; “Addressing the Gender Gap in ID Access”, ID4D, World Bank Group, n.d., https://id4d.worldbank.org/sites/id4d/files/ID4D-Gender-and-Legal-Barriers-Summary-EN.pdf; Julia Braunmiller, “The importance of women’s equal access to identification in times of a global crisis”, World Bank Blogs, 12 June 2020, https://blogs.worldbank.org/developmenttalk/importance-womens-equal-access-identification-times-global-crisis.

[52] James C. Knowles and Gayatri Koolwal, “Gender Issues in CRVS and Access to Adult Identity Documentation”, Data2X, June 2016, 3, https://data2x.org/wp-content/uploads/2019/09/CRVSAccesstoAdultIdentityDocumentation.pdf.

[53] Braunmiller, “The importance of women’s equal access to identification in times of a global crisis”.

[54] Sarah Haddock and Talajeh Livani, “Women’s access to identification cards can accelerate development in Afghanistan”, World Bank Blogs, 5 October 2020, https://blogs.worldbank.org/endpovertyinsouthasia/womens-access-identification-cards-can-accelerate-development-afghanistan.

[55] “Towards Gender Balance in Public Procurement”, Open Contracting Partnership and Value for Women, 2020, 5, https://www.open-contracting.org/resources/towards-gender-balance-in-public-procurement/.

[56] “B.C. Consultation on a Public Beneficial Ownership Registry”, British Columbia Ministry of Finance, January 2020, 12, https://www2.gov.bc.ca/assets/gov/employment-business-and-economic-development/bc-companies/business-corporations-act-consultation.pdf.

[57] Due to COVID-19 and the demands of the Commission’s work, the final report including their recommendation on BO registries is not due until the end of May 2022. See: “Home page”, Commission of Inquiry into Money Laundering in British Columbia, n.d., https://cullencommission.ca/.

[58] Meeting with staff from the Ministry of Finance of the Government of British Columbia, video conference, 15 March 2022.

[59] “Oversight of beneficial ownership disclosures: EITI Requirement 2.5”, EITI, March 2020, https://eiti.org/guidance-notes/oversight-beneficial-ownership-disclosures.

[60] “Gender-responsive EITI implementation: Requirements 1.4, 6.3, 7.1 and 7.4”, EITI, March 2022, https://eiti.org/guidance-notes/gender-responsive-eiti-implementation.

[61] Ibid.

[62] Ibid.

[63] Melania Chiponda, Miriam Omollo, Omolara Oriye, and Fadzai Traquino, “Webinar 2 – Pan-African Feminist perspectives on Illicit Financial Flows (Spotlight Focus on the Extractives Sector)”, FEMNET, from Radically Different: Gender justice in natural resource governance, Publish What You Pay webinar series, 28 January 2020.

[64] “Gender-responsive EITI implementation: Requirements 1.4, 6.3, 7.1 and 7.4”, EITI.

[65] Intaher Marcus Ambe, “Public procurement trends and developments in South Africa”, Research Journal of Business and Management 3 no. 4 (December 2016): 277-290, https://marcusambe.com/wp-content/uploads/2018/06/Public-Procurement-Trend-and-Developments-in-SA.pdf.

[66] “South African Standard on Assurance Engagements (SASAE) 3502: Assurance engagements on Broad-Based Black Economic Empowerment (B-BBEE) verification certificates”, Independent Regulatory Board for Auditors, November 2012, https://www.irba.co.za/upload/SASAE%203502%20Assurance%20Engagements%20November%202012.pdf.

[67] “Major B-BBEE Transactions Analysis Report: 2018/2019”, B-BBEE Commission, March 2020, https://www.bbbeecommission.co.za/wp-content/uploads/2020/08/ALIGNED-FINAL-MAJOR-TRANSACTION-REPORT-23-MARCH-2020.pdf.

[68] Liedtke, “Fronting still a major issue in delivering on economic transformation, says commission”.

[69] For more information, see: Tymon Kiepe and Eva Okunbor, “Beneficial ownership data in procurement”, Open Ownership, 11 March 2021, https://www.openownership.org/en/publications/beneficial-ownership-data-in-procurement/.

[70] “Towards Gender Balance in Public Procurement”, Open Contracting Partnership and Value for Women, 28.

[71] “Gender-responsive procurement” UN Women, n.d., https://www.unwomen.org/en/about-us/procurement/gender-responsive-procurement.

[72] International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, (Paris: FATF, updated March 2022), 91, https://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202012.pdf; Tymon Kiepe and Peter Low, “Beneficial ownership in law: Definitions and thresholds”, Open Ownership, 27 October 2020, 12, https://www.openownership.org/en/publications/beneficial-ownership-in-law-definitions-and-thresholds/.

[73] Andrea Giampiccoli, Sean Neville Jugmohan, and Nyane Ezekiel Macdonald Mofokeng, “Black Economic Empowerment led transformation within the South African accommodation industry: The case of Clarens”, African Journal for Hospitality, Tourism and Leisure 7 no. 1 (2018), https://www.ajhtl.com/uploads/7/1/6/3/7163688/article_33_vol_7__1__2018.pdf.

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