Global Register of Beneficial Ownership

Introduction
In line with global transparency initiatives and Pakistan’s commitment to combat money laundering and terrorist financing, the Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for companies to maintain and submit records of beneficial ownership. This requirement aligns with FATF recommendations and international best practices on transparency in corporate ownership.

Two key forms introduced by SECP in this regard are Form 31 and Form 32, which serve as reporting tools for maintaining the Global Register of Beneficial Ownership (GRBO). This article explains the significance, applicability, and filing requirements of these forms to help companies comply with the Companies Act, 2017 and associated regulations.

What is Beneficial Ownership?

A beneficial owner is the natural person who ultimately owns or controls a company, either directly or indirectly, through shareholding or other means. According to Section 123A of the Companies Act, 2017, any person holding:

• 25% or more shares, or

• 25% or more voting rights, or

• control through other means,

is considered a beneficial owner and must be disclosed to SECP.

This transparency aims to prevent misuse of corporate vehicles for money laundering, tax evasion, and corruption.

Form 31 – Declaration of Beneficial Owners by a Company

Purpose:
Form 31 is used by companies to declare their beneficial owners to SECP.

Who Should File:
All companies incorporated under the Companies Act, 2017, except those listed on a stock exchange, must submit Form 31.

When to File:

• Within 30 days of incorporation

• Within 30 days of any change in beneficial ownership

• Annually, along with the Annual Return (Form A or Form B)

Information Required:

• Name, CNIC/passport number, nationality, and address of the beneficial owner

• Nature and extent of beneficial interest

• Mode of ownership (direct/indirect)

• Supporting documents (e.g., shareholding structure, trust deed, power of attorney)

Penalty for Non-Compliance:
Failure to submit Form 31 may lead to penalties under Section 510 of the Companies Act, including fines up to Rs. 1 million.

Form 32 – Maintenance of Register of Beneficial Owners

Purpose:
Form 32 is for the maintenance of an internal register of beneficial owners at the company’s registered office.

Who Must Maintain:
Every company (except listed companies) is required to maintain this register under Section 123A(1).

Key Requirements:

• The register must be maintained in physical or electronic form

• It should include up-to-date information on all beneficial owners

• The register must be made available for inspection by SECP or authorized officers when required

What It Includes:

• Personal details of beneficial owners

• Dates of becoming and ceasing to be beneficial owners

• Documentary proof of ownership

• Any changes in beneficial ownership

Best Practices:

• Update the register immediately after any change

• Ensure alignment with share registers and Form 31 filings

• Store in a secure, accessible format

Why GRBO Compliance Matters

Pakistan’s compliance with international transparency frameworks is closely monitored by FATF, and non-compliance at the company level can have serious reputational and financial consequences.

Recent Developments and SECP Enforcement

In 2023, SECP enhanced scrutiny of companies’ Form 31 submissions, and notices were issued for failure to update beneficial ownership registers. Companies operating through trust structures, foreign holding companies, or nominee shareholding arrangements have been especially targeted.

Conclusion

Understanding and complying with the Global Register of Beneficial Ownership requirements is not optional—it’s a legal obligation under the Companies Act, 2017. Proper and timely filing of Form 31 and maintenance of Form 32 is crucial for businesses aiming to remain compliant, avoid penalties, and uphold transparency in corporate ownership.