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Key Regulatory Updates from 2021
Looking back on 2021, it was once again a busy year in which jurisdictions across the globe continued to introduce new regulations, both in response to the changing environment post-COVID-19, as well as more uniform changes being brought in as regulatory complexity continues to increase.
Mercator by Citco continues to provide updates from across the entire set of jurisdictions that Mercator operates in to help keep our multinational clients informed and remain compliant. Follow us on social media to stay up to date:
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Here are 5 Key Regulatory Updates from 2021:
1. Brexit and its effect on Corporate Requirements for UK Companies within the European Economic Area (EEA)
With the having UK officially left the EU (the transition period ended on 31 December 2020) there are a number of actions which need to be taken for UK based entities:
- When filing any changes related to EEA corporate officers (i.e. corporate director, secretary) to the Companies House, the UK company must provide them with such additional details of the corporate officers as registered (or principal) office address, legal form and its’ governing law;
- After Brexit, companies seeking a merger with another company outside the UK will need to transfer assets and liabilities using contractual arrangements (as happened before between the UK and non-EEA companies);
- Companies with a UK establishment and whose ‘home’ country is inside the EEA, will have to report the same information as overseas companies with UK establishment, together with additional details, i.e. location of head office, limited liability status, etc.
It is important to note that such changes have an impact on a minority of European countries that have requirements related to EEA membership, for instance, residency requirements for directors/officers or various requirements for UK owned branches. For example, in Norway, as of 1 January 2021, there is an obligation for LLC entities to ensure compliance with residency requirements of directors (i.e. the board of directors, deputy manager and corporate assembly shall be formed from EEA residents only). In addition, foreign companies (including UK owned) without a permanent place of business in Norway and being registered in the VAT Register, must now appoint a branch representative resident in Norway. The requirement to start preparing consolidated annual accounts applies to Norwegian companies with subsidiaries, where the parent of the Norwegian company is a UK company.
2. Belgium Allows Remote Participation and Voting at Shareholders’ Meetings
A new regulation in Belgium was implemented in late December 2020 allowing members of certain types of entities (such as SA/NV, SRL/BV, SC/CV, and A(I)SBL/(I)VZW) to participate in their shareholder’s meeting remotely. In other words, it means that even if a Company’s Constitution states otherwise, online meetings will still be allowed and considered in line with the law. In order to proceed, entities must fulfill the following criteria:
- The identity of the shareholder(s) must be verified at the remote meeting. This can be done using various tele and video tools;
- Directors of the company should send out a shareholder’s meeting notice prior to the call, addressing the procedure of the scheduled meeting.
Communication must be two-way, i.e. the shareholders must fully exercise their rights and be able to debate agenda items. One-way communication (i.e. shareholders only listen but do not participate) was only acceptable until 30 June 2021.
3. USA Implements Ultimate Beneficial Ownership (UBO) Regulation
Early last year, US authorities enacted the Corporate Transparency Act (CTA) which included the UBO reporting requirements. This will take effect once the Financial Crimes Enforcement Network (FinCEN) issues final rules to implement reporting requirements. However, the FinCEN first published the proposed rules for public comments on 7 December 2021 ending 7 February 2022, and there is currently no clear timeline for final implementation.
4. UAE Introduces Noteworthy Amendments to the Commercial Companies Law:
The UAE has introduced a series of amendments to key piece of legislation governing business activities in the UAE – Law 2 of 2015 regarding Commercial Companies.
The amendments, projected to be a significant element in the liberalization of foreign ownership in the UAE, were published on 2 January 2021 and took effect on 2 July 2021.
The amendments introduced a series of significant changes, most notably the elimination of:
- The requirement of minimum 51% Emirati ownership of capital in onshore companies;
- The restriction requiring the majority of directors of certain UAE companies to be UAE nationals.
However, some foreign ownership restrictions remain for companies carrying out economic activities considered to be of “strategic impact”, the list of which is expected to be clarified by the government.
The amendments may also carry implications for UAE free zones; the reduction of the number of the free zones is possible.
5. Brunei Darussalam Introduces Requirement for Registerable Controllers Information
In 2021, Brunei introduced a new legal requirement for certain companies to create and maintain a register of controllers and to submit the particulars of the registrable controllers to the Ministry of Finance and Economy.
Companies incorporated on or after 31 October 2021 should now submit the particulars of their registrable controllers within 30 days of incorporation, whereas companies incorporated before the 31 October 2020 should have filed this information by the 31 December 2020.
Entities found in breach of this legal requirement may be liable to penalties of up to BND 5,000 (approx. USD 3,700 / EUR 3,160).