Even before that press release from BCCAR arrived to suggest fact-checking, our newsroom reached out to the Bar Association of Belize for comment and clarification since these legal professionals are far more conversant with the law - and use the registry on the daily.
We were directed to attorney Aldo Reyes, a corporate and commercial law expert who has interacted frequently with the registries. He is also a member of the Bar Association's sub-committee, which has been tasked to review the changes in the companies registry.
Today, he confirmed our reports that the November 28th change-over DOES reduce transparency, as compared to the prior configuration. However, he qualified that by pointing out that law enforcement agencies, such as the Financial Intelligence Unit and the Office of the Director of Public Prosecutions, will be able to access the information that regular citizens won't. Here's how he explained that:
Aldo Reyes, Member, Bar Association of Belize
"Essentially there is no longer a distinction between an IBC which is known as an offshore company and a domestic company which is commonly known as a 250 company. There is just now one specie of company which the Belize Company and the new act, the Belize Companies Act as you said it was an amalgamation of the IBC Act and the Companies Act. The amalgamation resulted in, and it is one aspect of concern - it resulted in all companies in Belize now enjoying that level of confidentiality that offshore companies enjoyed, in that now what use to occur before is when you want to do a search of the local registry, you could get all the details for local companies and that being the name of the company when its incorporated, its registered office, the identity of its directors, its shareholders and all the documents which have been filed. Now that is no longer the case. When you do a search, you will only get what's called a "short form extract" and it's a very abbreviated form of available information. Notably what is missing now are the details of the directors and shareholders and it is a concern that personally I had voiced at a very recent conference that the FFC had hosted."
"You are correct that the regular Joe, person from the street, even a journalist won't be able to access all the details of a company from the company registry. However, we have to bear in mind that the confidentiality that these companies enjoy, it's not absolute. If the FIU or if the DPP or even if somebody who has a gripe against a particular company wishes they can access that information. That information has to be divulged. For example, if the FIU is conducting a investigation because there is something to be investigated, if there is grounds for an investigation, they can actually send a request to the registered agent of that company to divulge that information and the register agent must divulge it. The registered agent by law, they are required to keep all the information of not just who the directors and shareholders are, but who the ultimate beneficial owners are. So that confidentiality is not absolute."
Attorney Aldo Reyes then discussed other concerns that other members of the Bar Association have with the changes connected to the companies registry:
Aldo Reyes, Member, Bar Association of Belize
"There are legitimate reasons why we want details for companies' shareholders and directors. To give a very simple example, if I'm representing somebody who is buying shares in a company, of course we want to do due diligence on the company to ensure that the person who they are buying from really does own the shares. Again, one of my primary concerns as well when I voiced it at the conference was that supposed I as an attorney is acting for somebody who wants to sue a company. When we do a search, we want to be able to know not just where the registered office is, but who the directors are, so that we can actually serve our claim form. So, I was told that information on the company and its registered office would be available, but just that you wouldn't have information on the directors and shareholders. The sentiment that I got is just a desire to preserve as much as possible the benefit of the IBC that existed before."
"The other primary concern that the Bar Association had and it is one that has the Bar Association up in arms, so to speak, is that now there is some fundamental changes in this new act and one of them is that now all companies must have a register agent. All companies, except companies whose shareholders and directors are all Belizeans, locals. If you have a company which has a single director who is from another jurisdiction, you must have a registered agent in Belize and you can only file any documents for that company through that registered agent. So, that is one concern we had, because previously attorneys were able to file documents on behalf of clients with the registry, but now this new act is requiring all attorneys and law firms to apply for a license from the FFC and it is not a cheap license. It is quite expensive and it is something the cost would have to passed on to the clients. So, I had expressed a concern very early on in the working group about this and the justification I was given is that they wanted to bring all attorneys under the auspices of the financial services commission so that we have to do due diligence. But I pointed out to them that attorneys are already reporting entities under the anti-money laundering laws, so I heard crickets after that. There was no response. Our conclusion, the rational for it was merely a revenue generating intent."
"One other thing that everyone ought to note, is that every single company, no matter if you have all locals, every single company, IBCs and local companies must actually re-register now. If you don't re-register, your company will be struck off and you have to re-register through a registered agent, except again, if you company is all shareholders and directors Belizean. But even so, if all your shareholders and directors are Belizean, then somebody from that company needs to have an account with the FFC and you need to be assigned a login password and you have to familiarize yourself with the new online system."
Reyes also discussed the evolving jurisprudence on beneficial ownership of private companies. He told us that the European Court of Justice recently ruled that governments cannot be compelled to make their company's registries public. Here are those comments:
Aldo Reyes, Member, Bar Association of Belize
"I recently was sent actually a case that was just passed in the European Court of Justice. I think it was about 2 weeks ago where Bermuda took a case to the European Court of Justice and the ECJ passed a ruling that you cannot force registries to be open to the public, because our position ought to be counter-balance with people's fundamental rights to privacy and to protection of data. So, it's a balance of rights really. The ECJ found that you can't compel a government to make their registers public, so my initial thoughts, because my concerns were the same as yours, that why are all these registers now closed and we can't access the information. There has to be a balance struck. While I understand the need or the desire to salvage the confidentiality that IBCs use to enjoy, there also has to be struck a balance with the general need, the widespread need to be able to access this information."
