The stakeholders in your organization include legal representatives and Ultimate Beneficial Owners (UBOs). In some companies, a Pseudo-UBO might be a stakeholder. To use our services, we ask you to submit and verify some of your information about these stakeholders.
In this article, you will find examples to help you figure out who the stakeholders are in your Partnership.
Legal representatives for a Partnership
A legal representative is a natural person who is authorized to act on behalf of your organization. In the case of a Partnership, the partners may have full, limited, or no authorisation to sign. The specific conditions and limitations should be stated in the organization’s Commercial Register registration.
For instance, the Commercial Register might state the condition that a partner is authorised to sign without involving the other partners up to a certain amount; for higher amounts, the partners must co-sign. If the other partners have given them power of attorney, the partners may be authorised to sign on behalf of the professional partnership.
Ultimate Beneficial Owners for a Partnership
An Ultimate Beneficial Owner (UBO) owns or significantly controls an organization. A company or legal entity can have one or more UBOs. Note that a UBO is always a natural person, though this person may have a direct or indirect stake in the company.
You can identify a UBO in a Partnership as:
- Persons who have over 25% entitlement to capital, or;
- Persons with over 25% voting rights, or;
- Persons with effective control through other means.
Persons who have over 25% entitlement to capital
In a partnership, persons who are entitled to more than 25% of the capital can be designated as UBOs.
Let’s say there is a general partnership with two partners. Each has entered into the partnership agreement with a contribution of €150,000 each. The contract between them states that any labour remuneration and profits shall be divided equally. Both partners are then entitled to 50% of the capital, which makes both of them UBOs in this partnership.
Persons with over 25% voting rights
A UBO can also be someone who has over 25% of the voting rights in the organisation.
Example with more than 25% voting rights
There are 3 partners in a partnership, who each can cast 33.3% of the votes. In their partnership agreement, it is stated that any changes to the agreement can only be made by unanimous vote. Here, all 3 partners are UBOs for the organization.
Example with less than 25% voting rights
Imagine a limited partnership has 2 managing partners and 3 limited partners. The limited partnership agreement states that they must have a unanimous vote to amend the agreement. None of the 4 partners are UBOs based on voting rights because none of them have more than 25% of the votes. In this case, we should look at entitlement to capital or effective control through other means to determine the UBOs.
Persons with effective control through other means
Persons may be designated as UBOs if they have ownership or control of the company via means other than voting rights. Other means may include being the ultimate policymaker.
Example 1 of effective control
Let’s say a partnership has 130 partners. The agreement of this partnership stipulates a specific way that the partners will cast their votes. According to this arrangement, 1 partner, Frank, has the power to give voting advice and the other partners will follow this advice. Essentially, Frank is a UBO on the basis of effective control.
Example 2 of effective control
A partnership has 75 partners, where Gaby is considered a very important partner to the group. All other partners follow Gaby’s decisions and advice. In this case, Gaby is a UBO of the organization on the basis of effective control.
Do none of these interests apply to your company?
If your organization does not have a UBO, you should identify one or more pseudo-UBOs. A pseudo-UBO is a natural person who belongs to the senior management of an organization like a managing director. These managers must be registered in the Commercial Register as statutory directors. They can be considered Pseudo-UBOs because they fulfill the function of a director.