Ask two different questions
Ownership concerns the relevant ownership interest. Control concerns the powers and practical influence in the applicable legal test. A share percentage does not settle both.
Examine both questions for every customer that is not an individual. Identifying an owner does not end the control enquiry, and finding a controller does not remove the need to identify owners.
For bodies corporate, section 11 includes voting, specified share capital, board composition, and financial and operating policy decisions. These are alternative routes to control.
Source: Federal Register of Legislation: Sections 5 definition of beneficial owner and 11(1).
- Customer
A person other than an individual.
- Ownership route
Identify individuals with ultimate direct or indirect ownership of 25% or more.
- Control route
Separately assess individuals who control the customer under the applicable tests.
- Qualified measures
Read the relevant Rules before deciding which enquiries are required.
Two routes to beneficial ownership
The shareholder ultimately owns 25% of the company. The controller has no shares but can determine the composition of its board. Ownership of 25% or more and statutory control are distinct tests, and both apply to the same customer. This shows selected persons, not a complete ownership chart. It omits other owners.
Invented example. Example company. The shareholder: 25% ownership. The controller: Board control.
Examine powers and practical influence
The financial and operating policy test considers practical influence and patterns of behaviour. It does not depend only on enforceable rights.
Section 11 has a separate provision for persons other than bodies corporate. This page does not supply one control formula for every arrangement.
Source: Federal Register of Legislation: Sections 5 definition of beneficial owner and 11(1).
Invented example: a company with different rights
One individual holds a small economic interest but can appoint most of the board. Another has a larger holding with limited decision rights.
The reviewer examines the relevant powers and records the control conclusion. An unusual share structure does not itself prove wrongdoing.
Source: Federal Register of Legislation: Sections 5 definition of beneficial owner and 11(1).
Invented example: a shareholder and a controller can differ
In this invented example, the shareholder ultimately owns 25% of the company. The controller has no shares but can determine the board’s composition.
The shareholder meets the ownership threshold. The controller requires a separate control assessment. A review of share percentages alone would omit that question.
The diagram omits other owners. For a real company, examine the rights and evidence for each conclusion. Record any uncertainty.
Where no beneficial owner can be identified after reasonable steps, or none exists, Rules section 6-8 has a separate chief executive officer measure. The beneficial owners guide explains it.
Sources: Federal Register of Legislation: Sections 5 definition of beneficial owner and 11(1); Federal Register of Legislation: Section 5 definition of beneficial owner; section 28(2)(d); Federal Register of Legislation: Sections 6-7 and 6-8.
- Share record
Supports an ownership interest at a particular point in time.
- Rights and arrangements
Can explain a power to control decisions.
- Current position
Reconcile both types of evidence. A percentage alone does not settle control.
What does each piece of evidence establish?
Read this visual with the source conditions and explanation in this section.
Separate evidence questions. An answer to one does not settle the others.