The European Court of Justice strikes against transparency again. Our response should be to call for an end to corporate limited liability

The momentum for beneficial ownership transparency, ignited by initiatives like the Panama Papers, has been challenged by recent European Court of Justice rulings that support the 'weaponisation of privacy.' Specifically, a ruling in 2022 invalidated public access to beneficial ownership information. This trend continued with a subsequent ruling in September 2026 invalidating public access to shareholder information, based on the argument that competent authorities should handle anti-money laundering efforts and that access should be based on demonstrating a legitimate interest.
The challenges arise because the legal reasoning applied, such as relying on "legitimate interest," has proven ineffective in practice, as noted by Transparency International findings from 2025 regarding beneficial ownership data access. Furthermore, the Court's decision appears to prioritize theoretical infringement of privacy rights over practical difficulties faced by authorities, without adequately weighing real-world enforcement capacities or existing public access to information in other jurisdictions.
The article concludes by proposing that further reforms should move beyond mere registration requirements and consider ending corporate limited liability by replacing it with pro rata liability. This shift aims to align incentives by making shareholder identity relevant for liability and ensuring transparency, arguing that this change addresses fundamental issues of fairness and the incentive structure of corporate law rather than just procedural access to data.

* Andres Knobel is an acknowledged international expert on beneficial ownership.
* A European Court of Justice ruling in 2022 invalidated public access to beneficial ownership information.
* The European Court of Justice ruled in September 2026, invalidating public access to shareholder information.
* Rulings from the European Court of Justice and the European Court of Human Rights have invalidated access by tax authorities to banking information and company formation data since 2022.
* The September 2026 ruling followed the argument that competent authorities are responsible for fighting illegal activities, thus requiring access based on legitimate interest.
* "Legitimate interest access" has been shown ineffective in practice, citing an example from Argentina where a restriction was based on a legitimate interest claim.
* The Court stated that it does not matter whether information relates to private life or if persons have been inconvenienced when access is denied.
* The ruling did not consider the staff and resources of authorities to implement legitimate interest access, concluding that practical difficulties do not constitute a necessary interference with fundamental rights.
* A proposal suggests replacing full limited liability with pro rata liability so that shareholders become liable based on their percentage of interest.

The narrative presents a tension between abstract legal principles concerning privacy and public interest, and the practical realities of institutional capacity and economic incentives. The core pattern observed is the systematic erosion of transparency measures through legalistic arguments—specifically the invocation of "legitimate interest"—which appear to serve as a mechanism to justify the weaponization of privacy rather than genuine democratic oversight. This dynamic echoes historical patterns where established rights are selectively reinterpreted to favor state control over information flow, irrespective of empirical outcomes.
The shift from focusing on data access (beneficial ownership) to fundamentally restructuring liability (limited liability vs. pro rata liability) reveals a deeper systemic critique: the current framework incentivizes secrecy by insulating corporate actions from individual accountability and obscuring beneficial ownership structures. The argument that limited liability evolved as a means for economic growth, rather than an inherent right, suggests that the move toward pro rata liability is not merely a technical adjustment but a necessary re-alignment of incentives rooted in justice and transparency.
The persistence of legal rhetoric that dismisses practical difficulties—as seen in the Court’s dismissal of implementation challenges—suggests a pattern where formal legal authority is used to neutralize accountability structures. The challenge for future reform lies in shifting the focus from narrowly defined procedural access (like shareholder information) to embedding substantive accountability within the economic framework itself, ensuring that transparency is enforced not by discretionary rulings but by structural necessity. What are the inherent limits of relying on judicial review alone to correct systemic failures driven by institutional inertia and the prevailing incentive structure?