Newsletter – June 2019
Global updates – a quick glance
Australia: The corporate tax rate will reduce from 27.5% to 26% in 2020-21 for small companies.
Brazil:
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- Set up of entities have become a lot easier as an automatic set up process has been introduced.
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- “Limitadas” can now be set up with only 1 shareholder.
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- Brazil approves 90 days visa free entry to US citizens for business visits.
Canada: all corporations need to maintain a register for significant controllers (ultimate beneficial owners) from June 13, 2019.
China:
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- Set up of RMB bank account has become a lot easier, the need for a permit to set up a bank account has been removed.
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- China cuts its standard VAT rate from 16% to 13%.
India:
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- A new compliance requirement has been introduced for companies to file declaration of inter-company balances and exempt deposits.
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- India introduces filing requirement for Significant Beneficial Owner(s).
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- The rates of Employees’ State Insurance (ESI) Contribution for Employers has been reduced from 4.75% to 3.25% and Employee from 1.75% to 0.75% applicable w.e.f. July 01, 2019.
Ireland: New regulations introduced for reporting significant beneficial ownership details by Irish entities.
Italy: Appointment of external auditor or supervisory body has been made mandatory for limited liability companies if any of the specified criteria regarding asset, revenue and employee is met. The employee threshold has been reduced from 50 to 10.
Netherlands : Netherlands allows dismissal of employees on cumulative grounds, making dismissals easier.
UK: UK increases the maximum amount for basic unfair dismissal and a statutory redundancy payment to GBP 15,750 from GBP 14,670
Table of Contents
Foreign employees to come under the ambit of Single Touch Payroll (STP) reporting w.e.f July 1, 2019
New Foreign Investment Law adopted and will be effective from January 01, 2020
Reduced VAT rates with effect from April 01, 2019
Process of opening RMB corporate bank account simplified
Minimum wages increased in Beijing and Shanghai
National legislation on data protection adopted in Czech Republic
Guidelines for French companies processing biometric data published
New information requirements for employee tax statements and tax withholding returns
New GST return forms released; compliance process simplified from April 01, 2019
Requirement to identify Significant Beneficial Owner(s)
Indian government reduces the rate of Employees’ State Insurance contribution
Appointment of Supervisory Bodies or External Auditor in Limited-Liability Companies
The Dutch Upper house passes the Labor Market Balance Act “WAB”; Relaxation in dismissal provisions.
Australia
Foreign employees to come under the ambit of Single Touch Payroll (STP) reporting w.e.f July 1, 2019
Single Touch Payroll (STP) reporting is applicable for all companies in Australia from July 1, 2019.
Foreign employees employed in Australia were exempt from STP reporting by the Australian Taxation Office (ATO).
From July 1, 2019, the companies will have to report the information of foreign employees along with the regular employees for STP purpose and report their salaries or wages, pay-as-you-go (PAYG) withholding and superannuation liability on real time basis to ATO.
Significant penalties will be levied in case of failure on the part of employers in complying with this reporting requirement of foreign employees.
The STP reporting for foreign employees can be done within a month of actual payment as opposed to real time reporting (on each pay day) for other employee.
Implications
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- Employers will need to ascertain all the foreign employee payments
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- Set up system / alert the payroll service provider and ensure the STP reporting is done properly
Turnover threshold for Small Businesses increased to $ 50 million from $ 25 million in 2018-19 and tax rate reduced from 27.5% to 26% in 2019-20
The turnover threshold for small businesses has been increased from $25 million to $50 million from 2018-19 and tax rate is reduced from 27.5% to 26% in 2020-21.
The new minimum annual wage will be $740.80 per week or $19.49 per hour, from the previously $719.20 per week and $18.93 per hour from July 1, 2019
Brazil
Brazil provides visa-free entry for Americans, Australians, Canadians and the Japanese for up to 90 days
On March 18, 2019, Presidential Decree 9,731/2019 was published in Brazil’s Federal Gazette. The Decree provides that Australian, Canadian, American and Japanese citizens will no longer be required to obtain visas prior to entering Brazil for:
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- Business;
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- Tourism;
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- Transit;
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- Artistic and sporting activities; and
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- “Exceptional situations of national interest”.
Entry will be allowed for up to 90 days with a maximum of 180 days for each 12-month period. This is yet another positive step towards making Brazil a better place to do business.
The new rules come into force on June 17, 2019.
Incorporation Process Simplified for limited liability companies and individual limited liability company
Brazil has published the provisional measure No. 876/2019 (“PM”) on March 14, 2019 which is effective now. These measures simplify the set up for individual entrepreneurs, individual limited liability companies (“EIRELI“) and limited liability companies (“Limitadas”). These entities will now be automatically registered in Brazil’s commercial registries, after confirmation of the address / name of the entity and submission of standard documents. The registration will be cancelled if any material errors are noticed on submissions, but any minor errors can be rectified within the prescribed time.
The Taxpayers Registry (“CNPJ”) number will be issued automatically at the moment of registration. The PM also allows the submission of non-notarized copies of documents if they are certified by a lawyer, accountant or other interested party.
Implications
This will simplify the set-up process significantly. Currently, Brazil is amongst the most difficult jurisdictions to set up in. The changes will decrease the set up time and efforts considerably.
New Rules Bring Major Improvements to Brazil’s Business Environment such as single shareholder for limitadas, digital record keeping etc
On 30 April 2019, Provisional Measure 881/2019 (Medida Provisória 881/2019, “MP”) was published and came into force. These measures have taken some business-friendly decisions.
Single shareholder limited liability partnerships (limitadas)
Limited liability companies (limitadas) required two shareholders. The only available structure that needed only 1 shareholder was EIRELI, but the same is not yet very popular with many investors.
The MP provides that limitadas will now be allowed to have single shareholders. This will ease the set up process substantially, especially for foreign investors.
Digital records to substitute paper records
Taxpayers will be allowed to keep records in digital form.
Freedom to open business outside of business hours
Various restrictions on the days and times for opening businesses will be removed. The goal is to ensure that there is greater flexibility for serving customers outside business hours.
Implications
One of the major issues with set up in Brazil was the requirement of 2 shareholders for a Limitada. The MP has removed the same, facilitating a much easier set up option.
Canada
As per the Canada Business Corporations Act (CBCA), the Companies from Canada will require to prepare and maintain a register of Individuals having Significant Control (ISC) of the company. The maintenance of the register is in addition to the current registers as maintained for directors and shareholders.
The corporation needs to take reasonable steps to identify individuals with significant control at least once during each financial year to ensure that, the register is updated with the up to date information. In case of Change in Information, the register needs to be updated with such change within 15 days of Corporation becoming aware of it.
The individuals with significant control (ISC) refers to those individuals who have 25% or more of the voting rights or hold 25 % or more of the fair market value (FMV) of shares. Such interest or rights can be as registered shareholders, beneficial owners, direct or indirect* or even when held jointly with other individuals (provided such individuals are acting jointly).
* Indirect control can be as shareholder (s) of parent company or companies.
A register of Individuals having Significant Control (ISC) register shall contain following details:
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- Name, date of birth and latest known address;
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- Residential jurisdiction for tax purpose
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- Effective date of becoming an ISC and date on which it ceased to be an ISC
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- Details referring how an individual is ISC
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- Other information as per the regulations
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- Details of the steps taken by the corporation for identify and update the information
In case of any offence such as failure to prepare and maintain register, recording of false or misleading information, provision of false and misleading information etc., a director, officer, or shareholder will be for fine up to CAD 200,000 or imprisonment for a term of up to six months, or both.
Implications
All companies are required to take reasonable steps to identify and maintain the records in a register for the individuals having significant control (ISC)
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- Noncompliance can also lead to personal liability to directors in the form of fine or imprisonment or both.
China
New Foreign Investment Law adopted and will be effective from January 01, 2020
On March 15, 2019, new foreign investment law was adopted by the government and it is set to be effective from January 01, 2020. This new law will replace the current three laws pertaining to foreign direct investment, viz;
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- Chinese-foreign equity joint ventures law;
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- Wholly foreign-owned enterprises law;
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- Chinese-foreign contractual joint ventures law
The new foreign investment law is set to integrate all the above-mentioned regulations into a single law, which will in turn benefit and protect the foreign investors. The new law also aims to protect and attract foreign investments through legislative means. Some provisions are as under:
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- Foreign investors will be treated equally with domestic investors at the time of setting up of entity (Article 4)
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- Participating in government procurement/benefits/incentives plans (Article 16)
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- Robust IP protections for foreign investors (Article 22)
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- Restrictions on government officials in case of forced technology transfers (Article 22)
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- Equal treatment for foreign investors applying for licenses (Article 30)
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- Protection of foreign investments from expropriation (Article 20)
Implications
The new law can help foreign entities in protecting their IP better in China, which has been a long-standing issue that foreign companies had while investing in China.
Reduced VAT rates with effect from April 01, 2019
Following reduced VAT rates will apply from April 01, 2019:
| Sector | Old Rates | New Rates |
| Manufacturing sector, Consumers | 16% | 13% |
| Construction and transport, restaurants, telephony, logistic | 10% | 9% |
| Services* | 6% | 6% |
*VAT rate will remain same subject to additional deductions which will be introduced in the bracket.
Chinese authorities have issued circular on February 21, 2019 for regulating recruitment practices to promote female employment.
Following stipulations are imposed on employers and HR agencies so as to ensure that they are not:
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- Rejecting women on the basis of their gender
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- Conducting health examination for pregnancy test or impose child birth restrictions
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- Asking questions on marital and parental status
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- Prioritizing candidates on the basis of gender.
In case any employer publish any information on gender discriminatory content, such employer will be punishable with a fine ranging from CNY 10,000 to CNY 50,000. The employer will be given reasonable time to rectify the violation.
Implications
The businesses operating in China should have recruitment policies and procedures to be in place which clearly spells out what should be asked, how screening of candidates should be done, documenting reasons for rejecting any female candidates etc. A robust paper trail will be necessary to avoid any penal actions from the authorities.
Process of opening RMB corporate bank account simplified
People’s Bank of China (PBOC) on April 28, 2019,announced that there would be no longer requirement to apply for permit from PBOC in order to activate corporate bank accounts. Till now, it was necessary to obtain a permit from PBOC to apply for a RMB bank account opening in China. The process was very time consuming.
As per the new procedure, company can directly go to its chosen bank to open a bank account and the bank will file the necessary information with the PBOC instead of approval formalities which were previously required for permits.
Implications
This will provide relief to the foreign companies (wholly owned foreign entity – WOFEs) wanting to open the RMB bank account, the overall set up time in China for a WOFE will be significantly lowered.
Minimum wages increased in Beijing and Shanghai
Beijing – From July 01, 2019, minimum monthly wages for full time employees will be increased from RMB 2,120 to RMB 2,200.
Shanghai – From April 01, 2019, minimum monthly wages for full time employees has been increased from RMB 2,420 to RMB 2,480.
Implications
The social security limits will change for these cities according to the changes minimum wages.
Czech Republic
National legislation on data protection adopted in Czech Republic
Czech Republic has approved the law incorporating the General Data Protection Regulation (GDPR); regulations. The new law will be effective from March 12, 2019. Some country specific provisions in the law are as below:
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- A child of 15 years can agree to personal data processing e.g. when opening a social media account.
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- For academic, artistic, journalistic and related purposes the data controllers can use the data with some immunity.
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- Full exemption has been afforded to public authorities from any penalties.
France
Guidelines for French companies processing biometric data published
On March 28, 2019 French data protection authority, CNIL (Commission Nationale de l’Informatique et des Libertés) adopted regulation on processing of biometric data.
As per the regulations, a company needs to justify and document the various reasons when setting up biometric devices. The company needs to prove that any other solutions is not possible or practical and the biometric system is what is needed (e.g. an entry card would not be enough for security reasons). Employers meeting these conditions will not be required to obtain consent from the employees for processing their biometric personal data.
India
New information requirements for employee tax statements and tax withholding returns
Indian Government has made substantial changes in the year-end employee tax statements (Form 16) and tax deduction return (Form 24Q). There is a substantial addition to the information required to be given in the Form 16, are summarized as below.
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- Tax-free allowances such as travel allowance, House Rent Allowance (HRA) etc.
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- Salary received from other employers.
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- Standard deduction (i.e. introduced in Budget 2018)
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- Some other income sources if declared by the employee like – Income from house properties, Income from other sources.
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- Deductions for health insurance and deduction for interest on loan taken for higher education. In addition, the deductions in respect of life insurance premium, contribution to certain pension funds, contribution by taxpayer to pension scheme etc. have to be shown separately under each head.
The changes will be effective from May 12, 2019, thus, any form 16s issued after this date will need to be in the new format (even for the financial year 2018-19).
Also, there have been changes in “Form 24-Q – Statement for tax deducted at source from salaries”. The employer has to submit Form 24Q on a quarterly basis to report tax deducted on salaries. Form 24Q has also been changed to give effect of new format of Form 16 and thus, contains additional information such as, value of perquisites, profits in lieu of salary, tax free allowances like travel allowance, House Rent Allowance (HRA) etc., Permanent Account Number (PAN) of landlord/lender, Income from other sources, deductions for health insurance and deduction for interest on loan taken for higher education etc.
Implications
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- Employer now has to provide for detailed information of allowances and deductions. This will increase the payroll work.
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- Every employer should make sure that if Form 16 and Form 24Q are issued after May 12, 2019 then it has to be in the new format.
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- The new information in the form 16 and the 24Q will need to be reconciled to make sure they match.
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- As per the present price list, the Form 16s are charged at USD 120 per employee and Form 24Q (quarterly) is charged at USD 2,200 per year. The efforts involved will likely to go up by at least 20-25% (more so in the first year as we need to revise the formats).
The Indian government has notified new compliance for companies on April 30, 2019. All Indian companies are now required to report information relating to intercompany outstanding balances and exempt deposits. Further in another form DIR-3KYC the Indian government has mandated Director KYC (KYC refers to know your customer /alternatively Know your client) for DIN holders (Director Identification Number). The due date for the same form is now changed from April 30 to June 30, 2019 and the same has to be filed annually.
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- Reporting of all intercompany outstanding balances, any advances received from any companies (say under a cost plus contract) from any time after April 01, 2014 and outstanding till March 31, 2019, and many other details (including an auditor’s certificate). Consequences for non-compliance can be serious penal implications.
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- KYC for all directors has to be filed every year until June 30, 2019, consequences for non-compliance will be deactivation of DIN. Unless this is already done for March 31, 2019.
Indian government’s new reporting obligation for declaration of outstanding amounts
The Indian Government has recently notified that all companies other than government companies should file e-form “DPT-3” for disclosing all information regarding receipt of money/loan / advances by a company. Earlier the form DPT-3 was designated for furnishing information only relating to “deposits”.
Here are the details and implications of the notification:
Applicability
DPT-3 is applicable to all Indian companies other than government companies.
Frequency of return filing and due dates
One-time filing needs to be done for all loans and deposits (including non-deposit items as defined in the Deposit Rules) for transactions that happened between April 01, 2014 to March 31, 2019 AND are outstanding as of March 31, 2019. The one-time return is due on June 29, 2019.
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- An annual filing of DPT-3 return for the FY 2018-19, which will be due on June 30, 2019.
Information to be provided
Information required to be provided in DPT-3 includes (amongst many other details) –
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- Any amount received by the company from any other company;
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- Any amount received as advance for supply of goods or services etc. (outstanding for less than 365 days); from the April 01, 2014 to March 31, 2019
Other requirements
The following documents are required to be filed along with DPT-3
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- Copy of auditor’s certificate providing of outstanding balances from the April 01, 2014 to March 31, 2019; – mandatory only in case of annual filing
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- Details of liquid assets etc.
Penalties for non-filing
Penalty of INR 10,000 and for continuous default a penalty of INR 1,000 till the default is cured.
What to do
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- Identify the outstanding balances from April 01, 2014 to March 31, 2019. This includes any outstanding intercompany balances or advance received.
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- Obtain an auditor’s certificate.
Filing Form DIR 3 KYC (KYC of Directors) – unless this is already done for March 31, 2019
Applicability
Every individual who has been allotted a Director Identification Number (DIN) has to file Form DIR 3 KYC (KYC of Directors) annually.
Frequency of return filing and due dates
The due date for all directors who have an active DIN as of March 31, 2019, is June 30, 2019. The DIN will be deactivated if the KYC is not done. This will result in disqualification of the director and a serious default for the company.
Information to be provided
The KYC requirement is to provide information and proof for the below
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- Director Identification Number ‘DIN’ of the applicant;
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- Director’s full name and his father’s full name;
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- Details pertaining to Citizenship, Nationality and Residence;
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- Gender of the applicant;
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- Permanent Account Number ‘PAN’ of the applicant;
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- Aadhar Number;
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- Personal Mobile Number and Personal Email ID (For One-Time-Password purposes);
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- Permanent and temporary residential address;
A Proof of Identity and a Proof of Address is to be attached to the e-Form and digitally sign shall be affixed using his Digital Signature Certificate and get the e-Form certified from a practicing professional.
What to do
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- Obtain all the information and details for all Indian and foreign directors
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- Complete the KYC for each director
New GST return forms released; compliance process simplified from April 01, 2019
New GST forms are issued to simplify the procedure for GST reporting for businesses. These new forms will be used on pilot basis from April 01, 2019.These forms are named as “Normal”, “Sahaj” and “Sugam” and would make the compliance process simpler for the smaller businesses having a turnover of INR 50 million and they would have an option to file any of the three forms. There will be three components to the new return – one main return (form GST RET-1) and two annexures (form M GST ANX-1 and form GST ANX-2).
Indian government amends incorporation rules for deciding company’s name and notifies undesirable names for company formation
Indian government recently notified Companies (Incorporation) Fifth Amendment Rules, 2019 with a list of names, which are acceptable, and the list of undesirable names. The list mainly identifies, with examples, any names that resemble too nearly with any existing names. Any name too nearly resembling the existing company name will not be granted. The following are certain examples:
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- Green Technology Ltd. is same as Greens Technology Ltd. and Greens Technologies Ltd. (As plural or singular form will be considered as same)
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- TeamWork Ltd. is same as Team@Work Ltd. and Team-Work Ltd. (As symbols will be disregarded for name application)
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- Ascend Solutions Ltd. is same as Ascended Solutions Ltd. and Ascending Solutions Ltd. (Different tenses will not be considered as a different name)
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- Ultra Solutions Ltd. is same as Ultrasolutions.com Ltd. (Use of space of breaking of words will not be considered as a different name)
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- Color Technologies Ltd. is same as Colour Technologies Ltd. (Different spelling sounding the same will not be considered as a different name)
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- National Electricity Corporation Ltd. is same as Rashtriya Vidyut Nigam Ltd. (Translation into regional language will not be considered as a different name)
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- Silk Manufacturers Private Limited and Manufacturers Silk Ltd. (Re-arrangement of words will not be considered as a different name)
Implications
Due to certain procedural and legal changes in the recent past, obtaining a company name has been a difficult task in India. This circular may make it further difficult and deciding up on a unique name may become a time consuming task.
Requirement to identify Significant Beneficial Owner(s)
The Indian government has notified the Companies (Significant Beneficial Owners) (Amendment) Rules, 2019, which amended certain provisions of the Companies (Significant Beneficial Owners) Rules, 2018, including revisions in Forms BEN-1 and BEN-2 providing information about the Significant Beneficial Owners of shares in a company.
The Significant Beneficial Owners (SBO) regime as envisaged under the Companies Act, 2013 and the Companies (Significant Beneficial Owners) Rules, 2018, requires companies in India to separately identify individuals holding SBO in such companies and undertake requisite compliance requirements. Every individual holding SBO in a company, were required to file a declaration with the company in Form BEN-1 on or before May 09, 2019. The companies were subsequently required to make corresponding filings with the Registrar of Companies in Form BEN-2.
The details about the Significant Beneficial Ownership and related requirements for disclosure and penalty for non-compliance are stated herein below:
“Significant Beneficial Owner” in relation to a reporting company means an individual referred to in subsection (1) of section 90, who acting alone or together, or through one or more persons or trust, possesses one or more of the following rights or entitlements in such reporting company namely:
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- holds indirectly, or together with any direct holdings, not less than ten per cent of the shares;
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- holds indirectly, or together with any direct holdings, not less than ten per cent of the voting rights in the shares;
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- has right to receive or participate in not less than ten per cent of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;
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- has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone:
Explanation I. – For the purpose of this clause, if an individual does not hold any right or entitlement indirectly under sub-clauses (i), (ii) or (iii), he shall not be considered to be a significant beneficial owner.
Explanation III. – For the purpose of this clause, an individual shall be considered to hold a right or entitlement indirectly in the reporting company, if he satisfies any of the following criteria, in respect of a member (shareholder) of the reporting company, namely: (i) where the member of the reporting company is a body corporate (whether incorporated or registered in India or abroad), other than a limited liability partnership, and the individual,
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- holds majority stake in that member; or
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- holds majority stake in the ultimate holding company (whether incorporated or registered in India or abroad) of that member;
As you could see from the requirements of the SBO rules, every company needs to consider the below 3 aspects to determine its SBO(s):
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- right to a ten per cent shareholding and/ or voting right and/ or total distributable dividend, or any other distribution; or
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- right to exercise, or actually exercise, significant influence (the power to participate, directly or indirectly, in the financial and operating policy decisions of a company but is not in control or joint control of the policies); or
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- Right to exercise, or actually exercise control.
Compliance/ reporting requirements:
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- Every reporting company was required to take necessary steps to find out if there is any individual who is a significant beneficial owner as of February 08, 2019, and, identify that person and cause such individual to make a declaration in Form No. BEN-1 on/before May 09, 2019
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- Upon receipt of declaration from SBO in Form BEN-1, the Company is required to file a return in Form BEN-2 with the Registrar of Companies (“RoC”) within 30 days’ of receipt of Form BEN-1 from the SBO.
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- Additionally, every company has to maintain a register of SBO in the prescribed Form BEN-3 (to be open for inspection by any member of the company).
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- Every individual, who subsequently becomes a SBO, or where his SBO undergoes any change shall file a declaration in Form No. BEN-1 to the reporting company, within 30 days of acquiring such significant beneficial ownership or any changes therein and accordingly the company to file the return in Form BEN-2 with the RoC within 30 days of receipt of BEN-1 from the concerned SBO.
Implications
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- An individual being a SBO fails to make the prescribed declaration shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than INR 100,000 (approx. ~USD 1,440) but which may extend to INR 1,000,000 (~USD 14,400) or with both, and where the failure is a continuing one, with a further fine which may extend to Rs 1,000 (~USD 144) for every day during which the failure continues. Separate penalties are also imposed on the reporting companies which fail to comply with the provisions of the Act.
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- In addition, any willful misrepresentation, false or incorrect information or suppressing material information in the declaration made under these SBO regulations will be regarded as a ‘fraud’ under the Companies Act and penal consequences apply.
Indian government reduces the rate of Employees’ State Insurance contribution
The Indian government has reduced the rates of Employees’ State Insurance (ESI) Contribution for Employers has been reducedfrom 4.75% to 3.25% and Employee from 1.75% to 0.75% applicable w.e.f. July 01, 2019.
Ireland
Reporting of details of significant beneficial ownership to the Registrar by Irish incorporate entities from November 22, 2019
Pursuant to the European Union Anti-Money Laundering: Beneficial Ownership of Corporate Entities Regulations, 2019, the disclosure requirements concerning beneficial ownership will now be required in Ireland. This regulation has come into effect from March 22, 2019.
The new regulations provide for the formation of Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies (CRBO) within a grace period of 3 months from March 22, 2019.
Disclosures for Irish incorporated entities:
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- The relevant entities should ensure that all the relevant information about the beneficial owner is procured such as:
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- The name of the beneficial owner
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- Date of birth of beneficial owner
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- Nationality of beneficial owner
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- Residential address of beneficial owner
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- Detailed statement describing the nature, kind of interest held by the beneficial owner
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- Name and registered number of the relevant entity
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- Personal Public Service number (PPS) of the beneficial owner
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- The relevant entity shall at all times provide access to its beneficial ownership register to members of Garda Síochána, the Revenue Commissioners, Criminal Assets Bureau (CAB), or a competent authority engaged in Anti-Money Laundering (AML) prevention, detection or investigation
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- Any change in the information pertaining to the beneficial ownership register shall be communicated to the Registrar within 14 days of the change
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- The relevant entity shall also provide information to the Registrar on entering into business relationship with designated person.
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- Furnishing of notice to a person believed to be a beneficial owner to state about its status of beneficial ownership
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- Maintenance of beneficial ownership register
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- The relevant entities should ensure that all the relevant information about the beneficial owner is procured such as:
Time limit for disclosure:
The existing relevant entity shall disclose the intricate details referred above to the Registrar within 5 months from the effective date (November 22, 2019). Newly incorporated entities to provide these within 5 months of incorporation.
The new regulation has imposed penalty of EUR 500,000 or imprisonment not exceeding 12 months for any violations.
The public will have access to the following information of the beneficial owner: –
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- Name
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- Date of birth
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- Country of residence
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- Nationality
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- A statement of the nature and extent of the interest held, or the nature and extent of control exercised by, the beneficial owner.
Implications
Entities in Ireland will need to identify and compile the required information for the ultimate beneficial owners before the due date and keep the same updated.
Italy
Appointment of Supervisory Bodies or External Auditor in Limited-Liability Companies
“Business Crisis and Insolvency Code” came into effect from February 14, 2019. Limited Liability Companies fulfilling the below criteria will have to appoint a supervisory body or an external auditor:
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- having consolidated financial statements or
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- controlling a company which gets its accounts audited, or
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- where for at least two consecutive financial years a company meets any one of the below mentioned criteria-
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- have total assets in the balance sheet exceeds EUR 2 million (the current limit is EUR 4.4 million); or
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- has revenue from the sale of goods and services exceeds EUR 2 million (the current limit is EUR 8.8 million); or
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- has average number of employees employed during the financial year exceeds ten (current limit is 50)
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- where for at least two consecutive financial years a company meets any one of the below mentioned criteria-
The shareholders can appoint an external auditor within 30 days from the date of approval of financial statements, or the court can do so on request of Registrar of companies or any interested party.
Time limit for complying with such provision:
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- Existing limited liability companies as on March 16, 2019, should comply within 9 months from March 16, 2019 i.e. December 16, 2019 and
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- Limited liability companies incorporated after March 16, 2019, should comply immediately after incorporation.
Implications
Many companies, which were previously not required to appoint an auditor, will be required to appoint an external auditor due to the amended limits, especially the number of employees exceeding 10.
Netherlands
The Dutch Upper house passes the Labor Market Balance Act “WAB”; Relaxation in dismissal provisions.
The Labor Market Balance Act (Wet arbeidsmarkt in balans /WAB) was passed by the Upper House and approved by the Dutch Senate on May 28, 2019. The Labor Market Balance Act which will come into effect from January 01, 2020 will make a plethora of changes to the employment law. The following are certain important changes made by the act:
Dismissal system
The dismissal system is relaxed by introducing the so-called cumulation ground. The cumulation ground means an employer can dismiss an employee for a combination of reasons for dismissal, except for certain reasons such as business reasons, long-term disability, etc. This can make dismissals easier.
Fixed-term contracts treated as indefinite contract after 3 years.
The period after which a succession of fixed-term employment contracts is automatically converted into a permanent employment contract (the ‘ketenregeling’) will be increased to three years as against two years as earlier.
Increase in probationary period to 5 months
The probationary period can now be of up to five months for indefinite contracts. Earlier, the maximum probationary period was of two months.
Implications
The changes makes dismissal of employees easier in Netherlands and also adds to the probation period.
United Kingdom
Key Employment Law Changes in April 2019 regarding Payslips, increase in National Minimum Wage, Increase in statutory redundancy pay etc.
UK government has made various changes to employment law regarding Payslips, national minimum wage rates and pension contributions from April 06, 2019.
Itemized Pay slips
All workers now will have a right to receive an itemized Payslip. Those who have worked at varied pay rates or varied hours have a right to receive pay slips providing the details of either total hours worked or the itemized details for different types of work done according to different pay rates.
Increase in National Minimum Wage rates
The National Living Wage and National Minimum Wage rates increased on April 01, 2019 to:
| Sr. No. | Particulars | GBP |
| 1 | Workers aged 25 and above | 8.21 (National Living Wage) |
| 2 | Workers aged between 21-24 | 7.70 |
| 3 | Workers aged between 18-20 | 6.15 |
| 4 | Workers aged between 16-17 | 4.35 |
| 5 | Apprentices | 3.90 |
Increases to statutory redundancy payments and unfair dismissal awards
Statutory redundancy payment and unfair dismissal awards are also increased from April 06, 2019 as under:
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- Maximum pay for a week (for calculation of redundancy pay and for unfair dismissal) is increased to GBP 525 as against earlier GBP 508.
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- Maximum amount for basic unfair dismissal and a statutory redundancy payment is raised to GBP
- Maximum amount for basic unfair dismissal and a statutory redundancy payment is raised to GBP
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- An unfair dismissal compensatory award amount is increased to GBP 86,444 as against earlier GBP 83,682
There has also been a significant increase in maximum financial penalty for any breach of worker’s employment rights from GBP 5,000 to GBP 20,000.
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