How do the CAHR and the UBO-register differ from one another in order to assess whether both ...

105 Pages·2017·1.3 MB·English

How do the CAHR and the UBO-register differ from one another in order to assess
whether both registers should be implemented in Dutch legislation and how can
their implementation be improved through the application of blockchain
technology?

Name: Pieter van Muijen
ANR: 857290
Supervisor: Prof. E.P.M. Vermeulen
Master: International Business Law
Graduation date: June 2017
Master thesis International Business Law Pieter van Muijen
Table of contents
Table of contents .......................................................................................................................................... ii
Acknowledgements ...................................................................................................................................... v
Chapter 1: Introduction ................................................................................................................................ 1
1.1 Background ......................................................................................................................................... 1
1.2 Thesis question ................................................................................................................................... 2
1.3 Structure of the thesis ........................................................................................................................ 3
1.4 Investigative methods ......................................................................................................................... 3
1.5 Relevance ............................................................................................................................................ 4
Chapter 2: Current legislation ...................................................................................................................... 5
2.1 Current legislation ............................................................................................................................... 5
2.1.1 Introduction .................................................................................................................................. 5
2.1.2 Legislative history ......................................................................................................................... 5
2.1.3 Purpose of the shareholder register ............................................................................................. 6
2.2 Information in the shareholder register ............................................................................................. 7
2.2.1 Introduction .................................................................................................................................. 7
2.2.2 Information on shareholders ........................................................................................................ 8
2.2.3 Information on usufructuaries and pledgees ............................................................................... 9
2.2.4 Information on holders of certificates of shares .......................................................................... 9
2.2.5 Listed NV’s .................................................................................................................................... 9
2.3 Keeping the shareholder register up to date .................................................................................... 11
2.4 Insight in the shareholder register .................................................................................................... 11
2.4.1 Insight in the shareholder register ............................................................................................. 11
2.4.2 Electronic register ...................................................................................................................... 12
2.4.3 Extract of the shareholder register ............................................................................................ 12
2.4.4 Evidentiary value of shareholder register .................................................................................. 13
2.5 Importance of the shareholder register ........................................................................................... 13
2.5.1 General Meeting of Shareholders .............................................................................................. 13
2.5.2 Right of first offer ....................................................................................................................... 14
2.5.3 Distrain on shares....................................................................................................................... 15
2.5.4 Conversion of a NV to a BV ........................................................................................................ 16
2.5.5 Use of the register by notaries ................................................................................................... 16
2.6 Critique on the shareholder register ................................................................................................ 17
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2.6.1 Inaccuracy of the shareholder register ...................................................................................... 17
2.6.2 The paper shareholder register is outdated ............................................................................... 19
2.6.3 Anti-abuse function of the shareholder register ........................................................................ 19
2.7 Conclusion ......................................................................................................................................... 20
Chapter 3: Centrally held shareholder register ......................................................................................... 22
3.1 Legislative proposal CAHR ................................................................................................................. 22
3.1.1 Introduction ................................................................................................................................ 22
3.1.2 Background to the CAHR ............................................................................................................ 22
3.1.3 Legislative history of the CAHR .................................................................................................. 23
3.2 Purpose of the CAHR ......................................................................................................................... 24
3.3 Information in the CAHR ................................................................................................................... 26
3.3.1 Information to be registered in the CAHR .................................................................................. 26
3.3.2 Supply of the information .......................................................................................................... 27
3.3.3 Sanctions .................................................................................................................................... 28
3.4 Management of the CAHR ................................................................................................................ 29
3.5 Access to the CAHR ........................................................................................................................... 30
3.6 Costs of the CAHR ............................................................................................................................. 32
3.7 Relationship between the CAHR and the shareholder register ........................................................ 33
3.8 Digital CAHR ...................................................................................................................................... 34
3.9 Avoidance of the CAHR ..................................................................................................................... 34
3.10 Conclusion ....................................................................................................................................... 36
4 UBO-register ............................................................................................................................................ 38
4.1 Introduction ...................................................................................................................................... 38
4.1.1 Introduction ................................................................................................................................ 38
4.1.2 Background to the Directive ....................................................................................................... 38
4.1.3 Contents of the Directive ............................................................................................................ 39
4.1.4 Legislative history of the UBO-register in the Netherlands ........................................................ 40
4.1.5 Ultimate Beneficial Owner ......................................................................................................... 41
4.1.6 Contents of the UBO-register ..................................................................................................... 41
4.2 Purpose of the UBO-register ............................................................................................................. 42
4.3 Information in the UBO-register ....................................................................................................... 43
4.3.1 Entities that fall within the scope of the UBO-register .............................................................. 43
4.3.2 Information to be kept in the UBO-register ............................................................................... 44
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4.3.3 Supply of the information .......................................................................................................... 45
4.3.4 Sanctions .................................................................................................................................... 45
4.4 Management of the UBO-register .................................................................................................... 46
4.5 Access to the UBO-register ............................................................................................................... 46
4.6 Costs of the UBO-register ................................................................................................................. 49
4.7 Digital UBO-register .......................................................................................................................... 50
4.8 Avoidance of UBO-registration ......................................................................................................... 51
4.9 Relationship between the UBO-register and the CAHR .................................................................... 52
4.9.1 Similarities and differences between UBO-register and CAHR .................................................. 52
4.9.2 Relationship between UBO-register and the CAHR .................................................................... 54
4.10 Conclusion ....................................................................................................................................... 54
5 UBO-registration in other countries ....................................................................................................... 56
5.1 Introduction ...................................................................................................................................... 56
5.2 United States of America .................................................................................................................. 57
5.3 United Kingdom ................................................................................................................................ 59
5.4 Germany ............................................................................................................................................ 62
5.5 Conclusion ......................................................................................................................................... 65
6 Blockchain technology ............................................................................................................................ 66
6.1 Introduction ...................................................................................................................................... 66
6.2 Blockchain technology: How does it work? ...................................................................................... 67
6.3 Advantages and disadvantages of using blockchain technology ...................................................... 70
6.4 Types of blockchain systems ............................................................................................................. 73
6.5 Application of Blockchain technology ............................................................................................... 74
6.5.1 Blockchain technology in the company registers ....................................................................... 74
6.5.3 Blockchain technology in the CAHR ........................................................................................... 76
6.5.4 Blockchain technology in the UBO-register................................................................................ 77
6.6 Conclusion ......................................................................................................................................... 78
7 Conclusion and recommendations ......................................................................................................... 80
7.1 Introduction ...................................................................................................................................... 80
7.2 Conclusion ......................................................................................................................................... 81
7.3 Recommendations ............................................................................................................................ 86
Annex 1 ....................................................................................................................................................... 87
Bibliography................................................................................................................................................ 90
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Acknowledgements
This thesis has been a challenging and educational project. My interest in registration of ultimate
beneficial owners was first aroused in performing an assignment for Comparative Corporate Governance.
For this assignment we had to pick a number of international companies for which we had to identify the
beneficial owner. For a vast majority of the companies we chose, we were not able to identify this
individual. It intrigued me why and how these people wanted to remain anonymous. In my search for a
thesis topic the 4th anti-money laundering Directive and its obligation for the member states to create an
UBO-register therefore naturally got my attention. An analysis of the available literature led me to the
existence of the proposals regarding the CAHR and the discussion in literature and politics on whether
both registers should be implemented in Dutch legislation or not. I found the subject very interesting
especially since its practical implications could have major consequences to shareholders and investors.
I want to thank some people for their support in writing this thesis. First of all I want to thank my
supervisor Professor Vermeulen for providing support and guidance throughout the past few months.
Specifically I want to thank him for arousing my interest in blockchain technology and its widespread
application on existing processes in businesses, industries and governments. Secondly I want to thank
everyone who took the time to argue with me about the investigation of my thesis. Both (law) students
and professionals provided me with their sharp opinions about the subject which led me to new insights.
Last, but not least, I want to thank my parents for their unconditional support over the course of my study.
Without your support I would not have been able to learn as much about the law and myself as I have so
far.
I hope you enjoy reading this thesis and that it might provide you with some further knowledge
about the CAHR, the UBO-register, blockchain technology, their advantages and disadvantages and their
implications on society.

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Master thesis International Business Law Pieter van Muijen
Chapter 1: Introduction
1.1 Background
On the 4th of March 2011 a legislative initiative was presented in Dutch parliament to establish a centrally
held shareholder register (Dutch: Centraal aandeelhoudersregister; ‘CAHR’) that contained information on
the direct shareholders of BV’s and non-listed NV’s.1 The primary purpose of the CAHR was to provide
transparency on shareholder ownership in order to improve the prevention and detection of abuse of
entities such as tax evasion, money laundering and terrorist financing. Complex shareholder structures with
the use of BV’s and NV’s were often used to hide the identities of the criminals involved in these kinds of
criminal activities. The additional purposes of the CAHR were that it simplified the customer due diligence
of notaries, which they have to perform before validating a share transaction, and it increased the legal
certainty in the business community.
The current shareholder registration requirements were not deemed adequate for these purposes.
The trade register only holds information on the sole shareholder of a BV or NV and the shareholder register
held by companies was regarded too inaccurate for this purpose. Articles 2:85 and 2:194 BW create the
obligation for the board of directors of a BV and NV to register information about their rights holders of
shares register to name. Each register is kept separately by a company at their offices and they are
notorious for being inaccurate and not up-to-date. The Dutch government liked the idea to create a digital
register that recorded all the information about direct shareholders in a central place opposed to the
current registers that were separately kept and stored. The CAHR would provide them with a register which
they could actively search efficiently in order to detect abuse of entities early on. The outline of the register
was developed and the consultation legislation was published online. The government had the intention to
establish the CAHR until the 4th Anti-money laundering Directive (‘Directive’) was adopted by the member
states of the European Union.2
The most important change brought by the Directive was the obligation for all the member states
to implement legislation that would establish an UBO-register. This UBO-register would contain information
on the ‘Ultimate Beneficial Owners’ of a wide variety of entities established within their territory. The
transparency that the disclosure of this information would bring, would improve the prevention and
detection of money laundering with the European Union. These two forms of abuse of entities were
increasingly becoming a cross-border problem and to counter this, international cooperation would have
to be increased as well. The Directive created the same level of preventive measures across the entire EU
to accomplish this. The UBO-register is one of these measures and has to be implemented in each member
state before the 26th of June 2017. The Dutch government has every intention to complete the
implementation process on time.
The obligation of the Dutch government to create the UBO-register and the simultaneous
development of the CAHR, put too much strain on the same organizations in the Netherlands. The ICT-,
legislative- and policy capabilities of the Kamer van Koophandel (‘KvK’) and of the ministries of Finance,
Safety and Justice and Economic Affairs would not be able to handle development of both registers at the
same time.3 This would lead to difficulties in the feasibility and affordability of both registers. Since the

1 Kamerstukken II 2010/11, 32608, nr. 2.
2 Directive EU/2015/849.
3 Kamerstukken II 2015/16, 31477, nr. 12, p. 24.
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creation of the UBO-register constitutes an enforceable obligation of the EU, the UBO-register was given
priority. The creation of the CAHR was halted and postponed until after the UBO-register was
implemented.4 During and after the implementation of the UBO-register, the Dutch government would
have to time assess whether and how the CAHR would have added value to the purposes of prevention and
detection of abuse of entities.5 Since both registers have overlap in their purpose and in their characteristics,
implementing two registers that would do exactly the same was regarded as inefficient and a waste of the
taxpayers’ money. The Second Chamber of Dutch parliament didn’t agree with this decision and instructed
the government to continue the implementation of the CAHR.6 The government didn’t agree with this
instruction, since nothing has happened so far. In the literature a discussion rose whether the government
should implement the CAHR next to the UBO-register or cancel the CAHR altogether. Some authors were
not in favor of the CAHR to begin with,7 others think that the CAHR would become obsolete as a result of
the implementation of the UBO-register8 and some believe that the CAHR has an important added value
on the UBO-register and its implementation should not be postponed any longer.9 Politicians and authors
alike are thus divided on the question whether both registers should be implemented.
Furthermore, technological progress was a big motivator for the Dutch government to establish
the CAHR and the UBO-register. The use of advanced technologies allows the government to analyze the
information quicker and more accurate than ever before. By creating risk profiles the government can
almost automatically search the information in the CAHR and the UBO-register. The Directive requires
member states to cooperate in applying the newest technologies to counter the use of sophisticated
technologies by criminals and the digital CAHR is an immense upgrade compared to the paper shareholder
registers kept at companies. The use of technologies is beneficial to the government, but at the same time
they should ensure that the privacy-sensitive information is protected from intrusions, such as hacks, or
alterations. Blockchain technology has the potential to improve the sharing and gathering of data while
keeping it secure from intrusions at the same time. Application of the technology has not been considered
by the government yet, but could potentially have major benefits to both registers and government
processes as a whole.
1.2 Thesis question
This leads me to the following thesis question: How do the CAHR and the UBO-register differ from one
another in order to assess whether both registers should be implemented in Dutch legislation and how can
their implementation be improved through the application of blockchain technology?
The focus of this thesis will mainly be on the similarities and differences between the CAHR and the UBO-
register. The differences and similarities of both registers can provide us some valuable insight as to
whether it is advantageous to implement the CAHR next to the UBO-register. The benefits of both registers
separately as well as together will show if it is beneficial to implement both. The costs and disadvantages
of both registers will provide us with an insight into the possible effectiveness of the registers as well as the
burdens of establishing them for businesses, shareholders, the government and other actors that are

4 Kamerstukken II 2015/16, 31477, nr. 10, p. 6.
5 Kamerstukken II 2015/16, 31477, nr. 12, p. 22-24.
6 Kamerstukken II 2015/16, 29911, nr. 124; Handelingen TK 2015-2016, nr. 73, item 9.
7 Zaman, Ondernemingsrecht 2013/121, p. 620; Bosse, WPNR 2014, 7015; Vermeulen, Ondernemingsrecht
2011/39, p. 202.
8 Altun, JutD 2015/91, no. 15, p. 9.
9 Bosse, WPNR 2016/7117, p. 656-657; Hendriks, NM 2017, no. 1, p. 6.
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effected by the registers. The characteristics of both registers will show if both registers can complement
each other, show to much overlap for it to be efficient and costly to implement both or if they differ too
much for them to be compared to one another. Next to that, the application of blockchain technology to
both registers will be analyzed in order to assess how the registers and their users can benefit from this
technology. The advantages and disadvantages of the technology in general and the advantages and
disadvantages of application of the technology to both registers will provide an insight into possible
improvements as a result of the technology.
1.3 Structure of the thesis
This thesis consists of seven chapters. The first chapter is this introduction. In the second chapter the
current shareholder registration requirements of BV’s and NV’s will be outlined. It is important to provide
the current rules and regulations since it shows how shareholders are currently registered and provides a
good basis for the changes that both the CAHR and the UBO-register will constitute. Next to that, it shows
why the current registers are not adequate in pursuing the purposes of the CAHR and the UBO-register.
The third chapter provides the characteristics of the CAHR and the outline of the register according to the
proposals of the government. The fourth chapter will provide the characteristics of the UBO-register as to
how it will be implemented in Dutch legislation. This chapter will also contain a comparison between the
CAHR and the UBO-register. The fifth chapter will provide insights into shareholder and beneficial owner
registration in other countries. A comparison between the CAHR and UBO-register in the Netherlands on
the one side and comparable initiatives in the United States of America, the United Kingdom and Germany
will be made. It is important to make a comparison to the rules and regulations of other countries since this
can provide valuable and new insights for the Dutch government. Furthermore, it can tell if other countries
undertake their initiatives in line with the Dutch government or if the Dutch government stands alone in its
choices. The sixth chapter concerns the application of blockchain technology to the shareholder register of
companies, the CAHR and the UBO-register. In this chapter it will be discussed how the technology works,
what the advantages and disadvantages of the technology are and how it could be beneficial to the current
shareholder register of companies, the CAHR and the UBO-register. The last chapter will contain the
conclusions of the investigation carried out in this thesis.
1.4 Investigative methods
The investigation in this thesis will be conducted on the basis of a literature review. Since the subject is very
current and the outcome is important to a lot of shareholders and investors, the available literature is
substantial and of the last few years. Both the CAHR and the UBO-register have received a lot of critique in
literature and a lot has been written on the subject. The critique provided in the available literature will be
incorporated into this thesis. Furthermore the investigation will to a large extent rely on official documents
of the Dutch government and Dutch parliament. The considerations of the government in making certain
choices are extensively described in these sources which makes them valuable to this investigation. Since
it concerns the implementation of two registers into Dutch legislation, a lot of these sources will be in Dutch.
While I’m a native speaker in Dutch and fluent in English, this won’t pose a problem. In the fifth chapter a
legal comparison will be made with other countries. The comparison to the United States and the United
Kingdom can be conducted using English sources. The comparison to Germany will have to be conducted
using sources in German, for which I will be able to receive help from a fluent speaker. Since shareholder
and beneficial owner registration is a topic that concerns countries around the world, enough literature
can be found to conduct an adequate comparison between these countries and the Netherlands. The
available literature with regard to blockchain technology and its possible applications, necessary for the 6th
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chapter, are substantial as well. Application of the technology to existing industries, businesses and
processes is carried out on a large scale all over the world. A significant amount of people is involved in
developing the technology and literature on the subject is shared extensively over the internet.
1.5 Relevance
This thesis is academically relevant since it provides a contribution to a discussion that can be found in
academic literature. Authors are divided on whether it is useful to implement the CAHR next to the UBO-
register. This thesis analyzes the differences and similarities to provide a carefully assessed answer to this
discussion. Since the proposals regarding implementation of the CAHR and the UBO-register are still
evolving, this has not been done on the basis of the proposals used in this thesis. Furthermore, application
of blockchain technology to the CAHR and the UBO-register have not been investigated yet. It’s possible
application provides a further insight into the application of this technology by governments to benefit their
processes. This could provide a basis for further literature on this subject.
The social relevance of this thesis is provided by providing a contribution to a discussion that is
currently conducted in Dutch politics. The government still has to decide on the implementation of the
CAHR and will do so by reviewing the added value of the register. This thesis provides a contribution to this
discussion by reviewing the characteristics of both registers and assessing whether the CAHR will have an
added value. Furthermore, the application of blockchain technology to both registers as described in this
thesis has the potential to be beneficial to government processes. The suggestions provided in this thesis
for application of the technology could serve as a basis for applying the technology to government
processes, which will be beneficial to the Dutch government and the Dutch people.

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Master thesis International Business Law Pieter van Muijen
Chapter 2: Current legislation
2.1 Current legislation
2.1.1 Introduction
The current legislation in the Netherlands concerning shareholder registration for private companies with
limited liability (Dutch: Besloten vennootschap met beperkte aansprakelijkheid; ‘BV’) and (listed) limited
liability companies (Dutch: Naamloze vennootschap; ‘NV’) can be found in Book 2 of the Dutch Civil Code
(Dutch: Burgerlijk Wetboek; ‘BW’). The main article regarding shareholder registration in NV’s is article 2:85
BW. For BV’s, the main article is article 2:194 BW. Both articles create an obligation for the board of
directors of the company to keep a shareholder register that contains information on the shareholders of
the company. The shareholder register has to be kept regarding shares registered to name in the BV and
the NV. A BV can only have shares registered to name,10 while the NV can also have bearer shares (Dutch:
aandelen aan toonder).11 When a BV or NV has more than one shareholder, some information about these
shareholders is registered in the shareholder register of the company.12 When a BV or NV has only one
shareholder, the information of this shareholder will be registered in the Dutch Trade register. This register
is accessible to everyone through the Chamber of Commerce.13 Although both articles essentially create
the same obligation for the board of directors, some differences between the obligations can be
distinguished. Therefore, both articles and the obligations they create, will be analyzed separately if any
differences arise.
2.1.2 Legislative history
The registration of shareholders in BV’s and NV’s has seen some changes in the past 50 years. Since the
creation of the BV in the Netherlands in 1971, there has been a registration requirement for BV’s with
regard to all shares registered to name.14 For the NV, this obligation extended to shares registered to name
that were not paid up.15 Article 2:194 BW was created with the creation of Book 2 BW that came into effect
on the 26th of July 1976.16 At the same time article 39 WvK (old) was changed into article 2:85 BW.17 From
this moment onwards the obligation for the registration of shareholders for NV’s extended to all
shareholders of shares registered to name and not just those shareholders of which the shares were not
paid up. Furthermore, it was added that information about usufructuaries (Dutch: vruchtgebruikers) and
pledgees (Dutch: pandhouders) was to be kept in the registers.18
Both articles underwent some minor changes in 1992. The first alteration was made to adopt the
articles to changes made in legislation concerning the possibility of a non-possessory lien which was
created.19 The second alteration in 1992 was caused by changes made to legislation concerning the transfer
of shares registered to name. This change required more information on shareholders, usufructuaries and

10 Article 2:175 BW.
11 Article 2:82 BW.
12 Wolf, GS Rechtspersonen, art. 2:194 BW, aant. 13 (online, last updated October 1 2012).
13 Article 22 paragraph 1 sub e Handelsregisterbesluit 2008.
14 Article 57 Wetboek van Koophandel (expired).
15 Article 39 WvK.
16 Invoeringswet Boek 2 nieuw Burgerlijke Wetboek, Stb. 1976, 395, Kamerstukken II nr. 3769.
17 Wet van 17 mei 1976, Stb. 1976, 287, Kamerstukken II nr. 12897.
18 Kamerstukken II 1973/74, 12897, nr. 3, p. 5; Van Olffen, WPNR 1992/6048, p. 351.
19 Invoeringswet Nieuw Burgerlijk Wetboek, zesde gedeelte, Stb. 1989, 541, Kamerstukken II nr. 17725 and Stb.
1991, 605, Kamerstukken II 17725; Kamerstukken II 1982/83, 17725, nr. 3.
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