Each tier of an ownership structure check reveals a progressively deeper picture of who ultimately controls an asset, entity or contractual relationship. and each successive layer carries its own supply-side risks: the further down the chain you go. The harder the data is to obtain, the less uniform the source quality. Additionally, the greater the chance that a concealed interest or encumbrance surfaces only after a transaction has closed. Understanding what each tier contains, and where its boundaries lie, is the foundation of any credible due diligence exercise.
Why tiered ownership analysis exists
Ownership structures are rarely flat. A seller may appear on a land register, a share register. Alternatively, a company filing as the named holder. While the economic benefit of that holding flows several layers above or below through holding companies, trusts, nominee arrangements or usufruct rights. Regulators, lenders and sophisticated counterparties all recognise this gap between nominal and beneficial ownership – and tiered analysis is the systematic response to it.
The supply risk in ownership analysis refers to the risk that the data needed to complete a given tier simply does not exist in accessible, reliable form. This is distinct from legal risk (the risk that an ownership claim is defective) and from commercial risk (the risk that the counterparty is financially weak). Supply risk is a question of information architecture: what records exist, where they are held, who can access them, and in what format they are produced.
Tier 1 – Nominal holder: what is included
What this tier covers. The first tier answers the question: who is named as the legal holder of the asset or entity in the primary official register? For real property, this is the land or property registry entry. For a company, it is the commercial register filing showing registered shareholders and directors. For a vehicle or vessel, it is the relevant transport or maritime registry.
What you receive. At this tier you typically obtain the holder's name, identifier (fiscal number, registration number. Alternatively. Equivalent), the date and basis of acquisition. Additionally, any encumbrances, charges or liens formally registered against the asset. For property this includes mortgages, easements and priority notices. For companies it includes pledges over shares and registered security interests.
Supply risk at Tier 1. Supply risk here is generally low in mature European jurisdictions – registries are publicly accessible, entries are standardised, and searches can be returned within hours or days. The principal risk is a lag between the real-world event (a transfer, a new mortgage, a court attachment) and the registry update. In some jurisdictions registration is not constitutive of title but merely declaratory, meaning an unregistered transaction may already have legal effect even though it does not yet appear in the search result. A Tier 1 result is a snapshot, not a guarantee of current status.
What is not included. Tier 1 does not reveal who instructed the registered holder to act, who financed the acquisition, or whether the named holder is a nominee. It does not capture off-register encumbrances (such as contractual pre-emption rights or unregistered leases in jurisdictions where short-term leases need not be registered). It will not show fiduciary, trust or usufruct arrangements unless they have been individually registered.
Tier 2 – Immediate corporate layer: what is included
What this tier covers. Where the Tier 1 holder is a legal entity rather than a natural person, Tier 2 looks into that entity's own ownership: who holds its shares or membership interests. Who sits on its governing bodies. Additionally, what the entity's registered purpose and financial standing appear to be from public filings.
What you receive. This tier typically draws on commercial registry filings (articles of association, shareholder lists as filed, director appointments), tax identification records where publicly accessible, and any published accounts or capital disclosures. In EU jurisdictions subject to the Anti-Money Laundering Directives, it also includes an extract from the beneficial ownership register (where one exists and is accessible), showing declared ultimate beneficial owners above the relevant threshold.
Supply risk at Tier 2. Supply risk increases meaningfully here. The quality and recency of shareholder information in commercial registries varies considerably across jurisdictions – some require annual updates, others only update on a triggering event, and voluntary or negligent non-compliance is common. A shareholder list filed two or three years ago may reflect a structure that no longer exists. Beneficial ownership registers. While now a requirement across the EU, differ in access conditions, granularity and enforcement of accuracy. Some registers remain accessible only to parties who can demonstrate a legitimate interest, limiting the speed and ease of retrieval.
What is not included. Tier 2 does not resolve nominee share arrangements where the nominee has not been flagged in any filing. It does not capture economic interests conveyed through options, convertible instruments or profit-participation agreements that fall below registration thresholds. Offshore holding structures – where the Tier 2 entity is itself held by entities registered in low-disclosure jurisdictions – are identified in outline but not resolved at this tier.
Tier 3 – Ultimate beneficial owner and group structure: what is included
What this tier covers. Tier 3 attempts to identify the natural person or persons who ultimately own or control the structure. the ultimate beneficial owner (UBO). and to map the full group hierarchy through which that control is exercised. This is the most analytically demanding tier and the one where supply risk is highest.
What you receive. At this tier, the analyst combines UBO register disclosures (where available and reliable), corporate registry chains across multiple jurisdictions, published group accounts and consolidation notes, regulatory filings (for regulated entities. Supervisory disclosures may identify controlling shareholders), adverse media and sanctions screening, and. where the structure involves publicly listed entities. stock exchange transparency filings and major shareholding notifications.
Supply risk at Tier 3. This is where supply risk becomes a primary constraint rather than a background consideration. Several factors compound the problem simultaneously. First, multi-jurisdictional chains require searches in each intermediate jurisdiction, each with its own access rules, language requirements and update cycles. Second, low-disclosure jurisdictions (certain offshore financial centres, as well as some onshore jurisdictions with weak UBO enforcement) may simply not hold the relevant information in any accessible form. Third, even where UBO registers exist, the accuracy of self-declared data is not verified in real time by registry authorities in most jurisdictions – the register reflects what was declared, not what is necessarily true. Fourth, nominee and trust structures – particularly common in certain market segments – may be legally transparent in the jurisdiction of formation while remaining opaque in practice from the outside.
What is not included. Tier 3 analysis conducted from public sources alone will not reliably resolve layered nominee structures. Discretionary trusts where beneficiaries are not named in any public document. Alternatively, structures specifically assembled to frustrate beneficial ownership disclosure. These gaps are not a deficiency of methodology but a function of what the underlying data infrastructure makes available. Identifying the gap is itself a finding: an unexplained opacity at Tier 3 is a material supply risk signal that warrants further enquiry before a transaction proceeds.
How supply risk compounds across tiers
Supply risk does not simply add up as you move through tiers – it compounds. A gap at Tier 2 (an outdated shareholder list) multiplies the uncertainty at Tier 3, because the chain cannot be reliably traced through an intermediate link whose current state is unknown. Similarly, a jurisdictional change in the chain. for example. A holding entity incorporated in a jurisdiction that does not maintain a public company register. effectively resets the supply risk at that node to its maximum, regardless of how cleanly the earlier tiers were resolved.
For this reason, professional practice treats cross-jurisdictional structures not as a single three-tier exercise but as a series of overlapping sub-analyses, each with its own supply risk profile. The practical consequence is that completion timelines and the reliability of conclusions must be calibrated to the weakest link in the chain, not the average.
Practical considerations before a transaction or claim
Timing. Register searches produce point-in-time results. For time-sensitive transactions, Tier 1 searches should be refreshed immediately before closing, not relied upon from an earlier due diligence round. At Tier 3, the dynamic nature of group structures means that a check conducted at the start of a long negotiation may be materially incomplete by the time the deal signs.
Scope instructions matter. The scope of a tiered ownership check must be clearly defined at the outset: which entities. This jurisdictions. This thresholds for UBO identification (the EU standard of 25% is a floor. Not a ceiling). Additionally. This ancillary registers (insolvency registers, enforcement registers, sanctions lists) are to be included. Scope gaps create liability gaps – if a search was not commissioned, it was not done.
Reliance on foreign counsel and local agents. Tier 3 work in low-transparency jurisdictions routinely requires engagement of local correspondents who have access to non-public channels. company secretarial networks. Regulatory contacts. Alternatively, in some markets, court-ordered disclosure. This is standard practice but adds time and introduces its own quality-control considerations.
Documenting what was not found. A professionally prepared ownership structure report will record not only what was established but what could not be established and why. A clean report that omits unexplored nodes is more dangerous than one that clearly flags unresolved gaps. For litigation or regulatory purposes. The documentation of search methodology and its limits is as important as the substantive findings.
Sanctions and restrictive measures overlay. Ownership structure analysis in a cross-border context is rarely conducted in isolation from sanctions screening. A structure that is legally transparent but terminates in a sanctioned individual or entity creates exposure regardless of the formal ownership chain. Sanctions screening must be applied at each identified natural person and at each intermediate entity, not only at the named counterparty. This is particularly relevant in structures involving CIS jurisdictions or entities with historical ties to state-controlled industries.
When a tiered analysis is insufficient on its own
There are categories of transaction where even a thorough three-tier analysis from public sources must be supplemented by other means. These include acquisitions of targets with significant related-party transaction histories (where ownership of counterparties to those transactions is itself a relevant question). Restructurings involving pre-existing security packages (where the identity of secured creditors and their principals must be independently verified). Additionally, any situation where the transaction is being used to satisfy a regulatory fit-and-proper test.
In these contexts, ownership structure analysis feeds into, but does not replace, a broader legal due diligence exercise. Practitioners working across M&A, real estate, and corporate disputes routinely combine registry-based ownership checks with contractual review, financial analysis and – where available – representations and warranties from the counterparty backed by appropriate indemnity.
How Ferraz & Whitmore approaches tiered ownership analysis
Our team structures ownership checks around the specific risk profile of the transaction or dispute. defining which tiers are necessary. This jurisdictions must be covered. Additionally. This ancillary registers add material information rather than administrative volume. We work with a network of local correspondents across European, CIS, and offshore jurisdictions and apply a consistent methodology for documenting both findings and gaps.
Where a Tier 3 gap is identified, we advise on the options available: contractual protections, regulatory notifications, enhanced warranties, or – in appropriate cases – application for court-ordered disclosure. The objective is to give clients a complete picture of what is known, what is unknown, and what the unknown costs them in risk terms.
To discuss the scope and structure of an ownership analysis for your transaction or matter, contact us at info@ferrazwhitmore.com or visit our contacts page.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. The mechanisms described reflect general practice and may vary by jurisdiction, register, and applicable law. No reliance should be placed on this content without obtaining specific legal advice tailored to your circumstances. Ferraz & Whitmore accepts no liability for actions taken or not taken on the basis of this material.