Landmark CJEU case finds beneficial-ownership rules invalid
The EU鈥檚 top court has found that the general public鈥檚 access to information on the beneficial ownership of companies constitutes 鈥渁 serious interference with the fundamental rights to respect for private life, and to the protection of personal data鈥.
The Court of Justice of the European Union (CJEU) ruled that such a provision of an EU directive on money-laundering was invalid, and incompatible with the EU鈥檚 Charter of Fundamental Rights.
requires member states to ensure that information on ownership of entities incorporated within their territory is accessible in all cases to members of the public.
The court said the EU鈥檚 aim to prevent money-laundering and the financing of terrorism was 鈥渁n objective of general interest鈥, and that interferences with fundamental rights could be justified.
It added, however, that the interference entailed by the measure on beneficial ownership was 鈥渘either limited to what is strictly necessary nor proportionate to the objective pursued鈥.
鈥楶ublic鈥 not defined
The court said that the directive鈥檚 provisions allowed for data to be made available to a 鈥榩ublic鈥 that was not sufficiently defined and identifiable.
that the new rules amounted to 鈥渃onsiderably more serious鈥 interference compared with the previous rules, which provided for access to such information by competent authorities and certain entities, and by any person or organisation capable of demonstrating a legitimate interest.
The ruling followed a referral from the Luxembourg District Court, which asked the CJEU for a preliminary ruling on the issue.
Wider ramifications
Lawyers at Mason Hayes & Curran LLP (MHC) described the judgment as 鈥渓andmark鈥, saying that it had put public access to information about company ownership and control into doubt.
The lawyers added that the judgment also had potentially wider ramifications, pointing out that the registers of beneficial ownership were not the only registers that Irish companies had to keep.
鈥淎ll companies must also keep registers of their members, their directors, their secretaries, and the interests of directors and secretaries (and their families) in company shares and bonds.
鈥淭hese registers contain names and home addresses of directors and secretaries, and in many cases, those of shareholders.
鈥淣ot only is access required, but companies must provide copies of this information on payment of a modest fee. Much of this information is then publicly filed in the Companies Registration Office (CRO),鈥 MHC said.
鈥榃ake-up call鈥
MHC partner and solicitor Nick Metcalfe described the ruling as 鈥渁 wake-up call鈥 for policy-makers.
鈥淔or several years company law and information law have been on diverging tracks, each disregarding the other,鈥 he said.
鈥淔or example, Irish law, which is supposed to allow directors鈥 home addresses to be kept off the public record in cases of sensitive industries, is effectively inoperative.
鈥淎 start would be to look at the British model where, for example, an applicant for information must have a 鈥榩roper purpose鈥,鈥 he suggested.