China Targets Beneficial Ownership Information
By Maarten Roos, Bella Li
On 1 November 2024, China implemented the Administrative Measures on Beneficial Owner Information, jointly issued by the People's Bank of China (PBOC) and the State Administration for Market Regulation (SAMR).
These measures aim to enhance market transparency, uphold financial order, and combat money laundering and terrorist financing activities, by mandating all companies in China – including subsidiaries of foreign companies – to disclose beneficial owner information (BOI) to Chinese authorities.
Scope of Application
The measures apply to all types of entities, including joint ventures, wholly foreign-owned enterprises, and other types of companies with foreign investment.
Exemptions are limited. Entities with a registered capital of CNY 10 million or less, whose shareholders or partners are all natural persons, and where no other individual exercises control or derives benefits, do not need to complete a BOI filing.
Definition of Beneficial Owner
A beneficial owner is defined as a natural person who ultimately owns or controls an entity or enjoys its benefits. Criteria include directly or indirectly owning more than 25% of equity, shares, or partnership interests; holding over 25% of profit rights or voting rights; or exercising actual control through agreements or influence.
Filing Requirements
Entities established on or after 1 November 2024 must file beneficial owner information upon establishment. Entities registered before this date are required to complete their BOI filings within one year from effectiveness, i.e. by 1 November 2025. The information to be filed includes the beneficial owner's name, gender, nationality, date of birth, residential or workplace address, contact details, identity document information, and the nature and start date of the beneficial ownership.
Management and Confidentiality
The SAMR oversees the development of the registration system for filing beneficial owner information, while the PBOC manages the information system for its receipt, retention, and processing. The filed information shall not be publicly disclosed, but will be accessible to government authorities and institutions obligated under anti-money laundering laws.
Penalties for Non-Compliance
Entities failing to comply with the filing requirements may be ordered to rectify the situation within a specified period. Failure to do so can result in fines of up to CNY 50,000.
These measures could present a challenge for international companies that are concerned about disclosing BOI information to Chinese authorities. Nonetheless, they represent a significant step toward aligning China's regulatory framework with international standards, promoting transparency, and strengthening the integrity of its financial system.
R&P’s foreign direct investment, corporate and regulatory teams provide clients with advice on the disclosure of Beneficial Ownership Information, and can support companies with their BOI filings. For more information, please contact roos@rplawyers.com or your usual contact at R&P.