Implementing beneficial ownership transparency in the Kyrgyz Republic extractives sector — findings and recommendations

Data Collection and Publication

This section covers what data needs to be collected from beneficial owners effective beneficial ownership regime. This means collecting data that is granular and detailed to be useful for users.

What data needs to be collected

The draft form captures most of the key information required for an effective beneficial ownership disclosure, including name of beneficial owner, nature and percentage of ownership, PEP status, nationality, country of residence. This is the central information required by the EITI Standard from 2020. The form also includes additional information recommended by EITI: passport/citizenship number, date of birth, residential/service address and means of contact.

However, in other ways the draft disclosure form does not collect adequate information. For example, although the Subsoil Law includes provision for a State to be identified as the ultimate owner, the draft disclosure form for companies does not require any additional information beyond the full name of the State. This limits the utility of the information. In addition to missing some data, it is our view that some of the proposed data is not likely to be particularly useful to SCIESU or external users of published data. For this reason, we recommend that SCIESU focuses on collecting key data points and storing them as structured data.

Recommendation 8: data collection should be structured and include key data points for all beneficial owners

Open Ownership recommends that the disclosure form is amended to focus in on collecting fewer data points about beneficial owners but collecting them as structured data. Annex A provides a list of data points that should be collected for beneficial owners that are natural persons, and information to collect when a State or State Owned Enterprise is a beneficial owner. Importantly, as the structure of the form can be agreed within SCIESU (within the remit of relevant laws and regulations), there is an opportunity to ensure that data collected is both useful and effective in bringing about beneficial ownership transparency and manageable in quantity.

Percentage and Nature of Ownership

SCIESU plans to collect the exact percentage and nature of ownership above the 10% threshold in the Subsoil Law. This aligns with international best practice and will, providing it is published, improve the utility of the data.

Recommendation 9: The exact percentage of ownership, and the nature of ownership, should be reported and published publicly

Identifying information about beneficial owners

As mentioned in the section Transparency and Data Protection, whilst the law clearly mandates publication of beneficial ownership information, there is some concern among companies about exactly what information this will involve, in particular as the draft disclosure form includes some personal information such as passport number and date of birth.

Based on international best practice, Open Ownership recommends that sufficient information is published about all beneficial owners to enable users of the data to take reasonable steps to compare the data with other datasets, and ascertain if a particular person or company in the Kyrgyz Republic register is the same as a person or company with a similar name in another dataset.

Recommendation 10: Office address, and month and year of birth should be published to allow the disambiguation of individuals

Published information should include month and year of birth and office address; see Annex A for a full list. It is important to have a contact address for all beneficial owners to allow authorities to address any queries raised, and to assist users in ascertaining whether a beneficial owner on the register is indeed the same individual as a person with the same name in another dataset. Even where a business address is provided, this has been extremely helpful to civil society actors undertaking investigations. Where the beneficial owner is a State, the name and identifiers for the legal entity owning the license should be published.

Treatment of Historical Data

Historical information about companies can help uncover links that are not immediately evident from current information – for instance, from a law enforcement perspective, a sanctioned individual’s previous involvement in a company is a potential red flag. It is also important from a due diligence perspective, so that corporates can know if they are going into business with someone whose previous company, for instance, was closed due to fraud or bankruptcy. The European Court of Justice recently recognised this when it decided recently that there is no “right to be forgotten” in company registers.[10]

Currently, outdated information relating to licenses and license applications (e.g.: expired license holders, former legal owners of companies holding a license) is principally stored in hard copy files. Although SCIESU appears to have a well ordered system for this, it greatly limits the utility of this information by SCIESU, and means that even when the information is already publicly available it is only accessible by visiting the SCIESU office in person.

Beneficial ownership information serves as an important permanent record of ownership, and therefore historical records, and a list of changes, should be made public. When designing the business process for storage and publication of beneficial ownership information, mechanisms should be created that maintain a record of historical information submitted.

Recommendation 11: Historical information should be stored rather than replaced

SCIESU should ensure that there is appropriate legal basis for publishing, and republishing, historical information on beneficial ownership of license holders and applicants. This legal basis should be in accordance with local and international data protection laws and allow for the removal or redaction of inaccurate information or information likely to create harm.

Next page: Technical