Beneficial Ownership and Politically Exposed Persons Definitions
In February 2013, the International EITI Board agreed that following a period of testing and learning, the EITI should in the future require disclosure of beneficial ownership in oil, gas and mining companies operating in implementing countries. Acknowledging that limited experience existed in addressing these issues in the context of the EITI, the Board agreed to launch a Beneficial Ownership pilot project. Trinidad and Tobago was one of the twelve EITI implementing countries that volunteered to participate in this Beneficial Ownership Pilot Project.
Due to Trinidad and Tobago undergoing its Validation as well as the commencement of preparations for the publication of its second TTEITI report, the TTEITI Secretariat did not have the capacity or resources to devote towards overseeing this pilot project. Further capacity issues were faced as both the Head and the Policy Analyst were leaving the Secretariat and the new staff members would need time to familiarize themselves with the process of EITI implementation. As such Trinidad and Tobago had to put the project on hold.
In 2015, at the 54th SC Meeting held on 19 March, the SC revisited the possibility of undertaking the beneficial ownership project after the Head, Sherwin Long, attended a EITI Beneficial Ownership Workshop in London on March 16. After a brief discussion the SC “unanimously agreed to implement a TTEITI Beneficial Ownership Project which would be a standalone project separate from the International EITI Beneficial Ownership Pilot Project”.
The Way Forward For TTEITI Beneficial Ownership Project
In a previous note done on the Beneficial Ownership Workshop: Lessons Learned and the Way Forward for T&T, the following steps were outlined as the way forward:
Step 1: Define scope and definition of beneficial ownership and accepted shareholder thresholds, plus definition of Politically Exposed Persons (PEPs).
Step 2: Development of Project Scope (companies included in registry and registry data verification system)
Step 3: Secretariat Capacity Building and Partnerships (UWI Law School/ UK High Commission, EITI International Secretariat)
Step 4: Publication of public registry (linkage with TTEITI Website and Data Portal)
This follow-up note will address Step 1: defining beneficial ownership and Politically Exposed Persons (PEPs).
Background Information on relevant Trinidad and Tobago Laws
The Companies Act of Trinidad and Tobago contains the following clauses:
- (2) For the purposes of sections 182 to 185— (a) a person has a substantial shareholding in a company if he holds, by himself or by his nominee, shares in the company entitling him to cast on his own behalf at least ten per cent of the total votes entitled to be cast at any general meeting of the company; (b) a person who has a substantial shareholding in a company is a substantial shareholder of the company.
- (1) A person who is a substantial shareholder in a company shall give notice in writing to the company stating his name and address and giving full particulars of the shares held by him or his nominee (naming the nominee) by virtue of which he is a substantial shareholder.
- (1) A company shall keep a register in which it shall enter— (a) in alphabetical order the names of persons from whom it has received a notice under section 182;
Integrity in Public Life Act of Trinidad And Tobago contains the following clauses:
FINANCIAL DISCLOSURE 11. (1) A person shall, within three months of becoming a person in public life, complete and file with the Commission in the prescribed form, a declaration of his income, assets and liabilities that exceed ten thousand dollars in value in respect of the previous year and, thereafter, on 31st May in each succeeding year that he is a person in public life, he shall file further declarations of his income, assets and liabilities.
- (1) A declaration required under this Act, shall include such particulars as are known to the declarant, of the income, assets and liabilities of himself, his spouse and his dependent children.
- (4) For the purposes of a declaration under this Act, the income, assets and liabilities of a person in public life include the income, assets and liabilities acquired, held or incurred by any other person as his agent or on his behalf.
The Integrity in Public Life Act of Trinidad and Tobago lists the persons in public life as follows:
(1) Members of the House of Representatives
(2) Ministers of Government
(3) Parliamentary Secretaries
(4) Members of the Tobago House of Assembly
(5) Members of Municipalities
(6) Members of Local Government Authorities
(8) Judges and Magistrates appointed by the Judicial and Legal Service Commission
(9) Members of the Boards of all Statutory Bodies and State Enterprises including those Bodies in which the State has a controlling interest
(10) Permanent Secretaries and Chief Technical Officers
Based on the aforementioned clauses of the Companies Act, together with the EITI Standard definition of Beneficial Ownership, the following definition is recommended for Trinidad and Tobago’s local context:
Beneficial Ownership– the natural person who is directly or indirectly the owner of a company or controls at least ten percent of the shares or total votes, exclude persons acting as a nominee, intermediary, custodian or agent on behalf of another person. Politically exposed persons, who otherwise benefit economically from the company, are also considered to be beneficial owners.
The Financial Intelligence Unit of the Ministry Of Finance and The Economy Guidance Note AML/CFT Procedures for Politically Exposed Persons defines a PEP as “an individual who is or has been entrusted with a prominent public function.”
Using that definition as the basis, the TTEITI Secretariat proposes the following definition for a PEP:
A Politically Exposed Person (PEP) -is an individual who is or has been entrusted with a prominent political function. These include foreign and local political figures and extend to their immediate family members and close associates.
Please note the following definitions by the Financial Intelligence Unit of the Ministry of Finance and the Economy:
Immediate Family members– are individuals who are related to a PEP either through birth or marriage. Regulation (Reg.) 20(1) (e) of The Financial Obligations Regulations, 2010 (FORs), defines immediate family member as, “…the spouse, parents, siblings or children” of the PEP and the parents, siblings and additional children of the PEP’s spouse.” References to parents, siblings or children include the half and whole blood and relationships through adoption. Spouse includes ex-spouse.
Close associates-are individuals who are closely connected to a PEP, either socially or professionally. Reg. 20 (1) (f), FORs defines a Close associate as “any individual publicly known or actually known to the relevant financial institution (or Listed Business vide Rec 22) to be a close personal or professional associate…” of the PEP e.g. a business partner.