Court of Justice of the European Union stops public access to national transparency registers

In its judgement of 22 November 2022, the European Court of Justice (ECJ) declared the legal basis under EU law for the possibility of public access to the register of beneficial owners to be invalid.

The Austrian register authority (Federal Minister of Finance) acted quickly and has since prevented access to the register by the public. This is a necessity under EU law, which is sometimes unfairly criticized in the public debate.

The initial case

The Grand Duchy of Luxembourg had - in implementation of Directive (EU) 2018/843 - granted "anyone" the right to inspect the Luxembourg transparency register and thus obtain more detailed information on the beneficial owners of locally registered companies. Beneficial owners (BO) could apply for a restriction of public access in exceptional circumstances; however, this uniform EU-wide regulatory concept clearly prioritized transparency over the protection of privacy and personal data of the "transparent" BO concerned.

Then things happened as they ought to. A Luxembourg company and its BO contested a decision by the local registry authority, which had not restricted public access. The competent court turned to the ECJ, inter alia, for a preliminary ruling on whether the regulatory approach prescribed by Directive (EU) 2018/843 (access by the public as a principle, restriction of this right only in exceptional circumstances) was compatible with the EU Charter of Fundamental Rights (GRC).

Access only in case of legitimate interest

The ECJ (Cases C-37/20 and C-601/20) found clear words and declared the relevant provision invalid. Access to information on BO by any member of the general public would violate the fundamental rights to respect for private life and to protection of personal data (Art 7 and 8 GRC). In particular, public access could not be justified with difficulties in the practical application of the preceding legal provision, which allowed for access only upon demonstration of a "legitimate interest”. The current concept of accessibility of information on the BO "in all cases to any members of the general public" would not be limited to what is absolutely necessary, would not sufficiently take into account the fundamental rights of the BO and, in particular, would not protect the personal data of the BO against the risk of abuse.

The ECJ judgment means that Art 30 para 5 lit c Directive (EU) 2015/849 (original version) must again be applied: “Member States shall ensure that the information on the beneficial ownership is accessible in all cases to […] any person or organisation that can demonstrate a legitimate interest.”

Consequences for Austria

In Austria, public access is anchored in Section 10 WiEReG. Until the ECJ judgment, any member of the general public could obtain an electronic extract from the register of beneficial owners within a very short time, unless public access was exceptionally restricted - no specific evidence had been required since 20 January 2020 (transposition of Directive (EU) 2018/843 into the WiEReG). This has now an end.

The Austrian registry authority took the "public access" application offline on the very day of publication of the ECJ judgment (22 November 2022) and informed about it on the BMF website (https://www.bmf.gv.at/services/wiereg/oeffentliche-einsicht.html). This means that at this stage access by any member of the general public is only granted in case a legitimate interest is demonstrated.

Was this step required by EU law? Absolutely: judgments of the ECJ, if they declare an EU provision invalid, are to be directly observed by national courts and authorities. Consequently, public access is only conceivable on the basis of the re-applicable original version of Directive (EU) 2015/849 if legitimate interests are proven. Section 10 WiEReG is therefore contrary to EU law, as it allows public inspection without demonstration of a legitimate interest. There is no room for an interpretation of Section 10 WiEReG in conformity with the Directive (the wording cannot be changed that far). Should a person or organisation of the general public submit a request for inspection, the registry authority would only be obliged to conduct a closer examination if "legitimate interests" are demonstrated in the request and Art 30 para 5 lit c Directive (EU) 2015/849 in its original wording is granted direct effect. Even then, a renewed referral to the ECJ is recommended to the registry authority in order to have the ECJ specify the conditions for access to BO information in conformity with fundamental rights. The European Commission itself admitted in the oral proceedings before the ECJ that the criterion of "legitimate interest" is difficult to implement and that its application could lead to arbitrary decisions. However, this would itself be contrary to the EU Charter of Fundamental Rights.

In any case, the quick reaction of the Austrian registry authority shows that the interplay between EU case law and the enforcement of EU law by national authorities works excellently.