Classic Catch-22 situation on access to ownership register

The response from the Department of Finance to a decision last year of the European Union’s top court in relation to public access to registers of beneficial ownership has been described a Dublin lawyer as a “classic Catch-22″.

The Court of Justice of the European Union decided the EU directive that provided for the creation of registries of beneficial ownership should not include a right of public access to the registries as this was a “serious interference” in the privacy and personal data rights of the beneficial owners.

The establishment of the registries, as part of the EU anti-money-laundering regime, was designed to allow people know who the ultimate beneficial owners of companies were in instances where that might not be clear from the ordinary national registries because of the use of offshore company structures, nominee shareholders, or other measures.

The ruling led to the closure of public access to the registries across the EU and critical comment from those unhappy about the reversal involved in corporate transparency. Now the Minister for Finance, Michael McGrath, has come up with an amending statutory instrument that will allow qualifying parties – who would presumably include journalists – get access to the Irish registry if they can show that the company they are investigating is connected with someone convicted of money-laundering or terrorist financing, or has assets in a “high-risk third country”.

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This sounds very like being told you can’t ask a question unless you can prove you know the answer. As Frank Flanagan, a partner in leading law firm Mason, Hayes and Curran, has said, the instrument creates “a classic Catch-22″.

Or, as company law expert Paul Egan SC has put it: “Before you inspect, you must first prove the facts you hope to uncover by the inspection. Bad law in every way.”