Revisions to Draft Companies (Beneficial Ownership Information) (Amendment) Regulations 2021 – Public Consultation

Amendments to Form BOF1

Below OO provides comments on the new Form BOF1. However note that preferably the form review should include all relevant forms to ensure each is complementary. Should the BRS require, OO is available to review BOF2 and BOF3.

Well-designed beneficial ownership declaration forms will generally meet all of the following criteria:

• It is clear who (people as well as companies) will fall under the scope of the disclosure process (it may be necessary to provide detailed guidance alongside the form and referenced from the form in order to achieve this)
• The form is easy to understand and navigate
• It is easy for people to supply good quality data for each field
• It is easy for companies with simple BO structures to make their declarations
• The full range of BO structures, declarable by law, can be disclosed via the form(s)
• Form submissions can be linked to data in other official databases, so that companies do not have to submit the same information multiple time

Although Form BOF1 seeks to gather much of the information OO recommends collecting in order to allow full disclosure of beneficial ownership, the form could be adjusted in several ways to support more streamlined data entry, reduce accidental errors and facilitate easier data use. These recommendations are informed by guidance provided in OO’s Beneficial ownership declaration forms: guide for regulators and designers:

1) Include definitions of BO terminology at the point where they are needed

BOF1 calls on people to declare they are a beneficial owner without providing an explanation of how a beneficial owner is defined in Kenyan law. If the form may be shared with individuals or companies in a paper form without accompanying guidance, it may be prudent to include this definition prominently in Form BOF1 to raise awareness of some of the key BO definitions and concepts.

Similarly information is requested on any beneficial owners linked to the declaring company via an indirect beneficial ownership relationship or structure. However the definition of indirect ownership is not provided in the form.

OO understands that the indirect ownership declaration section of Form BOF1 is intended to capture nominee arrangements (nominee shareholdership and nominee directorship) but indirect ownership as a concept extends beyond just these types of arrangements. Where BO of a registered private company is exercised indirectly (via intermediaries, including legal owners), OO advises that sufficient information about intermediaries should be collected to reveal full ownership/control chains.

Questions about how best to capture and understand the full range of indirect beneficial ownership arrangements and structures are explored in OO’s Beneficial ownership in law: Definitions and thresholds briefing.

The concept of legal ownership is not the same as the concept of beneficial ownership, but they are related. Providing a definition of legal ownership to explain how it is different from beneficial ownership could be a useful addition to Form BOF1.

2) Be clear about the format in which answers are expected

OO is pleased to see in Form BOF1 that some fields provide guidance on the format that individuals or companies should follow when filling out the form. For example, the dd/mm/yyyy format is clearly provided for the Date that the person became a beneficial owner and Date of birth fields in recognition of the multiple formats that people may otherwise use to write dates.

This approach should be extended to additional fields from the form in order to ensure that the BRS is able to collect more standardised, well-formatted BO data which can more easily be used or shared with the relevant authorities without the need for cleaning the data.

For example, the Form BOF1 asks for a full name but doesn’t explain whether an individual’s first name, middle name(s) and family name should be provided or just the first name and family name. To resolve this, OO would recommend either explaining the format required or separating out any name fields to avoid any confusion by creating separate fields for the first name and family name. Separating out the fields would be in line with the best practices for high-quality BO data collection that OO has documented as part of our Beneficial Ownership Data Standard.

Where an individual is required to provide a birth certificate number, national identity card number or passport number, OO would advise creating one field or tick box where the individual can indicate which type of ID they will provide followed by a separate field for the number. This will support better quality data collection and would support easier automated checks of the IDs provided via the online version of Form BOF1 as the ID numbers could be checked for correct length and formatting.

Good-quality, well-structured identifiers for individuals or companies are essential to be able to combine datasets from multiple systems.

Where the company number is requested at the top of Form BOF1, it would be good to clearly indicate that this should be the company number from the BRS Company Registry in case there is any chance of misunderstandings where perhaps a tax ID might be mistakenly provided by an individual or company. From the BRS Company Registry, it seems like valid company numbers can be of varying length and formatting including examples like C.140512, CPR/2011/41483 and PVT/2016/025014.

Additional text guidance could be useful here to explain whether or not - for example - companies should enter the full stops or backslashes in their company numbers or just the letters and numbers. Again, this will improve the quality of the company identifier data which will make it easier to connect the collected BO data to other data like that collected during public procurement processes.

In the nationality field, it should be clear what users should do if they hold dual or multiple nationalities. If people with dual nationality need to fill out this form, it may be prudent to provide multiple nationality fields in line with the best practice for BO data collection set out in OO’s example beneficial ownership declaration form.

To allow for high-quality data collection, OO would recommend that the postal address, business address and residential address fields are split out into different fields to allow for the capturing of a postal code and country details alongside a full address where each part of the address should be on a different line or separated by commas.

Data management systems often use a diversity of address formats and data is often inconsistently entered across data fields in these source systems. This is why OO recommends the use of a very simple address format to improve data quality, allow easier analysis of structured data and enhance the ability of the BRS to connect BO data with other datasets via linking by address data.

3) State clearly which fields are required and which are optional

Form BOF1 currently provides no indication next to fields as to whether they are required or optional for individuals or companies to fill in. Adding these indications is a useful signal to individuals and companies required to fill out the form and will help ensure compliance with more complete data collection.

In certain cases, BO forms should provide a way for the individual or company filling out the form to declare that they have tried and failed to collect the required information. The legal basis for this is set out in regulation 11 of the Companies (Beneficial Ownership Information) Regulations, 2020.

For instance, a beneficial owner whose details are unknown could be flagged as an “unknown person”. OO’s Beneficial Ownership Data Standard provides guidance on best practices for the capturing of data on such unspecified or unknown beneficial owners via the unspecified field in an ownership or control statement, unspecifiedEntityDetails field in a entity or company statement and the unspecifiedPersonDetails field in a person statement.

If Form BOF1 could be updated to collect information on unknown persons or unknown ownership or control relationships, additional guidance should be provided to explain how a field should be correctly filled in as unknown.

OO would recommend the inclusion of an additional field allowing people to choose from a list of the reasons set out in the 2020 regulations for why full BO information cannot be provided:

• The company has not identified the beneficial owner
• The company has not been able to identify the beneficial owner particulars
• The company has issued a warning notice which has not been complied with
• The company has issued a restriction notice
• There is a matter pending before court in relation to beneficial ownership

Many of these explanations can easily be mapped to the range of reasons for unknown information laid out in the Beneficial Ownership Data Standard except for additional provisions in the data standard covering situations where subjects may be exempt from disclosure rules:

• No beneficial owners
• Subject unable to confirm or identify beneficial owner
• Interested party has not provided information
• Subject exempt from disclosure
• Interested party exempt from disclosure
• Unknown
• Information unknown to publisher

If the BRS considers OO’s recommendation to add an additional sub-regulation at regulation 13 to provide exemption from publication in limited cases, the publicly available data should note that beneficial ownership information is held by authorities but has been exempt from publication, this could be done, for example, by including a field to the Form BOF1 where the individual or company can declare this exemption.

4) State which information is for internal use only and will not be openly published

There will be information collected about individual beneficial owners and other people which should not be published widely. Some private addresses, private contact details and identification details may be disclosable but not widely shareable due to limits in the legal mandate for publishing or sharing data, or reasons of personal privacy or security.

OO recommends that Form BOF1 should make it clear what information is being collected for agency and state use only and will not be made public. For example, such information could be annotated with a message “This will not be made public”.

5) State which additional documentation or information must be provided with the form

The process for submitting BO information via the BRS eRegister as set out in the user manual requires an individual to upload a colour passport photo as part of the BO registration process. Is this also a requirement for any individuals filling out Form BOF1? If so, OO would recommend guidance be added setting out any additional documentation or proof of identity which is required to be submitted along with the form as well as explaining what format it should be submitted in.