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Beneficial Ownership: A Critical Component in Corporate Governance

In an effort to enhance transparency and accountability, regulatory bodies have emphasized the importance of identifying beneficial ownership in companies. This involves determining who holds ultimate control or influence over a corporation, regardless of their shareholding percentage.

Defining Beneficial Ownership

Beneficial ownership refers to the individual or entity that has the right to exercise control or influence over a company’s decisions and operations. This can include individuals who hold significant shareholdings, have the power to appoint or remove directors, or exercise informal control through agreements or arrangements.

Measures for Identifying Beneficial Owners

Companies are advised to employ the following measures to identify their beneficial owners:

• Review all available documents and information
• Consider interests held by individuals, corporate entities, trusts, partnerships, or other arrangements
• Maintain an internal policy on beneficial owner identification and require shareholders to notify changes in ownership information

Obtaining Beneficial Ownership Information

Companies must obtain the following information from their beneficial owners:

• Full name
• Nationality(ies)
• Primary residential address (not a PO Box)
• Contact information (email, phone number, mailing address if different from residential address)
• Date of birth
• National registration number or passport number
• Type of beneficial ownership (direct, indirect, or ultimate control)
• Details of agreements or arrangements regulating the power to bind the company

Sample Form for Collecting Beneficial Ownership Information

The appendix provides a sample form that companies can use to collect beneficial ownership information from their shareholders and other stakeholders. The form asks questions about shareholding percentages, direct and indirect interests, and the right to exercise ultimate control or influence over the company.

Conclusion

Beneficial ownership is a critical component of corporate governance, as it allows companies to identify who holds ultimate control or influence over their operations. By implementing measures to identify and collect beneficial ownership information, companies can enhance transparency and accountability, ultimately leading to better decision-making and improved overall performance.