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BvD ownership database

BvD ownership database. September 2013 - Brussels. Content. A database of links between 2 entities Ownership link characteristics Entity characteristics A wide range of sources Type of links Type of entities Type of percentages Controls

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BvD ownership database

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  1. BvD ownershipdatabase September 2013 - Brussels

  2. Content • A database of links between 2 entities • Ownershiplinkcharacteristics • Entitycharacteristics • A wide range of sources • Type of links • Type of entities • Type of percentages • Controls • Weekly validation of the database & availability in each application • Data added values by BvD • Independence indicator • Global and DomesticUltimateOwner • Calculated total percentage • BeneficialOwners • Archiveddatabases

  3. Content • Ownership data in the application • Common software module • UltimateOwnerdefinition • Wide range of searchpossibilities • Alerts and search on updated information • Ownership data in a company report • Ownership data in listresults • Mint versions & Disc versions – particularities • Enhancements in preparation

  4. Whatis the Ownershipdatabase? Ownership database • A database of links • A link = an ownership relationship between 2 entities, a shareholder and a subsidiary.   A shareholder might be a corporation, a private individual, a government or a collectively described entity (such as the "public" for listed companies).   The subsidiary, however, is always a corporation.

  5. Ownership links The ownership link Each ownership link contains the following information: Shareholders ---------(% / date / source / type)-------- Subsidiary • ID of the shareholder • ID of the subsidiary • Direct or Total (or both) percentages of ownership of the shareholder in the subsidiary (percentages relate to voting shares) • Information source (such as: Information Provider, Annual Report, Private Communication, News, Web Sites of the concerned company, stock exchanges, etc.) • Date of the information

  6. Ownership links The entity characteristics The identifiers of an entity include the following information : • Identification number • Name • Type • Address (when available and relevant) • Nationality (when available and relevant)

  7. Sources – Information providers A wide range of sources 2 differentcategories of sources : • Information providers (data automaticallyprocessed) More than 60 different information providers. Very different coverage/depth/update frequency of the data Very different way to collect the data

  8. Sources - BvD • BvD sources (collected by a team of 35 persons) • Annual reports • Private communications • Companywebsite • Stock exchanges • DEF 14, 13G, 13D, 10K for listed US companies • ZEPHYR, the BvD M&A database • Telephone call

  9. Sources - BvD Annual reports Collecting in 2 different ways : • Global reports database alerting the team as soon as a new report is available. • website Links recorded from annual reports are noted : RS when it concerns the shareholders (Report of the Subsidiaries); RM when it concerns the subsidiaries (Report of the Mother).

  10. Sources - BvD Private Communication Mailings are sent : - once a year to 30,000 corporations (non US, listed & unlisted) to 5,500 insurance companies (worldwide, listed & unlisted). - twice a year to 18,000 banks (worldwide, listed & unlisted) The response rate is 20% and constantly increasing, which is quite satisfactory. Links collected this way are marked PC.

  11. Sources - BvD Private Communication

  12. Sources - BvD Company web sites and Web crawler • Web-Sites Ownership information is available on the company web sites  systematic follow up by using the Web crawler. • Web-crawler An internet address (the address of the web page containing the shareholder structure) is saved in the system. As soon as the shareholder information has changed, the team is automatically informed by the system. Links collected this way are marked WW.

  13. Sources - BvD Stock Exchanges Systematic tracking on all stock exchanges of declared shareholders having a minimum percentage of ownership or passing this minimum threshold.  Links recorded from this source are noted SE.

  14. Sources -BvD US listed Companies Information collected from SEC filings • DEF 14 Proxy Statement • SC 13 D and 13 G • 10-K • S-1 • DEF 14 and 10-K are published once a year. • 13 G /D ans S-1 several times.

  15. Sources - BvD ZEPHYR : Handling of acquisitions, mergers and spin-offs • Modifications in basic ownership structure arising from mergers, acquisitions or spin-offs are tracked on a day-to-day basis by referring systematically to the ZEPHYR database which is produced and marketed by BvD. ZEPHYR is a comprehensive database identifying about 60,000 deals per year, worldwide. • Only completed deals are followed. A merger may or may not imply the creation of a new legal entity. Such situations are, of course, carefully reflected in the BvD ownership database.

  16. Sources - BvD Telephone Calls Direct contact with the company by telephone or e-mail when •  unclear or conflicting ownership information is collected or • when specific questions arise regarding the data. Corrected links are marked TC.

  17. Matching process Matchingprocess Very important part of the work (principallymanual) to ensure the consistency of the database. Ex : The linkbetweencompanies A and B isprovided by 2 Ips The French IP provides a subsidiarylinkbetween a French company A and an Italiancompany B The Italian IP provides the ownershiplinkbetween the Italiancompany B and the French shareholder A IPs are generally not able to provide an identifier for foreign entities. • BvD has to identify that companies A & B provided by both IPs are the same and has to ‘match’ them to be able to consolidate the information.

  18. Type of links Type of links : Direct or Ultimate / Active or Archived • Direct links : links directly received from a source.  does not imply a direct relationship between both entities (which requires a direct percentage). • Ultimate Owner links : either directly provided by a source or calculated by BVD. • Active links : links provided on the latest update.Still considered as valid as long as no other information is available. • Archived links : links that were valid at a certain date but that have been archived because a new information has been collected.

  19. Type of entities : 2 categories Type of entities • Each entity at both ends of a link is given a "type" by BvD analystsaccording to the following classification = Internal process • Classification is made of 2 parts (=> impact the GUO identification) • Individuallylabelledentities • Collectivellylabelledshareholders •  considered as unable to exert, as such, control over a company. •  disregarded in the qualification of the degree of independence of a company (see Independence Indicator ) and, as a consequence, in the process of identification of the possible Ultimate Owner of a company.

  20. Individuallylabelledentities Type of links • -  Bank (B) -  Financial company (F) • -  Insurance company (A) -  Industrial companies (C) • -  Private equity firms (P) - Venture Capital (V) • - Hedge funds (Y) • -  Mutual & Pension Fund/Nominee/Trust/Trustee (E) • - Foundation/Research Institute (J) • - Public authorities, States, Governments (S) • -  One or more known individuals or families (I) • -  Employees/Managers/Directors (M)

  21. Collectivelylabelledshareholders Type of links • -  Public (used only for publicly quoted companies) (Z) • -  Unnamed private shareholders, aggregated (D) • More than one private shareholder, collectively designated. • "Private shareholders“; "Private citizens (760)"; • "1073 Private persons“; "Private investors with less than 2%"; • -  Other unnamed shareholders, aggregated (L) • More than one unnamed shareholder, either companies (unnamed) or a • mixture of companies and private owners. • "Other shareholders“; "Affiliated companies"; • "Australian institutional investors“; “Companies, Mutual funds & Trusts"; • "More than 3000 shareholders“; "Financial and Insurance institutions";

  22. Type of percentage: Direct and Total Ownership Type of percentage • Direct Ownership • An entity A owns directly a certain percentage of Company B at first level. • Total Ownership • An entity A has a total stake in Company B without knowing the path through which the ownership is held. • Result from infinite situations involving 3 or more companies. • Example for a total link of 60% between A and B

  23. Percentage of interest vs percentage of control When known, the priority is always given to the % attached to the Voting shares (control percentage). However, information providers but also annual report or other sources, rarely precised if the percentage given is a percentage of control or of interest.

  24. Type of percentage:Direct and Total Ownership Type of percentage • Direct ownership percentage can’t exceed 100% • Total ownership percentage exceeding 100% • Direct links between A and B and between B and C are recorded, however, no source mentions the total ownership of A in C.   • The company report will display the direct link between B and C and indicate the fact that A is the Ultimate Owner of C.

  25. Type of percentage: Direct and Total Ownership Type of percentage • Total ownership percentage exceeding 100% • Same information but a source indicates that A holds a Total ownership of 100% in C. The two links are displayed in the report of company C and the Total ownership percentage then appears as 200%.

  26. Type of percentage: Direct and Total Ownership Type of percentage Encountered values beside figures WO Wholly Owned MO Majority Owned JO Jointly owned CQP1 50% +1 share BR Branch GP General partner NG negligible n.a. non available (a linkexist but the % is not known) “-“ we don’t know if a link exist or not Signs like "+/-", ">", or "<" can also be used before a figure

  27. Controls Controls Why To check : - input errors - conflicts between the different sources - discrepancies  Each reported error leads to the creation of new controls on the complete database. When Continuously, to be able to validate a database once a week.

  28. Controls Controls More than 50 controls – some examples : • Direct ownership percentage exceeding 100% • Doublings on shareholders based on string characters • Wrong source date • All entries without “type of shareholders” • Direct percentage exceeding total percentage • Textual information older than numerical link • Dead banks with links • Unlisted companies with shareholder information coming from Nasdaq or Proxy statement • Unlisted companies with shareholder type “Z” (Public) • Archived link more recent than an active link • …….

  29. Validation of the database Weekly validation of the database

  30. Availibility in each application • The mostrecentownershipdatabaseisalwaysused for an indexation. • The timing of the update depends on the indexation frequency of the application • For ORBIS/MINT GLOBAL, an update or a correction made duringWeek 1 willbeavailable in the application mid of Week 3. • Wecan have differentownership data in different applications because of theirdifferent update timing

  31. Added value at BvD Added value at BvD • 5 main concepts have been developed by using raw data : • BvD Independence Indicator • Global Ultimate Owner (GUO) and a Domestic Ultimate Owner (DUO) • Calculated Total percentage • Corporate Group • Beneficial owners • Archiving data and creation of annual historical databases • Complex software possibilities to work with the ownership data (incl. Pathfinder, Hyper Ownership Viewer)

  32. BvD Independence Indicator Added value at BvD – Independence Indicator • Degree of independence of a company with regards to its shareholders • Direct as well as indirect cumulative control are considered • The indicators A, B, C, D and U are used. • A qualification "+" or "-" gives an idea of the degree of reliability of the Indicator. • Remark : • The categories of shareholders collectively labelled by the sources are disregarded in this process (since they are considered as unable to exert a controlling power over a company). • The Independence Indicator is closely linked to the concept of the Ultimate Owner. In order to be regarded as ultimate owner, a company carries the Independence Indicator A or B. Ownership presentation – 29/05/2009

  33. Independence Indicator A (Independent companies) 5 3 2 3 4 5 6 4 6 2 5% 7 15% 10% 5% 15% 2 20% 3 4 5% 10% 5% 20% 10% 5% 20% 5% 2 3 4 5 1 A (4 or 5 shareholders) 1 21% 20% 1 24% 15% > 75.01% direct A- (1 to 3 shareholders) A+ (6 or more shareholders) 1 A+ Added value at BvD – Independence Indicator No shareholder having more than 25% of direct or total ownership A- : also to a company mentioned by a source as the UO of another company

  34. Independence Indicator B 5 3 2 3 4 5 6 4 6 2 1% 7 5% 3% 2% 5% 2 26% 3 4 2% 1% 1% 27% 10% 5% 26% 1% 1 B (4 or 5 shareholders) 1 1 B- (1 to 3 shareholders) B+ (6 or more shareholders) Added value at BvD – Independence Indicator (Can beultimatelyownedwith a definition 25.01%) No shareholder having more than 50% of direct or total ownership 2 3 4 28% 26% 10% > 50.01% direct 1 B+ Ownership presentation – 29/05/2009

  35. Independence Indicator C 3 4 2 2 3 25% 25% > 50.01% direct 10% 20/55% 55% 1 1 C+ C 2 100% 3 55% 25% 30% 1 Added value at BvD – Independence Indicator Recorded shareholder with a total or a calculated total over 50% C : also to a company when a source indicates that this company has a UO C

  36. Independence Indicator D Added value at BvD – Independence Indicator Recorded shareholder with a direct ownership of over 50% 2 3 55% 10% 1 D Independence Indicator U • Unknown degree of independence: • No shareholder identified • Shareholders with unknown %

  37. Added value at BvD – Independence Indicator Independence Indicator « - » Given to Inactive companies and Public authorities

  38. Ultimateowners Added value at BvD – Ultimate owners • Several sets of definitionsof UltimateOwner • Global UltimateOwners (GUO) • DomesticUltimateOwners (DUO) • Immediateshareholders • Controllingshareholders

  39. Several sets of definitions of UO Added value at BvD – Ultimate owners • Resulting of • the version used by the user and itsaccessrights • Common definitions in expert versions • “Highest corporate” definition in expert versions (need specific access) • “Highest corporate” definition in Mint versions (for all users) • the combination of the followingparameters : • minimum % that must characterize the path from a subject company up to its Ultimate Owner : 25,01% or 50,01% • shareholding structure of the Ultimate Owner : shareholders of the UO must beknown or not • public or private character of the Ultimate Owner, whateveritsshareholders (i.e. even if it has a shareholderwith more than 50,01%) • Type of the ultimateowner (canbe an individual, a public authority or not)

  40. Added value at BvD – Ultimate owners • Common definitions in Expert versions

  41. Global Ultimateowner Added value at BvD – Ultimate owners • Shareholder with the highest direct or total % of ownership (except categories of shareholders collectively labelled by the sources considered as unable to exert a controlling power over a company). • If this shareholder is independent, it is defined as the Ultimate Owner of the subject company and a UO link is created between the shareholder and the subject company. • If the highest shareholder is not independent, the same process is repeated to him until BvD finds an Ultimate Owner. • Strength of the UO link between the UO and the subject company • UO+ : all links in the path > 97.99% or UO links indicated by a source • UO : all links in the path > 50%, one or more between 50.01 and 97.99% • UO- : all links in the path > 25% but one or more between 25.01 and 50%

  42. Look for the shareholder with the highest direct or total % of ownership.(Definition 50,01%) 2 2 3 3 55% 55% 26% 26% 6 1 1 35% D D 5 4 40% 60% Added value at BvD – Ultimate owners If this shareholder is independent, it is defined as the Ultimate Owner of the subject company and a UO link is created with the subject company 5 40% If the highest shareholder is not independent, the same process is repeated to him until BvD finds an Ultimate Owner

  43. 2 2 3 3 6 55% 55% 5 4 26% 26% U n.a. 1 1 U 40% D D 60% 5 4 40% 60% Added value at BvD – Ultimate owners Consider also as independent (and consequently as possible UO) entities for which no shareholder is identified or all shareholders have an unknown percentage of ownership (companies with independence indicator U) (Def. 50,01% + unknown) Or

  44. 2 3 6 100% 26% 60% 1 D quoted 5 4 40% 60% quoted Added value at BvD – Ultimate owners Consider the highest quoted company in the path as independent and consequently as possible UO of its subsidiaries, whatever its shareholding structure (Def. 50,01% + quoted)

  45. Added value at BvD – Ultimate owners Highestcorporate as UltimateOwner Need a specific activation in the admin site because the user must beawarethatit affects the display in list and report but not how the search are generated.

  46. Added value at BvD – Ultimate owners Def. 50,01%, known or unknown sh, any entities

  47. Added value at BvD – Ultimate owners Def. 50,01%, known or unknown sh, only a corporate

  48. Added value at BvD – Ultimate owners UltimateOwner in Mint versions Only one option regarding the entity type of the GUO : Anyentity or a corporate(includingfunds, privateequity and foundations) Always min 50% in the path Shareholders of the UO canbeunknown Searches are alsoimpacted by bothdefinitons

  49. DomesticUltimateOwner Added value at BvD – Ultimate owners Highest entity in the path between a subject company and its Global UO that is located in the same country as the subject company. The path between the subject company and its Domestic UO may pass through one or more entities that are not located in the same country as the subject company. 6DE GUO 60% 5 4FR DUO 40% 60% 2FR 3CH 100% 26% 1FR D

  50. Immediateshareholder 2 3 6 100% 26% 1 D 5 4 40% 60% Added value at BvD – Ultimate owners First shareholder in the path from the subject company to its Ultimate Owner. 60% Immediate shareholder  If no UO, no immediateshareholder

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