Improving beneficial ownership transparency in Ukraine: Review and recommendations

Annex A: Collecting and publishing useful beneficial ownership data

Here we discuss in greater detail the element of ownership chain disclosure for making beneficial ownership data genuinely useful.

This recommendation is consistent with Open Ownership’s data standard, which will allow Ukrainian beneficial ownership data to be interoperable with data from other jurisdictions, and has also been developed in partnership with global experts on company data and beneficial ownership.[40]

Information on ownership chain. Collecting beneficial ownership data as structured data by default is a necessary first step to implement the requirements in the draft legislation, that would require an entire ownership chain to be reported (including o˝shore entities). To capture onshore entities, Ukraine could collect beneficial ownership information according to the UK model: if a Ukrainian company is owned by other Ukrainian companies only, it must report the identifying information of those parent companies. And, if a Ukrainian company is not owned by other companies, but by people, it must report them as beneficial owners. If all companies comply, then the Ukrainian companies register should be able to match the submissions of Ukrainian companies that reported Ukrainian parents with the submissions of those parent companies, in order to create a beneficial ownership chain for those entities that are registered in Ukraine.

The challenge of capturing intermediate companies registered offshore is the relative opacity of other jurisdictions. Steps must be taken to ensure this does not become a loophole. To capture intermediate companies that are registered in o˝shore jurisdictions, we recommend that the system include a validated template that captures the full details of these entities, jurisdictions and registries, drawn from a near-universal list like OrgID. Where validation is not possible because the data is not accessible, the data submitter must take steps to retrieve accurate data about intermediate companies. The system should be able to record where disclosure has been stopped by an intermediary or by failure to respond by an owned entity.

A note on exemptions. In a few cases [41], the nature of the work that a company does may mean that individuals linked to that company are genuinely put at risk by having their information in public. At the moment there is no provision in Ukrainian law for such companies to be allowed to keep their beneficial owners hidden. Should this become an issue, provable risk that is directly linked to ownership of a company can be managed, as UK Companies House has done, on a case-by-case basis, by allowing at-risk people to apply to the registrar to have information removed from the public register. These exemptions must be clearly and narrowly defined in regulation, and be adjudicated by an independent body.

Note that being wealthy is not a legitimate security risk. Wealthy people who are shareholders and directors of companies through straightforward means already have their information available to the public. The purpose of a beneficial ownership register is to capture those relationships that are not straightforward, because someone has chosen to keep their identity hidden for money laundering, tax evasion, and other reasons.

Next page: Annex B: Integration with Open Ownership Register