Coverage of corporate vehicles in beneficial ownership disclosure regimes

Setting out the coverage of a disclosure regime in law

A BO disclosure regime’s coverage should be clearly set out in law. There are a number of different ways that jurisdictions can legislate for which corporate vehicles should be included in the scope of disclosure requirements. The best approach will heavily depend on the local context, such as which corporate vehicle categories are governed by different pieces of primary or secondary legislation.

Legislating for the scope of coverage involves the consideration of several factors, including:

  • how the definition of beneficial ownership influences which corporate vehicles can be legally beneficially owned;
  • how to set out the scope of coverage in primary and secondary legislation;
  • how to set out exemptions such that they only allow for narrow interpretation and do not create an unnecessarily convoluted disclosure regime; and
  • how to create guidance to facilitate compliance.

A general consideration for where to place provisions detailing coverage and exemptions in legislation is that it is typically more time consuming and laborious to amend primary legislation than secondary legislation. It may also require a higher level of technical knowledge among lawmakers. Additional considerations for using primary legislation include: the aim to future-proof reforms against potential political about-turns; the level of technical and legal knowledge in the executive to produce delegated legislation; and potential lack of parliamentary oversight. Conversely, placing certain details in secondary legislation can enable an iterative approach.

Defining ownership and control of corporate vehicles in law

The coverage of corporate vehicles closely relates to the definition of beneficial ownership set out in legislation, as discussed above. For a BOT regime to be comprehensive, all categories of corporate vehicles that facilitate the ownership and control of assets should be covered, based on a robust and clear legal definition that includes all relevant forms of ownership (including benefitting from an entity, such as the enjoyment of an entity’s assets) and control. It should also specify that ownership and control can be held both directly and indirectly. [93]

To illustrate, a definition limiting beneficial ownership to the ownership and control of a corporate vehicle through shares would exclude corporate vehicles that do not issue shares. Whilst share ownership and voting rights are common means of determining beneficial ownership, benefits, influence, or control can also be granted directly or indirectly through more complex mechanisms. This is often the case for certain categories of corporate vehicles, such as SOEs, and certain forms of partnerships. For example, ownership and control can be held through rules or articles of the company, via a special class of share, or through an informal agreement that grants an individual control over the company, such as exercising control via a family member or associate without a legal contract. Different forms of ownership can consider legal concepts, such as bare and usufruct ownership, which separate ownership between those who have the right to use, enjoy, and derive income or other benefits from assets and those who do not. [94]

Policymakers should consider variations in the ways in which ownership and control can be exercised through different categories of corporate vehicles, and how this may change. A robust definition also ensures it can accommodate any new corporate vehicles or changes to existing corporate vehicles.

Detailing coverage using primary

As is done by most jurisdictions, setting out the coverage of a regime in primary legislation offers the strongest basis for clarity and consistency in how BOT is implemented over time and, where relevant, by subnational bodies. Certain aspects of coverage can also be addressed in secondary legislation. Generally, jurisdictions should set out the broad principle in primary legislation that all categories of corporate vehicles through which ownership and control can be exercised must be covered. Further details on specific corporate vehicles – including about exemptions – can be detailed in secondary legislation.

When drafting legislation relating to the coverage of a disclosure regime, policy and lawmakers should consider:

  • describing a broad scope of coverage in primary legislation;
  • taking stock of the full range of acts and regulations that may need to be amended;
  • future-proofing a regime in anticipation of changes to the ways in which ownership and control can be exercised through corporate vehicles; and
  • balancing the level of detail to include in primary versus secondary legislation.

Describing coverage in broad terms through primary legislation

In several jurisdictions, the scope of coverage is defined in legislation on the basis of corporate vehicle category and registration requirements; for example, pointing to all companies or all entities created under a specific act, such as a Companies Act. This approach offers clarity, but can focus BO disclosure somewhat narrowly on registered legal entities. It is therefore unlikely to allow for the comprehensive capturing of information on all relevant categories of corporate vehicles.

A more comprehensive approach is to describe the scope in general, broad terms, anchoring the guiding principles and an unambiguous requirement to disclose BO information in primary legislation. For example, by referring to all legal entities and arrangements, or to all corporate vehicles that can confer beneficial ownership based on a robust BO definition that includes a substantive interpretation of ownership and control (see Box 6). This approach widens the scope of coverage beyond legal entities, helps avoid the creation of blanket exclusions, and future-proofs legislation.

Finally, all legislation dealing with beneficial ownership should be considered and harmonised. These may include laws relating to companies, partnerships, non-profits, AML/CFT, taxes, natural resource management, and public procurement. An argument for detailing coverage (and the legal definition) in primary AML legislation is that it may help facilitate harmonising legislation across corporate vehicles where different acts cover different types of corporate vehicles.

Box 6: Country examples of legislating for coverage using general, broad terms

Argentina’s legal framework lists specific corporate vehicles (“a legal entity, a trust, an investment fund”) followed by a generic catch-all that refers to “any other legal structure” (emphasis added). [95]

Similarly, Austria’s Beneficial Owners Register Act lists 19 types of domestic and foreign entities and arrangements, such as ordinary partnerships, LPs, stock companies, and savings banks. It also includes a catch-all clause: “other legal entities, required to be entered into the Commercial Register” (emphasis added) and “foundations and funds established on the basis of a provincial act”. [96]

Liberia’s Act to “Further Amend Part I (The Business Corporations Act) and Part III (The Partnerships and Limited Partnerships Acts) of the Associations Law, Title 5, Liberian Code of Law Revised” [97] sets out a robust definition of beneficial ownership. It then uses catch-all language and a non-exhaustive list of domestic and foreign corporate entities to which the Act may apply, although not covering legal arrangements:

“As used herein, the term ‘beneficial owner’ shall be applicable to all forms of businesses incorporated and/or organized under the laws of Liberia or authorized to do business within the Republic of Liberia, inclusive of resident and non-resident corporations, foreign corporations authorized to do business in Liberia, [LLCs], partnerships, [LPs], trusts, foundations, and other legal entities organized under the laws of Liberia or authorized to do business in Liberia” [98] (emphasis added).

In the Netherlands, a broad scope covering all legal entities and arrangements is included in primary legislation (AML law) along with the definition: “the natural person who ultimately owns or controls a company or other legal entity or a trust or similar legal arrangement” [99] (emphasis added). It then provides a non-exhaustive but comprehensive list of legal entities and, separately, arrangements. Further specifications of what constitutes beneficial ownership when it is applied to different corporate vehicles is contained in secondary (AML) legislation. [100] Registration requirements for legal entities (stored in the business register) are contained in primary legislation (company law) which references the primary AML legislation, and states clear exemptions of two entity types. [101] Information on the beneficial ownership of legal arrangements is collected in a separate register and governed by different legislation.

Future-proofing legislation

Agencies and policymakers involved in BOT reforms cannot assume that the ways in which ownership and control are exercised in their economy through and over domestic or foreign corporate vehicles with significant ties to the jurisdiction will remain fixed over time (see Box 7). They should also preempt that new categories of domestic corporate vehicles may be introduced in future legislation, and lawmakers should consider whether legislative frameworks will ensure new categories of corporate vehicles will be covered automatically, whilst allowing for some degree of adaptation.

Therefore, jurisdictions should not include exhaustive lists of corporate vehicles in primary legislation. This will mean new legislation is required if the categories of corporate vehicles which can be formed or which operate in the jurisdiction change over time. When outlining details about specific corporate vehicles in secondary legislation, particularly when listing corporate vehicle types, legislators can future-proof their legislation by including a catch-all clause; for example, by referring to “all other types/categories” of corporate vehicles (see Box 6).

Box 7: Examples of shifts in the way ownership and control can be exercised through corporate vehicles

LPs and LLPs are relatively new entity types compared to many types of companies. They are already widely used in some jurisdictions, but are not yet recognised in others. In Nigeria, for example, LPs and LLPs were first introduced in the 2020 Companies and Allied Matters Act, just two years before the implementation of its public BO register. Similarly, trusts are a feature of common law and not of civil law, but foreign trusts may be or become relevant to a civil law regime due to their operations or use in ownership chains.

Certain US states have begun incorporating novel corporate vehicles, including series LLCs [102] and decentralised autonomous organisations. [103] Following a public consultation, the BO information reporting requirement under the US CTA “retains the catch-all provision of the ‘substantial control’ definition… This provision recognizes that control exercised in novel and less conventional ways can still be substantial. It also could apply to the existence or emergence of varying and flexible governance structures, such as series [LLCs] and decentralized autonomous organizations, for which different indicators of control may be more relevant” [104] (emphasis added). These examples also highlight the important interplay between how the definition of beneficial ownership captures ownership and control and the scope of a regime’s coverage.

Providing further details and enabling an iterative approach through secondary legislation

The role of secondary legislation in setting out the scope of coverage can be to provide the further details needed to guide effective implementation and to govern the application of BOT for specific policy aims. Whilst many jurisdictions include lists of covered corporate vehicles in primary legislation, this can be more restrictive for subsequent changes compared to including these non-exhaustive lists in regulations.

This approach facilitates ease of future amendments that are deemed necessary to provide clarity to those with implementation and compliance responsibilities, whilst ensuring that the legal scope of disclosure requirements and broad principles for disclosure are anchored in primary legislation. This can help facilitate an iterative approach to implementation, and allows for revisiting details, such as requirements placed on specific corporate vehicles, to ensure the disclosure regime remains effective.

It is also important that any secondary legislation governing a specific policy aim – such as regulations on the use of BO information for public procurement or AML legislation governing CDD/KYC requirements – avoids inconsistencies that create ambiguity and potential legal challenges (see Box 8).

Box 8: Country examples of inconsistencies in the scope of disclosure requirements in legislation

Indonesia’s Presidential Decree No.13/2018 is the primary legislation governing BO disclosure in the country and provides obligations for “[LLCs], foundations, associations, cooperatives, [LPs], firm partnerships and other types of corporations” to disclose BO information to a central register. [105] However, the last category of “other types of corporations” is not included in subsequent regulations, which could include a range of entities, including PLCs, municipally owned entities, SOEs, and joint ventures. [106]

Similarly, Kenya’s definition of beneficial ownership in primary legislation (Companies Act 2015) includes a reference to ownership or control over “a legal person or arrangement”, but subsequent regulations only cover companies, and not partnerships. [107]

Whilst both these cases illustrate inconsistencies, the formulation in primary legislation does allow for creating further regulations for additional corporate vehicle categories.

Legislating for reasonable exemptions

Any exemptions should be clearly defined, justified, and left open to only narrow interpretation. Exemptions are an important means of achieving proportionality, but their use also introduces complexity into a BOT regime. This complexity can have the effect of creating confusion and contradictions, and can therefore inadvertently increase the burden of compliance on corporate vehicles and beneficial owners.

When creating exemptions in law, policymakers should consider:

  • making exemptions explicit and specific;
  • creating a legal obligation on exempt corporate vehicles to declare the basis for their exemption and provide minimum information;
  • balancing the level of detail to include in primary versus secondary legislation and regularly reassessing exemptions;
  • harmonising exemptions with any complementary policies, such as CDD/KYC requirements, to support the ease of understanding and complying with a disclosure regime; and
  • creating separate exemptions for domestic and foreign corporate vehicles of the same or a similar category.

Making exemptions explicit and specific in law

The two primary bases for reasonable exemptions are the existence of adequate information on ownership and control through a reliable and accessible source, and third-party intermediaries being best placed to perform reporting and oversight of certain corporate vehicles due to their practical realities, as previously discussed. Any exemption that a jurisdiction deems reasonable should be made explicit and specific enough to allow for only narrow interpretation.

To ensure a complete record, exempt corporate vehicles should have a legal obligation to declare the basis for their exemption; provide a minimum amount of information to identify them and where ownership and control information about them can be found; and keep this information up to date, as discussed below.

It is particularly important that jurisdictions ensure there are only exemptions in cases where there are robust and ongoing oversight mechanisms in place for the exempt corporate vehicles, to avoid creating loopholes. Where jurisdictions create exemptions informed by risk assessments, they may allow corporate vehicles to not have to report any ownership and control information. As discussed earlier, a risk assessment lacks strength as a basis for exemptions.

Rather than creating blanket exemptions for a category of corporate vehicle, regulations can reference or list specific categories of corporate vehicles that are exempt on the basis of meeting additional criteria. These should not be open to interpretation. Governments should publish specific detail and guidance on the justification and bases for exemptions (see Box 9). This is an important means of ensuring they can be only narrowly interpreted, and that the burden of oversight for the designated authority is manageable.

In Brazil, for example, there is an exemption on the basis of the regulation and supervision by a competent authority in the country of origin (see Box 10). This exemption is broad and open to interpretation, and it places a monitoring burden on a government body to ensure a corporate vehicle is in fact supervised or regulated in a home jurisdiction. To ensure the exemption can be only narrowly applied, the government could instead publish an exhaustive list of countries and their regulatory bodies, along with guidance on any evidence they may need to provide, to meet the criteria for the exemption. To illustrate, this is done in the UK with PLCs, which are exempt if their shares are traded on an exhaustive list of stock exchanges. [108] This could be complemented by a clear and published rationale.

Box 9: Example of listing exemptions on the basis of adequate information and risk in the United States

The US CTA lists a total of 23 categories of corporate vehicles that are excluded from the reporting requirement to FinCEN based on their regulatory category or activities, though it does not explicitly address arrangements and associations, leaving questions about the coverage of trusts and partnerships. In the US CTA, many exemptions are on the basis of adequate information being available elsewhere, i.e. for “entities that are otherwise subject to significant regulatory regimes—e.g., banks—where Congress presumably expected primary regulators to have visibility into the identities of the owners and ownership structures of the entities”, for example, through the bank licensing process. [109]

However, it also excludes companies with over 20 employees, a physical office, and a turnover of more than USD 5 million because large businesses are not deemed to be a risk for money laundering, the Act’s policy aim. It remains to be seen whether this assumption about low risks for such “large operating companies” bears out in practice, [110] but active money-laundering cases involving large companies exist in other jurisdictions, and exemptions with similar justifications in other places have shifted abuse to these corporate vehicles. [111]

Listing the categories of corporate vehicles that are exempt, after justifying the basis for their exemption, encourages policymakers to consider their full range and impact. By whichever basis exemptions are set, it is recommended that the list of exempt corporate vehicles is reassessed regularly. Additional exemptions may need to be created where there is a strong case that disclosure requirements are not proportionate, or revoked if warranted by a change in circumstances. Including details on exemptions in secondary legislation enables an iterative approach. A designated body, such as one with a responsibility for routine reviews and recommendations to the legislature based on AML/CFT risks, could support this process. [112]

Ensuring clarity, legibility, and coherence of disclosure requirements

There is the potential that creating exemptions can reduce the legibility of a regime, or the extent to which requirements set out in legislation and regulations can be easily understood by those who are affected by them. The risk of this is even greater where there are blanket exclusions. For example, in the case of AML/CFT obligations, applying disclosure requirements to a different set of corporate vehicles than those obliged entities have to conduct CDD/KYC on can lead to a disclosure regime that is incoherent and difficult to understand and comply with. Whilst exemptions are often made to reduce the burden on specific entities and individuals, an unharmonised and incoherent approach may have the opposite effect (see Box 3).

Finally, exemptions may not apply equally to domestic and foreign entities, and differences should be made clear (see Box 10). For example, foreign corporate vehicles subject to a disclosure regime in their home country that meet certain standards in terms of their BO information being accurate, up to date, and readily accessible could constitute grounds for an exemption.

Box 10: Example of separate exemptions on the basis of tax domicile in Brazil

Brazil’s primary legislation includes two separate sets of exemptions, one for those who are tax domiciled in Brazil, and another for those tax domiciled abroad but with sufficient links to Brazil. Exemptions for domestic entities include: sole traders and sole proprietorships of lawyers, where the natural person listed is the beneficial owner; companies made up exclusively of individual partners, provided that at least one of them owns more than 25% of the entity’s share capital; and pension entities, pension funds, and similar institutions, “provided that they are regulated and supervised by a competent governmental authority in the country”. [113] Some exemptions that do not exist for domestic entities are relevant for listed companies whose shares are traded on a regulated market recognised by the Securities Commission in countries that “require public disclosure of shareholders considered relevant, according to the criteria adopted in the respective jurisdiction”. [114]

Creating guidance to support understanding and compliance

Clear guidance on the ownership and control criteria for corporate vehicles and their reporting obligations facilitates compliance by helping the individuals filing disclosures on behalf of covered corporate vehicles, as well as those corporate vehicles’ managers and beneficial owners, understand the requirements. Separate guidance may be required for different categories of corporate vehicles. This may be especially relevant in cases where the application of these concepts is more complex or unique based on a corporate vehicle’s purpose or mode of operation. Jurisdictions may need to develop differentiated reporting requirements for corporate vehicles, such as SOEs with less common ownership and control mechanisms (see Box 11). They may also need guidance setting out the application of reasonable exemptions, such as any reporting requirements that are in place for exempt corporate vehicles.

Box 11: Example guidance of applying definitions of ownership and control to specific corporate vehicles

Limited partnerships

Denmark’s guidance offers specific advice on the beneficial ownership of LPs,115 noting that “it is important to be aware of the special structure of the business form”. The guidance notes that, as a rule, the general partner is not the beneficial owner of the company, and “limited partners will in all cases have to be assessed in relation to the definition of [beneficial] owners, as their participation in the company is necessarily characterised as ownership”. However, situations may arise where the general partner can also be considered a beneficial owner, namely:

“If the day-to-day management is handled by the general partner and if this is a legal person (company), the [LP] must register the natural person or persons who handle the actual management of the company. It is the Danish Business Authority’s assessment that it will be the day-to-day management of the complementary business. If the general partner is [an LP], it will thus be the day-to-day management of this LP.”

State-owned enterprises

There are critical differences between ownership and control by states and ownership and control by natural persons. BO disclosure regimes should capture information about the state or state-agency involvement in companies as part of BO declarations. A state can be a minority owner and still exercise significant influence and control over a company or SOE. When establishing which control mechanisms to record, consideration should be given to a number of positions which allow individuals to exercise significant control in SOEs but are positions which often do not explicitly meet the definition of beneficial ownership in ordinary companies, such as board members and senior managing officials. [116]


[93] The scope of natural persons covered by a BO regime is primarily determined by a jurisdiction’s definition of beneficial ownership, which sets out the criteria for a person qualifying as a beneficial owner. This often includes thresholds for share ownership and voting rights after which a person’s beneficial ownership becomes reportable. Any natural person who meets the definition for being a beneficial owner is relevant to a jurisdiction’s regime and should therefore be reported to the relevant authorities in an entity or arrangement’s BO disclosure. Having a robust and clear definition of beneficial ownership is among the nine principles for effective implementation of BOT. See: Tymon Kiepe and Peter Low, Beneficial ownership in law: Definitions and thresholds (s.l.: Open Ownership, 2020),

[94] Bare and usufruct ownership offer different types of legal rights. Typically, bare ownership can be held and disposed of without the owner having the right to use the asset, whilst usufruct ownership is associated with the right to enjoy the benefits of an asset, for example, to reside in or receive income from a piece of real estate.

[95] UNIDAD DE INFORMACIÓN FINANCIERA Resolución 112/2021, Boletín Oficial de la República Argentina, 19 October 2021,; Ramos Rivera, Argentina: Scoping study.

[96] Federal Ministry of Finance, “Federal Act on the establishment of a register of beneficial owners of companies, other legal entities and trusts (Beneficial Owners Register Act – WiEReG; Wirtschaftliche Eigentümer Registergesetz)”, Article 1 (2), 1-2.

[97] Ministry of Foreign Affairs, Republic of Liberia, “An Act to Further Amend Part I (The Business Corporation Act) and Part III (The Partnership and Limited Partnership Acts) of the Association Law, Title 5, Liberian Code of Laws Revised”, 6 April 2020, 2,

[98] Ministry of Foreign Affairs, “An Act to Further Amend Part I (The Business Corporation Act) and Part III (The Partnership and Limited Partnership Acts) of the Association Law, Title 5, Liberian Code of Laws Revised”, 2.

[99] Wet ter voorkoming van witwassen en financieren van terrorisme 2022, Government of the Netherlands, Article 10a.

[100] Uitvoeringsbesluit Wwft 2018, Government of the Netherlands, Article 3.

[101] Handelsregisterwet 2007, Government of the Netherlands, Article 6.

[102] Sandra Feldman, “The Series LLC: An organizational structure that can help mitigate risk”, Wolters Kluwer, 18 February 2020,

[103] A decentralised autonomous organisation is governed by so-called smart contracts rather than using the traditional hierarchy of an LLC. They are typically aimed at cryptocurrency collectives. See: Eric Geringswald, “Wyoming is the first state to recognize Decentralized Autonomous Organizations”, LexisNexis, 18 August 2021,

[104] FinCEN, US Treasury, Federal Register: The Daily Journal of the United States Government 87, no. 189 (September 2022): 59527,

[105] Republic of Indonesia, Presidential Decree No.13/201, “Peraturan Presiden Republik Indonesia Nomor 13 Tahun 2018 Tentang – Penerapan Prinsip Mengenali Pemilik Manfaat Dari Korporasi Dalam Rangka Pencegahan Dan Pemberantasan Tindak Pidana Pencucian Uang Dan Tindak Pidana Pendanaan Terorisme Dengan Rahmat Tuhan Yang Maha Esa”, 2018,

[106] Peter Low and Hani Rosidaini, Beneficial ownership transparency in Indonesia: scoping study (s.l.: EITI and Open Ownership, 2022),

[107] The Companies Act No. 17 of 2015, Government of Kenya,; The Companies (Beneficial Ownership Information) Regulations, 2020, Government of Kenya,

[108] The Register of People with Significant Control Regulations No. 339 2016, Government of the United Kingdom, Part 2, The Register of People with Significant Control Regulations No. 339 2016, Government of the United Kingdom, No. Schedule 1: List of Markets,

[109] FinCEN, US Treasury, “Beneficial Ownership Information Access and Safeguards, and Use of FinCEN Identifiers for Entities”, Federal Register: The Daily Journal of the United States Government 87, no. 241: (December 2022),

[110] Sandra Feldman, “CT expert insights: Understanding the Corporate Transparency Act (CTA) reporting requirements, with Sandra Feldman”, Wolters Kluwer, 11 October 2022,

[111] For example, see: Dan McCrum and Olaf Storbeck, “German prosecutors file first charges in Wirecard fraud”, Financial Times, 13 January 2022,

[112] For example, Switzerland has established a national AML/CFT co-operation and coordination framework led by the Interdepartmental Co-ordinating Group on Combating Money Laundering and the Financing of Terrorism (GCBF). The GCBF is responsible for the ongoing identification of risks to which the country is exposed. Each year, the GCBF submits its results to the Swiss Federal Council for information or for adoption of further measures. See: FATF, Best Practices on Beneficial Ownership for Legal Persons (Paris: FATF, 2019), 31,

[113] National Registry of Legal Entities, Federal Revenue of Brazil, “Instrução normativa RFB Nº 2119, de 06 de dezembro de 2022”, Section 5, Chapter II, 8 December 2022,

[114] National Registry of Legal Entities, “Instrução normativa RFB Nº 2119, de 06 de dezembro de 2022”, Section 5, Chapter III.

[115] See: Erhvervsstyrelsen, Vejledning om: Reelle ejere, “Kapitel 5 – Scenarie 1: Virksomheden har reelle ejere” (Copenhagen: Erhvervsstyrelsen, 2017),

[116] The following technical guidance clarifies the complexity of state ownership and control, fully recognising the differences between ownership and control by states and ownership and control by natural persons, and laying out how information about the control of SOEs can be found in a range of legislative instruments: Abbott Pugh and Howard, Defining and capturing data on the ownership and control of state-owned enterprises.

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