Leveraging shareholder data for beneficial ownership transparency

Introduction

BO registers for legal vehicles play a critical role in BOT. Countries typically implement BOT reforms to support a range of objectives related to improved governance and accountability. Regardless of the specific objective, understanding corporate structures or networks – namely, the relationship between individuals, legal vehicles, and assets – is essential for these reforms to succeed. Collecting information about beneficial owners through declarations by legal vehicles is a key source of such data.

The effectiveness of these systems depends not only on the existence of reporting requirements but also on the quality, completeness, and usability of the data collected. Ensuring that BO information is accurate, consistent, and proportionate to risk remains a key challenge for policymakers and implementers.

Beneficial and legal ownership are often framed as distinct concepts, but they are tightly linked. [1] For example, an individual may be a beneficial owner based on their significant legal ownership of a legal vehicle, or they may be a beneficial owner based on other interests in it – direct or indirect – which enable them to control or benefit from its activities and holdings. Legal ownership is one of many types of interest which can lead to an individual being considered a beneficial owner of a legal entity. In reality, the vast majority of companies and similar legal vehicles are not part of wider corporate networks, vested in trusts, or subsidiaries of foreign companies. Most are owned and controlled directly by one or a few individuals, or have very simple corporate structures. In such cases, legal ownership is the main determinant of beneficial ownership.

Many jurisdictions have established BO registers for legal entities that operate separately from registers of their legal ownership, such as central shareholder registers. At the same time, legal entities in many jurisdictions are already required to report detailed shareholder information to company registers. Where this data is centralised, well structured, and regularly updated, it may capture a significant proportion of relationships subject to BO declarations, particularly in cases involving relatively simple ownership structures based on direct ownership of shares. Some jurisdictions, such as Switzerland, have proposed leveraging shareholder information in BO declarations. [2]

However, how and the extent to which existing shareholder data can support, complement, or streamline BOT has not yet been thoroughly examined. [3] It is therefore important to explore the potential benefits of high-quality, centralised shareholder data for BOT; assess the degree of overlap between these information sources in terms of parties and interests; and estimate the prevalence of relatively simple ownership structures compared to complex ones. Addressing these questions will help inform the design of more effective BOT regimes.

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