The beneficial owner of a company is the ‘legal person’ who enjoys the benefits of owning that company.
The disclosure of beneficial owners is an important dimension of transparency in resource-rich countries. It’s a powerful and effective means of helping to prevent corruption, particularly at the stage where extraction licences are allocated as it enables greater public scrutiny of government decisions.
In countries where there aren’t any mechanisms for disclosing beneficial ownership, there have been many cases where extraction licences are granted to mining companies with no reputation or experience. This practice can enable the corrupt sale of licences to affiliates of the government, or even government officials themselves at a fraction of the true value. These licences can then be sold on to more established companies at significant profit.
The momentum for enacting beneficial ownership legislation is gathering pace around the world, particularly via the EU, G7 and G20 and the Extractive Industries Transparency Initiative (EITI). The release of the ‘Panama papers’ has resulted in further calls for disclosure, including of ultimate beneficiaries when projects are held through one or more intermediary companies.
ICMM was at the forefront of promoting the inclusion of beneficial ownership in the 2013 EITI Standard, which encouraged reporting on beneficial ownership. By January 2020, all EITI implementing countries will have to ensure that all oil, gas and mining companies that bid for, operate or invest in, extractive projects in their country disclose their beneficial owners.
While the decision to enact beneficial ownership legislation is ultimately within the sole remit of a national government, ICMM encourages governments to enact appropriate legislation in support of full transparency around ownership.