Financial Crime World

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Beneficial Owners: A New Requirement for Jordanian Companies

The Jordanian government has introduced new regulations requiring companies to disclose beneficial owners (BOs) who own or control less than 20% of their shares. This move aims to increase transparency and combat money laundering and terrorist financing.

Identification and Recording of Beneficial Owners

A recent amendment to the Companies Law No. 1/2010 requires companies to identify and record BOs, including natural persons who exercise control over a legal entity through means other than direct ownership. This includes shareholders who act together under a shareholder agreement, even if each individual owns less than 20% of the shares.

Example: Two Natural Persons Acting Together

In Figure 5, Natural Persons A and B each own 15% of the shares in a company, but they act together under a shareholder agreement. Although each person’s ownership is below the 20% threshold, their combined ownership exceeds 30%. As a result, both natural persons are considered BOs.

Control: A Key Factor

In addition to identifying BOs through direct or indirect ownership, companies must also identify natural persons who exercise control over the company, even if they do not meet the ownership threshold. This includes individuals with voting rights, the right to appoint or remove directors, or those who exert dominant influence over the company.

Example: A Person with Control but Less than 20% Ownership

In Figure 6, Natural Person D holds only 10% of the shares in a company but has 25% of the voting rights. As a result, they are considered a BO due to their control over the company.

Senior Management: The Last Resort

If no natural persons can be identified as BOs and there are no stock exchange listed or government-owned entities to report, companies must identify senior management who have ultimate control over the company.

Example: Senior Management with Control

In Figure 7, the senior management of Holding Company X has effective control over the Reporting Company, even though none of the individual shareholders meet the 20% ownership threshold.

Companies must also identify BOs in legal arrangements, such as trusts or partnerships. In these cases, the identity and personal details of the beneficial owners must be disclosed.

Example: A Trust with Multiple Beneficiaries

In Figure 9, Natural Persons B, C, D, E, and F are identified as BOs due to their roles as settlors, trustees, and beneficiaries in a trust that owns 70% of the Reporting Company. The corporate trustee is not considered a BO because it is not a natural person.

Documentary Evidence: Proof of Identity and Ownership

Companies must provide documentary evidence to confirm the identity and personal details of each beneficial owner, as well as the nature and extent of their ownership or control. This can include:

  • Copies of national ID cards
  • Passports
  • Tax registration certificates
  • Official documents confirming residential addresses
  • Corporate registrations

Conclusion

The new regulations aim to increase transparency and combat financial crimes in Jordan. Companies must comply with these requirements by identifying and recording their beneficial owners, providing documentary evidence to support this information, and submitting it to the relevant authorities.