Data Standard / Modelling requirements / Representing beneficial owners

Representing beneficial owners

Key requirements: If a person is a beneficial owner of an entity - whether directly or indirectly - and the person or entity is required to declare this beneficial ownership, there MUST be a Relationship statement connecting the two which represents the beneficial ownership relationship.

If an entity declares that it has no disclosable beneficial owners, its record MUST be the subject of a Relationship statement with recordDetails.interestedParty.reason ‘noBeneficialOwners’.

Overview

Beneficial owners can exercise their interests directly in an entity or indirectly, via intermediary entities (such as arrangements or other companies). It must be clear in a BODS dataset which people are declared as beneficial owners of which companies (and which entities are intermediaries). And it must be clear what overall interests beneficial owners have (regardless of whether they are direct or indirect).

Person 1 indirectly holds a 15 percent shareholding in Company E, via an intermediary: Company A. Person 2 directly holds 32 percent of Company E's shares.

In the above situation, Person 1 indirectly benefits from a 15% shareholding in Company E and Person 2 has a direct 32% shareholding in Company E. In a jurisdiction where people with a shareholding (direct or indirect) of over 10% in a company should be disclosed as beneficial owners, both Person 1 and Person 2’s interests would be declared. Additionally, the jurisdiction may require that details of Person 1’s indirect interest are disclosed. That is: that some details of the chain Company E - Company A - Person 1 are also disclosed.

In BODS, the following properties are used to represent such information disclosure:

Requirements

No beneficial ownership relationships

If an entity declares that it has no disclosable beneficial owners, its record MUST be the subject of a Relationship statement with recordDetails.interestedParty.reason ‘noBeneficialOwners’.

If an entity is exempt from declaring its beneficial owners its record SHOULD be the subject of a Relationship statement with recordDetails.interestedParty.reason ‘subjectExemptFromDisclosure’.

A beneficial ownership relationship

If a person is a beneficial owner of an entity, entity X, (whether directly or indirectly) and one of them is required to declare this beneficial ownership, there MUST be a primary relationship record connecting the two which represents the beneficial ownership relationship. Specifically, in the recordDetails for the relationship:

  • the entity’s recordId value MUST be the subject

  • the person’s recordId value MUST be the interestedParty

  • isComponent MUST be false

  • the interests which make the person meet the criteria for being declared a beneficial owner MUST be included if known. They MUST have beneficialOwnershipOrControl set to ‘true’. If an interest is known to be exercised indirectly, via intermediary entities then directOrIndirect MUST be ‘indirect’. If it is known to be exercised directly then directOrIndirect MUST be ‘direct’. Otherwise directOrIndirect MUST be ‘unknown’.

Intermediaries

Where beneficial ownership is known to be exercised indirectly, via known intermediary elements, this SHOULD be represented in addition to the above. In particular:

  • the chain of known intermediary elements SHOULD be represented by secondary records

  • these secondary records SHOULD link the beneficial owner’s record to entity X’s record indirectly

  • these secondary records SHOULD all have isComponent set to ‘true’

  • these secondary records SHOULD all have their recordId values listed in the componentRecords array of the recordDetails for the primary relationship.

When Statements about the primary relationship are published in a BODS file:

  • Statements for all secondary records referenced from componentRecords MUST also be published in that file

  • Statements for all secondary records must appear before the the first Statement for the primary relationship.

Example

In the following example, Person 1 is a beneficial owner of Company E. They exercise that beneficial ownership via an intermediary company, Company A.

Person statements, Entity statements and Relationship statements are linked by lines, representing the company ownership structure. Statement property values are given as follows. Person 1's Statement: recordId is 'p-1', recordDetails.isComponent is false. Intermediary Company A's Statement: recordId is 'e-2', recordDetails.isComponent is true. Company E's Statement: recordId is 'e-1', recordDetails.isComponent is false. Relationship statement connecting Person 1 and Company A: recordId is 'ooc-3', recordDetails.isComponent is true, its interest has directOrIndirect as 'direct' and beneficialOwnershipOrControl as false. Relationship statement connecting Company A and Company E: recordId is 'ooc-2', recordDetails.isComponent is true, its interest has directOrIndirect as 'direct' and beneficialOwnershipOrControl as false. Relationship statement connecting Person 1 and Company E: recordId is 'ooc-1', recordDetails.isComponent is false, componentRecords are ooc-2 and e-2 and ooc-3; and its interests have directOrIndirect as 'indirect' and beneficialOwnershipOrControl as true.

Statement order

An example of valid statement order within a BODS dataset for the above would be: p-1, e-1, e-2, r-3, r-2, r-1.

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