Striking off in the CBE for non-compliance with UBO obligations
Striking off in the CBE for non-compliance with UBO obligations
In January, it became known that the General Administration of Treasury of the FPS Finance deleted almost 21,000 ghost or dormant entities from the Crossroads Bank for Enterprises (CBE), mainly due to non-compliance with the legal obligations around the UBO register. Indeed, since the end of 2023, this has been a new ground for ex officio striking off a company in the CBE.
Notwithstanding the usual procedure of striking off, an entity in the CBE could until recently be deleted ex officio based on the following grounds:
1° the death of the founder-natural person, already at least six months ago according to the data of the national register;
2° the closure of the liquidation of a legal person, already pronounced at least three months ago;
3° the closure of the bankruptcy of a legal entity, already decided at least three months ago;
4° failure to file financial statements for at least three consecutive financial years; and
5° companies not falling under point 4°, but meeting the following cumulative criteria:
The Act of 5 November 2023 containing various provisions on economy, as entered into force on 21 December 2023, introduced two additional grounds for ex officio decommitment, namely:
We will briefly elaborate on the possibility of an automatic deletion due to non-compliance with the UBO registration obligations below.
The UBO register was created in 2018 and the initial transition period to report the required information expired in 2020. However, FPS Finance found that many who had to report did not fulfil their obligations. For this reason, the CBE management service will now be authorized to strike off entities ex officio if the formalities relating to the registration or updating of information in the register of beneficial owners (the UBO register) were not complied with. In this way, the legislator hopes to raise awareness of companies' shortcomings regarding their obligations to provide information to the UBO register.
Specifically, the automatic decommitment is provided for companies or associations that meet one of the following situations:
As this is a purely administrative deletion, the entity concerned will continue to exist legally. The entity thus retains its legal personality, including all rights and obligations. Nevertheless, the deletion entails some important consequences. For example, the activities with which the entity was registered can no longer be carried out. If the company would nevertheless continue the activities after the deletion, it risks being sanctioned with a fine of at least EUR 26 up to a maximum of EUR 25,000 or – if this would represent a higher amount - up to 6% of the total annual turnover in the most recently completed financial year preceding the imposition of the fine for which data are available that allow the annual turnover to be determined. Moreover, the deletion is published in the Belgian Official Gazette, which may be detrimental to the entity's activities and its relations with third parties, including credit institutions. Legal actions brought by the entity are also declared inadmissible ex officio.
Finally, it should be emphasized that the ex officio striking off for non-compliance with UBO formalities is not a definitive measure. After the necessary formalities have been completed in the UBO register, the CBE will withdraw the deletion once the FPS Finance informs them that the situation has been regularized. The withdrawal of the ex-officio deletion, like the ex-officio deletion itself, will be published in the Belgian Official Gazette and can be consulted online via the CBE's Public Search.
Would you like more information on this? Please do not hesitate to contact your trusted BDO advisor or Karen Keuleers.
1° the death of the founder-natural person, already at least six months ago according to the data of the national register;
2° the closure of the liquidation of a legal person, already pronounced at least three months ago;
3° the closure of the bankruptcy of a legal entity, already decided at least three months ago;
4° failure to file financial statements for at least three consecutive financial years; and
5° companies not falling under point 4°, but meeting the following cumulative criteria:
- not having active capacities, activities or establishment units registered in the CBE for a minimum of three years;
- being enrolled in the CBE with an active status;
- not having current admission or capacity applications registered in the CBE;
- not having made any changes to the data registered in the CBE for seven years; and
- for seven years, not having carried out any publication other than that of the annual accounts, in the Annexes to the Belgian Official Gazette.
The Act of 5 November 2023 containing various provisions on economy, as entered into force on 21 December 2023, introduced two additional grounds for ex officio decommitment, namely:
- the automatic removal of companies that no longer exist as a result of a merger or division; and
- ex-officio removal of companies that have not complied with their obligations under UBO registration.
We will briefly elaborate on the possibility of an automatic deletion due to non-compliance with the UBO registration obligations below.
The UBO register was created in 2018 and the initial transition period to report the required information expired in 2020. However, FPS Finance found that many who had to report did not fulfil their obligations. For this reason, the CBE management service will now be authorized to strike off entities ex officio if the formalities relating to the registration or updating of information in the register of beneficial owners (the UBO register) were not complied with. In this way, the legislator hopes to raise awareness of companies' shortcomings regarding their obligations to provide information to the UBO register.
Specifically, the automatic decommitment is provided for companies or associations that meet one of the following situations:
- As a result of non-compliance with the obligation to communicate its beneficial owners to the UBO register, the company concerned has been imposed an administrative penalty and has failed to communicate or correct its data within a period of sixty calendar days after the imposition of an administrative fine; or
- The company concerned has been in default of annual confirmation of its details in the UBO register since at least one year; or
- The company concerned has not transmitted any information on the beneficial owners and, moreover, has not carried out any publication in (the Annexes to) the Belgian Official Gazette for the past seven years. The latter situation, according to the legislator, will make it possible to strike out dormant legal entities that no longer give any sign of life. This situation concerns entities subject to an obligation to publish in the Belgian Official Gazette, which excludes partnerships.
As this is a purely administrative deletion, the entity concerned will continue to exist legally. The entity thus retains its legal personality, including all rights and obligations. Nevertheless, the deletion entails some important consequences. For example, the activities with which the entity was registered can no longer be carried out. If the company would nevertheless continue the activities after the deletion, it risks being sanctioned with a fine of at least EUR 26 up to a maximum of EUR 25,000 or – if this would represent a higher amount - up to 6% of the total annual turnover in the most recently completed financial year preceding the imposition of the fine for which data are available that allow the annual turnover to be determined. Moreover, the deletion is published in the Belgian Official Gazette, which may be detrimental to the entity's activities and its relations with third parties, including credit institutions. Legal actions brought by the entity are also declared inadmissible ex officio.
Finally, it should be emphasized that the ex officio striking off for non-compliance with UBO formalities is not a definitive measure. After the necessary formalities have been completed in the UBO register, the CBE will withdraw the deletion once the FPS Finance informs them that the situation has been regularized. The withdrawal of the ex-officio deletion, like the ex-officio deletion itself, will be published in the Belgian Official Gazette and can be consulted online via the CBE's Public Search.
Would you like more information on this? Please do not hesitate to contact your trusted BDO advisor or Karen Keuleers.