Beneficial ownership transparency – knowing who ultimately controls and benefits from a company – is critical to fighting corruption and preventing illicit financial flows. EITI and Open Ownership have developed a new beneficial ownership declaration form to bring greater transparency to corporate ownership.
Even the best policy will fail if the mechanisms to enforce it are poor. In the world of beneficial ownership transparency, making public the real owners of companies requires the right set of tools and political commitment.
This is of particular importance in the extractive industries, where companies often generate substantial revenues that are vulnerable to corruption if mismanaged.
How ownership data is collected matters, and declaration forms are where the rubber meets the road. That’s why the EITI and Open Ownership partnered up to develop a new form, which can be used by governments to better capture ownership and control information and strengthen their transparency mechanisms.
Since the EITI Requirement on beneficial ownership disclosure was introduced in 2016, many countries have started to collect information on who ultimately owns or controls companies that ask for, or hold, a license to extract. Many governments have adopted legislation and piloted data collection. Some have even launched public registries. In most cases, beneficial ownership data is being collected through EITI reporting. Yet this data is often confined to PDF reports, making it hard to access, analyse and use.
How data is collected affects how you can use it
As with any information disclosed through EITI reporting, it’s the use of that data that can have a transformative effect on governance and accountability. How data is collected and organised primarily determines its quality, and therefore the extent to which it can be used for monitoring, analysis and reform.
A good form can go a long way. As the tool that governments use to obtain company information, it’s where policy comes to life.
Any well-intended policy can fail if the means used to collect information are poor. For example, if a government requires companies to disclose all persons holding a share of more than 5% (a low threshold), it should enforce this policy using a declaration form that can accommodate potentially up to 20 beneficial owners. Without a properly designed way of collecting information, the company disclosures may be incomplete and the policy goals unmet.
Key benefits of the new declaration form
It collects standardised information (e.g. prompting the user to choose the country from a select list instead of free text) and thus will reduce the need for cleaning and preparing the data for analysis.
The information collected through the form can be imported into a database, which enables analysts to interrogate and connect the data more easily. For example, a user may want to search how many companies a person holds interest in. Through a database, the user can find all companies associated with that person by using the beneficial owner’s ID number.
Because the form collects data in a standardised way, it is much easier to share the information with interested parties, such as other government departments, international oversight organisations, companies undertaking due diligence and citizens interested in knowing who owns extractive companies.
The form collects better data on state ownership by requiring data on what country, and through what type of participation, a ministry/agency holds an interest.
The form encourages basic visualisations to illustrate ownership and control structures between the declaring company, the first intermediary company (if applicable) and the beneficial owner(s).
Governments may consider using this form if they:
Aim to collect information on legal and beneficial owners using an online form;
Are building a data collection system using existing data available to the government (e.g. from a commercial registry or cadastre);
Wish to share or link the collected information with other government data;
Plan to publish most of the collected data publicly, through a register and/or an API.
Learn more on how collecting high quality beneficial ownership information helps fight corruption, facilitate due diligence and promote better governance.