Publisher: 
EITI
Publication Type: 
Guidance note
Published Date: 
August, 2017

Guidance note 28 on MSG oversight of beneficial ownership reporting

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The EITI’s beneficial ownership pilot and subsequent requirements for mandatory disclosure, as well as the Panama Leaks and global attention on beneficial ownership transparency, have resulted in an increasing number of EITI countries attempting to disclose beneficial ownership through their EITI Reports. The EITI reporting process can be a practical way to obtain beneficial ownership data from companies, especially in countries where such data is not already collected through other means. At the same time, lack of oversight by the multi-stakeholder group (MSG) of the key steps in the reporting process might result in a more time consuming and costly EITI Reports that do not deliver the desired quality of beneficial ownership information.

Around twenty EITI countries has so far attempted to include beneficial ownership data in at least one EITI Report. A review undertaken by the International Secretariat of ten EITI Reports with beneficial ownership data published at the end of 2016 indicates that despite the growing experience and knowledge of common challenges associated with such reporting, the quality of the beneficial ownership disclosures has so far not improved. In the ten reports reviewed, it is estimated that only 23% of all companies disclosed the beneficial ownership information. While most of the reports included information on the name of the beneficial owner, they did not consistently report on other identity indicators such as nationality, date of birth, country of residence and contact details. Furthermore, most reports did not disclose how the beneficial owners exercise their ownership, nor did they specify the method for assuring the data. Several reports retained the same recommendations from the Independent Administrator (IA) as in previous reports to establish registers and improve the legal framework for BO disclosure, indicating little progress with implementation of beneficial ownership related recommendations.

There are likely many reasons for the gaps in reporting. There might be a lack of guidance accompanying the beneficial ownership declaration forms or insufficient follow-up with companies when information has been missing. Companies might have been given too little time to respond, or the MSG has not been engaged enough on this issue when reviewing draft and final reports. In some cases, the lack of legal requirements might have prevented companies from reporting.

MSG oversight of the reporting process, notably deciding the mandate of the IA, supporting the follow-up with reporting companies, and scrutinising the quality of the data in the draft report, is paramount to ensuring comprehensive disclosures. The following note is intended to guide multistakeholder groups in overseeing beneficial ownership reporting. Addressing the questions in this checklist should help ensure better quality and more useful beneficial ownership reporting.

Contents

1. Introduction

2. Checklist for oversight of beneficial ownership reporting

1. Step 1 – Agreeing the Terms of Reference for Independent Administrators
2. Step 2 – Reviewing the Inception Report and agreeing an approach to beneficial ownership disclosure
3. Step 3 – Guidance and instructions to reporting companies
4. Step 4 – Reviewing the beneficial ownership disclosures in the draft EITI Report
5. Step 5 – Reviewing the BO disclosures in the final EITI Report

3. Further guidance