Beneficial Ownership Definitions Vary Across Countries in Extractive Industries

Beneficial ownership is a crucial concept in the extractive industries, as it refers to the ultimate control and ownership of a company. However, a recent review reveals significant differences and inconsistencies in how countries define beneficial ownership.

Country-by-Country Analysis

Niger

Niger’s Multi-Stakeholder Group (MSG) has not concluded its work on reviewing relevant legal texts to ensure consistency between the definition of beneficial ownership and national laws. As a result, no definition was agreed upon for the purpose of the pilot.

Nigeria

Nigeria’s Extractive Industries Transparency Initiative (NEITI) 2012 oil and gas audit provides a definition of beneficial ownership, stating that it refers to “the natural person(s) who directly or indirectly (through another company) ultimately controls the corporate entity.” However, no definition is provided in the mining report. NEITI’s evaluation report notes that the MSG agreed to use the EITI Standard’s definition, but also reserved the right to revisit it as implementation progresses.

Tajikistan

Tajikistan has defined beneficial ownership through existing legal texts and anti-money laundering laws. The MSG agreed that a beneficial owner is one or more natural persons who ultimately have the rights of ownership and de facto control of the client, with an ownership share of 5% or more. Politically exposed individuals are subject to compulsory disclosure, regardless of shareholding.

Tanzania

Tanzania’s MSG has not yet agreed upon a definition of beneficial ownership. A consultant is being procured to undertake a study on beneficial ownership, which will include proposing a definition. Some stakeholders have suggested an ownership threshold of 5%.

Togo

Togo’s MSG did not agree on a definition of beneficial ownership for the purpose of the pilot.

Zambia

Zambia’s MSG defined beneficial ownership based on the Mines and Minerals Development Act (2008) and the Zambian Income Tax Act (1996). The agreed definition states that a beneficial owner is the natural person(s) who directly or indirectly ultimately owns or controls the corporate entity, with an ultimate beneficial interest defined as any individual who has control over the company, either directly or indirectly, or receives substantial economic benefits.

Conclusion

The varying definitions and approaches to beneficial ownership across countries highlight the need for consistency and harmonization in this area. As the extractive industries continue to evolve, it is essential that countries adopt a common understanding of beneficial ownership to ensure transparency and accountability.