Revising Corporate Beneficial Ownership Details: Is It Necessary or Controversial?
Going by the latest B&FT report, the Office of the Registrar of Companies (ORC) is pinching over 250K registered companies in Ghana for failing to update their beneficial ownership (BO) details since the deadline passed some three months back. This low compliance, as the ORC warns, may lead to the removal of non-complying firms from the books soon and won't sit well with those who haven't filed their annual returns in years.
This lack of transparency, when it comes to knowing the actual owners of companies, puts a question mark on the legitimacy of the ownership structures in Ghana, raising queries about transparency, accountability, and potential conflicts of interest. Let's examine if the push for these pre-existing companies to disclose their BO information is justified.
The establishment of a statutory beneficial ownership disclosure regime in Ghana, as part of the Companies Act, 2019 (Act 992), was intended to bring transparency, making it easier for businesses, citizens, and civil society to identify the real owners of companies. The Act defines a beneficial owner as someone who directly or indirectly holds substantial economic interest or benefits from a company. Certain related categories like politically exposed persons (PEPs) are also considered.
However, many firms, especially those set up before Act 992 came into play, are reluctant to disclose their BO information. Transparency and accounting remain essential aspects of any organizational governance, ensuring that the identity of beneficial owners is disclosed to the ORC.
A low compliance rate might lead to struggles in resolving disputes over ownership and control, especially when holders are merely nominees. Without accurate BO details, it becomes difficult to determine who holds ultimate control or ownership over a company. This ambiguity can negatively impact a company's reputation, financial stability, and may lead to prolonged legal battles, diverting attention from core business operations.
Additionally, low BO disclosure rates encourage the prevalence of shell companies, which can be used to conceal true ownership and control, separate interests from those who actually benefit from business operations, and facilitate fraudulent activities, such as money laundering, tax evasion, and corruption. Ensuring high compliance rates and disclosing accurate BO information is crucial to maintain integrity in the corporate ecosystem and promote transparency and accountability.
Moreover, regulators may find it difficult to reject blacklisted individuals if accurate BO data is unavailable, exposing companies to a heightened risk of financial crimes. By measuring PEPs and understanding associated harms, regulators can prevent illicit activities, promote good governance, and foster investor confidence.
In conclusion, it's imperative for companies to adhere to beneficial ownership disclosure requirements to ensure long-term sustainability. Not only does it help in avoiding legal and reputational repercussions, but it also allows companies to build trust and maintain transparency with stakeholders and the wider business community.
Companies in default are advised to act swiftly and submit their BO information, demonstrating their commitment to good corporate governance and responsible business practices. By complying with the disclosure requirements, they can future-proof their companies, fostering trust and resilience in the market.
Consult a legal expert for professional advice on this matter.
- The push for companies to disclose their beneficial ownership (BO) information is justified, as it could promote transparency, accountability, and prevent potential conflicts of interest.
- Adequate disclosure of BO details is essential for resolving disputes over ownership and control, ensuring a company's reputation, financial stability, and avoiding prolonged legal battles.
- Low BO disclosure rates encourage the prevalence of shell companies, which may conceal true ownership, separate interests from those who actually benefit, and facilitate fraudulent activities like money laundering and tax evasion.
- Ensuring high compliance rates and disclosing accurate BO information is crucial for maintaining integrity in the corporate ecosystem, promoting transparency, accountability, and fostering investor confidence in the long-term sustainability of businesses.
