European Court confirms company data can’t be whitewashed

In a significant victory for transparency and common sense, today the European Court of Justice today ruled that personal data in company records was not subject to the so-called ‘right to be forgotten’, even for dissolved companies. This is a crucial judgement for corporate transparency, and for the fight against the use of companies for criminal purposes, whether it’s money laundering, fraud, tax evasion or organised crime.

The judgement is quite short, and well worth reading in full, and recognizes that not only is information in company registers deliberately a matter of public record, it’s critical for basic business purposes that it remains public even after companies are dissolved.

By today’s judgment, the Court notes first of all that the public nature of company registers is intended to ensure legal certainty in dealings between companies and third parties and to protect, in particular, the interests of third parties in relation to joint stock companies and limited liability companies, since the only safeguards they offer to third parties are their assets.

The Court further notes that matters requiring the availability of personal data in the companies register may arise for many years after a company has ceased to exist.

Here at OpenCorporates, we get a significant number of emails each week demanding to remove the information, and using the ‘right to be forgotten’ as a justification. Often, as in the ECJ case, the justification is that the fact that their last business failed is making them more difficult to do business today. Well, as the court pointed out, that’s exactly why the information needs to be made public, as people should have full visibility of the risk they are taking when they buy from, sell to or work for a company, including the past corporate history of the directors and owners.

Furthermore, in a point that’s very relevant for the public beneficial ownership registers:

The Court considers that this interference with the fundamental rights of the persons concerned (in particular the right to respect for private life and the right to protection of personal data guaranteed by the Charter of Fundamental Rights of the Union) is not disproportionate in so far as (1) only a limited number of personal data items are entered in the company register and (2) it is justified that natural persons who choose to participate in trade through such a joint stock company or limited liability company, whose only safeguards for third parties are the assets of that company, should be required to disclose data relating to their identity and functions within that company.

For those countries that are refusing to end anonymous companies in their company registers by creating public, open data beneficial ownership registers, we think that this is a critical point. Hopefully countries such as Germany that have backtracked will now seize the opportunity to enable true corporate transparency and create a hostile environment for criminal use of companies

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