New beneficial ownership framework launched

Today, Michael Barron and Tim Law announce the launch of BO6, a new beneficial ownership transparency (BOT) framework. BO6 has 6 stages that ensures stakeholders build a beneficial ownership (BO) reporting system that meets international best practice.

There is a global trend towards disclosure of the beneficial owners of companies. Beneficial ownership transparency is, though, still evolving as a concept. BO6 is the first framework of its kind that supports governments and other stakeholders along the whole beneficial ownership transparency process.

From the moment a president, prime minister or minister makes a commitment to implementing BO reporting obligations, through to a functioning system that allows users to reap real benefits from clear data on the ultimate owners of companies, the framework supports the decision making and policy implementation process. It asks the right questions at the right point to allow officials to make policy choices and decisions in an efficient manner and at the optimal time. It creates opportunities for engagement with the private sector, professional advisors, civil society and other stakeholders to ensure a fit-for-purpose reporting system.

For civil society, BO6 provides a structure to assess implementation of beneficial ownership initiatives. Civil society organisations can use BO6 to ensure that government agencies are addressing all challenges and making appropriate policy decisions.

For companies, especially those supporting beneficial ownership implementation, BO6 provides structure for engaging with governments and civil society to ensure any reporting regime is fit for purpose and meets their needs. Companies can be significant users of beneficial ownership information.

The BO6 stages are:

  1. Understand the landscape where the BO system is being constructed.

Each country starts from a different place and has different priorities for implementing BOT. This stage ensures there is a shared understanding amongst all stakeholders of BO’s importance and the benefits it will bring.

  1. Decide on the scope of the BO reporting system.

This stage includes some critical decisions on the definition of beneficial owner, companies in scope, thresholds and other core parts of implementation.

  1. Design the mechanisms for collection, storage, verification, disclosure and enforcement.

Based on the analysis and decisions undertaken in stages 1 and 2, this stage ensures the BO reporting system is designed to be fit for purpose and in a strong position to deliver benefits for stakeholders.

  1. Legislate to create a robust statutory basis for the reporting system and its enforcement.

The form of legislation will depend on the particular circumstances in each country but should include all the necessary elements to ensure the policy decisions are implemented in full.

  1. Implement the legislation and all the mechanisms.

This stage includes ensuring that the necessary resources are deployed both to implement the legislation in an efficient manner and that there are high levels of understanding and compliance.

  1. Benefit from the availability of clear data on the ultimate owners of companies.

To maximize the benefits, the BO register needs to contain reliable information and be easy to access.

Across all six stages, there is a process to communicate with all stakeholders on the implications of the decisions that have to be made, the uses for reliable BO information and strategies to maximize the benefits from the availability of this information.

BO6 allows stakeholders to make the right decisions at the right time to optimize the benefits of having reliable information on business ownership available for use. Michael and Tim have developed the BO6 framework based on their combined experience of research and practical implementation of BO reporting across four continents.

Michael and Tim have advised governments on the requirements to meet the EITI Standard 2019, FATF Recommendations, OGP commitments and what constitutes international best practice. They have produced scoping studies, drafted robust definitions, designed collection, verification, disclosure and enforcement mechanisms, drafted primary legislation and implementing regulations, advised on overcoming resistance and ensuring that users benefit from BO information.

As with any structure that needs to stand for many years, a BO reporting system needs a well-developed blueprint, solid foundations, well designed infrastructure and reliable support mechanisms. A BO system implemented on this basis is more likely to bring benefits to the economy: reduce the risks of doing business, creating higher levels of integrity and trust and allow government and the citizens to know who is really investing in their economy.