In march this year, Rwanda passed the Law No 019/2023 of 30/03/2023 amending Law No 007/2021 of 05/02/2021 governing companies. Alongside this, the Office of the Registrar General issued guidelines for identifying beneficial owners of legal entities and arrangements. The law mainly provided for obligations to legal entities requiring them to maintain information on beneficial owners, while the guidelines provided detailed directions for identifying and filing information on beneficial owners. This comes as a result of Rwanda committing to implementing global transparency standards, monitored by the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) and the Financial Action Task Force (FATF), some of which include ensuring the transparency and beneficial ownership of legal entities. The availability of accurate and up-to-date information on the beneficial owners of legal entities, which can be easily accessed by relevant authorities helps deter individuals from using companies as a shield to carry out crimes such as money laundering or financial terrorism. Therefore, to ensure compliance, and prevent such crimes, the Government of Rwanda, through the aforementioned law, has introduced obligations for all legal entities in Rwanda to obtain and maintain accurate information on their owners. As a result of the new law, RDB issued a public notice, on the 26th of July 2023, requiring all companies to file their beneficial ownership information no later than 31 August 2023, through https://bo.rdb.rw/business. Due to the urgency in the matter, existing companies wishing to amend any information in the Companies Registry will not be able to do so unless they have filed their Beneficial Owner Information, and new companies wishing to register will have to also provide such information for the registration to be processed. It is in that regard that we have prepared this article giving a brief summary on what the law and the ORG guidelines provide on beneficial ownership information. Under its article 2 (40), the amending law defines a Beneficial Owner as, “the natural person(s) who ultimately owns or controls a legal entity or arrangement or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.” The law further provides that a natural person shall be considered to be a beneficial owner of a company if he or she meets one of the following conditions in relation to the company: i. He or she holds shares or exercises voting rights in a company either directly or indirectly, meeting the required threshold, which is 25% as stipulated in the Guidelines for the identification of the beneficial owners of legal persons and arrangements; ii. He or she holds a right, directly or indirectly, to appoint or remove a majority of directors of the company; iii. He or she exercises significant influence or control, directly or indirectly, over the company Beneficial ownership focuses on individuals who both own and benefit from a company's assets, as well as those who have real control over the company, regardless of their official positions. It's not just about people who have legal rights to the company. The aim is to identify the individuals who are truly in charge and benefiting from the company. All companies incorporated in Rwanda, be it domestic or foreign companies registered in Rwanda, are required to hold adequate, up-to-date information of their beneficial owners, this includes: the personal details of the beneficial owners; their physical address; details on the control exercised on the company; the details of the interests held in the company; and any other information that may be requested by the Registrar General. This requirement also applies to dormant companies. The law requires companies to maintain records of this information for a period of 10 years after the date on which the legal entity ceases to exist. In order to be able to keep and maintain the above information, companies have the following obligations: i. Maintain an up to date internal register of beneficial owners at the registered office of the company. An internal register is maintained by the Company Secretary, and where the Company has no Company Secretary, the responsibility is taken up by the Board of Directors; ii. File a copy of the internal register of beneficial owners with the Registrar General and inform the latter within fourteen days of any changes thereto from the date of the changes. The aforementioned law also provided for sanctions of which companies can be liable to, in case they fail to keep and maintain adequate, accurate and up to date information on their beneficial owners. It provides that legal entities that fail to keep and update their records, including information on beneficial owners, commit a fault and are liable to an administrative fine of not less than FRW 500,000 and not more than FRW 2,000,000. In summary, this new law is there to ensure and put in place obligations for all registered entities in Rwanda to have accurate and current information about their beneficial owners. This aligns with international transparency commitments and aims to prevent illegal activities like money laundering or terrorist financing. The author is a lawyer at Trust Law Chambers. This article solely constitutes the views of the author and does not constitute any form of legal advice.
