AICD submission on beneficial ownership disclosure requirements

On 16 December 2022, the AICD made a submission to Treasury on implementing beneficial ownership identification and disclosure requirements for Corporations Act entities.

The AICD made the following key points in its submission:

• The AICD supports measures aimed at improving the transparency of information on beneficial ownership that are targeted, proportionate and consistent with existing regulation.

• The AICD does not however consider that the proposed ‘phased approach’ for the introduction of a beneficial ownership disclosure regime is practical or cost-effective. We have particular concerns with the proposed requirement for entities to maintain their own individual beneficial ownership registers until a single and central public register is established.

• The AICD strongly recommends that a beneficial ownership disclosure regime be facilitated via a central register from the commencement of the regime, applying only to large entities with the resources to comply determined by an appropriate monetary threshold.

• A beneficial ownership disclosure regime should only require entities to collect and report beneficial ownership information to a central register, and should not require entities to verify and/or ‘police’ beneficial owners’ non-compliance with the requirements to provide information.

• The AICD is concerned that the public availability of beneficial ownership information on a register will give rise to unacceptable privacy risks for beneficial owners and heightened cyber security risks for entities, particularly if entities are required to maintain their own registers as contemplated in an initial phase. This is out of step with current Government and broader community expectations on the protection of personal information, and growing awareness of the risks associated with large amounts of potentially unnecessary data being held by entities.

• The AICD supports a listed company exemption from new beneficial ownership disclosure requirements due to existing requirements, such as the substantial holding and tracing notice regimes, which provide adequate disclosure of beneficial ownership information. To incentivise improved compliance with these regimes, particularly from foreign beneficial owners, we agree ASIC should have strengthened powers to restrain the disposal, acquisition, and exercise of rights attached to interests in listed entities where a person has, without reasonable excuse, failed to comply with the substantial notice or tracing notice regime requirements.