Case examples: identifying and reporting beneficial owners

Basics: thresholds and key terms

A beneficial owner is always a natural person who ultimately controls a legal entity – through a participation in the capital or voting rights, or by other means. Capital and voting rights are assessed separately: anyone who reaches either threshold is subject to the reporting obligation.

• Direct control: from 25% of the capital or 25% of the voting rights.
• Indirect control (from the 2nd level): more than 50% is required at each intermediate company, down to the final level holding at least 25% of the entity subject to the reporting obligation.
• Extent: the participation of the intermediate company in the entity subject to the reporting obligation is reported – not the calculated look-through percentage.
• Control chain: reportable only from two control levels – except in the case of a trust or fiduciary relationship, which itself counts as a level.
• Subsidiary basis: if no beneficial owner can be identified, the highest-ranking member of the managing body is reported.

The three extent categories

For each beneficial owner, the following information is reported: last name, first name, date of birth, nationality, postal code, municipality of residence and country of residence.

1. Direct control

The person controls the company directly – without an intermediate legal entity.

1.1 Participation in the capital GmbH

Facts: Person 1 holds 10%, Person 2 20% and Person 3 70% of the quota shares in A GmbH.

• Persons 1 (10%) and 2 (20%) are below 25% – they are not beneficial owners and no report is required.
• Person 3 (70%) exceeds 25% and is therefore the only beneficial owner to be reported.

1.2 Mixed participation: capital and voting rights GmbH

Facts: Person 1 holds 90% of the quota shares and 50% of the voting rights. Person 2 holds 10% of the quota shares but, due to a provision in the articles of association, 50% of the voting rights.

• Person 1 exceeds 25% both in terms of capital and voting rights – must be reported.
• Person 2 is below the threshold in terms of capital (10%) but reaches it through 50% of the voting rights – must also be reported.

1.3 Direct control by other means AG

Facts: Person 1 has the right to appoint or remove more than half of the members of the board of directors of A AG.

• Anyone who controls a company by means other than a participation – for example through the right to appoint or remove the majority of the board of directors – is considered a beneficial owner.
• No extent can be stated in this case. Instead, it must be described how the control is exercised.

1.4 Beneficial owners only partially identified GmbH

Facts: Persons 1 and 2 each hold 50% of the quota shares in A GmbH. Person 1 could be identified, but Person 2 could not – or their identity could not be verified.

• Both exercise direct control with 50% each and are beneficial owners.
• Person 1 has been identified and is reported as a beneficial owner.
• Person 2 cannot be identified. Instead of Person 2, A GmbH reports the highest-ranking member of the managing body (Person 3) as the person required to provide information – not as a beneficial owner – together with the efforts undertaken to identify Person 2.

1.5 Participation below the threshold GmbH

Facts: A GmbH has five members, each holding 20% of the quota shares.

• Persons 1–5 are each below 25% – they are not beneficial owners.
• Since no one meets the requirements, A GmbH reports, on a subsidiary basis, the highest-ranking member of the managing body (Person 6) as the beneficial owner.

2. Indirect control

One or more additional legal entities are situated between the person and the company subject to the reporting obligation. From the second level, the 50% threshold applies.

2.1 Participation through an intermediate company vertical chain

Facts A: Persons 1–3 each hold 20% of A AG. Person 4 is the sole shareholder of B AG, which holds 40% of A AG.

• Persons 1–3, with 20% each, are below 25% – they are not beneficial owners.
• Person 4 holds 100% of B AG (> 50%), which in turn holds 40% of A AG (> 25%) – Person 4 is a beneficial owner through a vertical chain. Reported extent: 40%.

Facts B (variant with voting rights): Person 1 holds 30% and Person 2 70% of the voting rights in B AG, which is the sole shareholder of A AG.

• Person 1, with 30% of B AG, is below 50% – not a beneficial owner.
• Person 2 holds 70% of the voting rights in B AG (> 50%), which holds 100% of A AG. Extent: 100%.

2.2 Participation through several legal entities horizontal chain

Facts: Persons 1–7 each hold 10% of A AG. Person 8 is the sole shareholder of B AG and C AG. B AG holds 10% and C AG 20% of A AG.

• Persons 1–7 each fail to reach 25% – they are not beneficial owners.
• Person 8 holds 100% of both B AG and C AG. Their participations in A AG (10% + 20%) are added together: 30% > 25% – Person 8 is a beneficial owner through a horizontal chain. Extent: 30%.
• Only one control level → B AG and C AG do not have to be reported as a control chain.

2.3 Vertical chain with control by other means chain subject to reporting

Facts: Persons 1 and 2 each hold 20%, and Person 3 holds 60%, of C AG. C AG controls B AG (right to appoint its board of directors). B AG holds 100% of A AG.

• Persons 1 and 2 (20% each of C AG) are below 50% – they are not beneficial owners.
• Person 3 controls C AG (> 50%), which controls B AG by other means, which in turn holds A AG. Extent: 100%.
• Two control levels (C AG, B AG) → the control chain must be reported.

2.4 Indirect control with a fiduciary relationship fiduciary

Facts: Person 2 holds 100% of A AG but acts on behalf of Person 1, who has appointed Person 2 as a fiduciary shareholder.

• Person 1 (principal) ultimately controls A AG through the fiduciary – beneficial owner.
• Person 2 (fiduciary) is not at the end of the chain and does not actually control the company – not a beneficial owner.
• The fiduciary relationship counts as a control level → the details of Person 2 and their role as fiduciary must be reported. Extent: 100%.

2.5 Fiduciary relationship with an additional company fiduciary

Facts: Persons 1–7 each hold 10% of A AG. Person 8 has appointed Person 9 to represent them on a fiduciary basis in B AG. B AG holds 30% of A AG.

• Persons 1–7 are each below 25% – they are not beneficial owners.
• Person 8 indirectly controls A AG through the fiduciary relationship and B AG’s 30% participation (> 25%). Extent: 30%.
• Because of the fiduciary relationship, the details of B AG and Person 9 must be reported.

2.6 Indirect control with a trust trust

Facts: Trust B was established by Person 4 (settlor); Persons 1–3 are the beneficiaries. The trust is administered by Person 5 (trustee), who holds 100% of A AG for the trust.

• A AG is 100% controlled by the trust. All persons involved are considered beneficial owners: settlor (P4), trustee (P5) and beneficiaries (P1–3).
• Persons 1–5 indirectly control A AG and must all be reported. Extent: 100%.
• Because of the trust, the control chain including the trust details must be reported.

3. Mixed control

Direct and indirect participations occur within the same structure.

3.1 Direct and indirect control combined direct + indirect

Facts: Person 1 holds 70% of A AG. B GmbH holds 30% of A AG; Person 2 holds 60% of B GmbH and Person 3 holds 40%.

• Person 1 directly holds 70% (> 25%) – beneficial owner, direct participation.
• Person 2 holds 60% of B GmbH (> 50%) and therefore indirectly controls its 30% participation in A AG. Extent: 30%. Only one control level → no control-chain report.
• Person 3, with 40% of B GmbH, is below 50% – not a beneficial owner.

3.2 All participations below the threshold subsidiary basis

Facts: Persons 1–7 each hold 10% of A AG. B AG holds 30% of A AG; its shareholders are Persons 8, 9 and 10, each with 33%.

• Persons 1–7 each fail to reach 25% – they are not beneficial owners.
• Persons 8–10, each holding 33% of B AG, are below the threshold of more than 50% required from the second level – they are not beneficial owners.
• Since no beneficial owner can be identified, the highest-ranking member of the managing body (Person 11) is reported on a subsidiary basis.

What does this mean for your company?

Match your structure to one of the cases: Who directly holds at least 25%? Are there holding companies, fiduciary relationships or a trust in between? If no one reaches the threshold, the subsidiary report of the highest-ranking member of the managing body applies. The fastest way to determine whether you are affected and which deadline applies is our Express Check; for an in-depth assessment of the reporting obligation, deadlines and required information, use the detailed TJPG check.

Frequently asked questions about the case examples