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The new Danish Register of Company Owners – is it really necessary?

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Legal news
calendar 22 February 2015
globus Denmark

In December 2014 the new public Register of Company Owners was launched in Denmark and thus Danish companies are now obliged to publish information of ownership and regulatory matters to an increased extent. The register was introduced as part of an attempt to fight certain types of financial crime – particularly money laundering. In this newsletter we will focus on the purpose of the new regulation, and we ask the question: “Is it really necessary to fully and publicly disclose this information?”

In December 2014, the Danish Business Authority opened the Register of Company Owners for registration, which means that all Danish limited liability companies are obliged to register ownership and regulatory matters and continuously update the registered information. This register is a result of EU legislation and UN recommendations and thus similar registers are being introduced in other countries.

The introduction of the register is a part of the ongoing struggle against money laundering that is often conducted through huge, shadowy group company structures that have shown to be very difficult – if not entirely impossible – to uncover. The idea is that greater transparency and publicity increases the risk of discovery of such economic crimes at the same time as it facilitates any subsequent investigative work.

Have we gone too far?
Even though this might sound like music to the ears, the register has not only been lavished by praise. One of the main concerns raised e.g. by the General Council of the Danish Bar and Law Society (“Advokatrådet”) is that the publicity of the register constitutes an unproportionate intrusion on a traditional and fundamental right in Denmark, the right to privacy regarding personal financial matters.

In Denmark, the personal right to decide to what extent information regarding private (incl. financial) matters is shared is cherished and safeguarded. We feel safe knowing that our neighbours generally only know what we have told them ourselves. This is not an absolute or totally indispensable principle, but we must at least be entitled to demand that any deviation is well-reasoned.

Although money laundering and tax evasion is usually associated with bounty-beaches and distant skies, something seems to indicate that there is a need for greater transparency in company structures in Denmark well. All other things being equal, publicly available information of ownership will impede – though not entirely preclude – the use of shadowy business structures. And this is surely a praiseworthy goal to target, is it not?

But even so, when new legislation intrudes on fundamental individual rights, such intrusion must be proportionate, necessary and the expression of the least intervening mean suitable to achieve the purpose. This is in itself a fundamental legal principle. The legislature finds that the interest of privacy has been sufficiently heard, as only holders of ownership and / or voting rights exceeding 5 % must be listed.

But even though minor shareholders go below the threshold, we take the liberty of questioning whether it is really necessary to publicly disclose all collected information of ownership and control. Could the purpose perhaps be achieved through less intrusive means, e.g. by limiting the group of people having access to the information in the register? Which impact would it have, if the register could only be accessed by public authorities, the Danish Security and Intelligence Service, the police, banks, attorneys, auditors and others already being subject to anti-money laundering legislation, and thus already participating in the fight against money laundering? What is the purpose of everyone having access to private information about their neighbour, their children’s teacher, the cashier in the local supermarket, their employees or their employer?

From our side this question remains unanswered. But fact is that the register is a reality; and it seems that we have not yet seen the end of the increase in publicity.

“5 Q&A’s” regarding the Public Register of Company Owners
Please click here for our short guide on the Register of Company Owners providing an overview of the new rules and which impact they have on you and your company.

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Aage

Krogh

Partner

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The team

Aage

Krogh

Partner

Lucca

Powers Bates

Senior legal assistant

Matilde

Grønlund Jakobsen

Associate

Pernille

Skall Søby Nielsen

Legal assistant

Signe

Kræmer Pedersen

Senior legal assistant

Victoria

Valentin Olsen

Junior legal assistant