leonardo ávila
Associate - Honduras
Honduras now has a legal answer to a question that for years remained unresolved: who actually controls a company? Legislative Decree No. 127-2026, Transparency and Centralized Register of Ultimate Beneficial Owners Law, published in La Gaceta No. 37,184 on July 3, 2026, establishes new rules for the identification and reporting of the natural person who ultimately owns or controls a company or other legal structure. The law also eliminates the possibility of maintaining or issuing bearer shares and establishes their conversion into registered shares.
The use of complex corporate structures does not, in itself, imply unlawful activity. On the contrary, in most cases it serves legitimate purposes related to investment, business organization, estate planning, regional expansion and risk diversification. These structures allow investors to efficiently organize their operations, separate economic activities, protect assets, attract capital and benefit from the joint growth of a corporate portfolio. However, the same complexity that makes them useful from a commercial perspective can also make it difficult to identify the natural persons who exercise effective control over them.
One of the most common forms of these structures is holding companies, understood as companies whose primary purpose is to hold interests in other companies. Through this model, a holding company may control multiple operating companies located in different jurisdictions, exercising its influence indirectly through the companies that form part of its corporate group. Similar phenomena may also be observed in trusts, investment funds, autonomous estates and other legal structures that, by their nature, require clear rules to identify the ultimate owner or controller.
Along these lines, and with the purpose of aligning itself with international standards on the prevention of money laundering, terrorist financing, corporate transparency and the proper use of legal structures, Honduras recently approved, through Decree No. 127-2026, the Transparency and Centralized Register of Ultimate Beneficial Owners Law. The law takes as a reference, among others, the guidelines contained in Recommendations 24 and 25 of the Financial Action Task Force (FATF), aimed at ensuring that authorities can access adequate, accurate and up-to-date information on the ownership and control of legal persons and legal structures.
One of the most relevant changes is the adoption of a broad definition of ultimate beneficial owner. The law is not limited to identifying the person who directly owns shares, but also includes the natural person who exercises effective control over an entity through means other than direct ownership. This approach makes it possible to move from a purely formal view of share ownership to a more substantive view, focused on the economic reality and control of the structure. In addition, from an investigative perspective, this significantly reduces the usefulness of legal structures whose purpose is misrepresented for unlawful purposes.
Likewise, through the creation of the Centralized Register of Ultimate Beneficial Owners (RCBF), reporting entities will be required to report the ownership chain until reaching the natural person who exercises effective control. To this end, they must provide information related to ownership percentages, control mechanisms and supporting documentation that allows the corporate traceability of the structure to be reconstructed.
From a corporate and transactional perspective, this reform will have important practical effects. The identification of the ultimate beneficial owner will become increasingly relevant in due diligence processes, mergers and acquisitions, financings, banking compliance, correspondent banking, contracting with multinational groups and transactions with investors or counterparties subject to international compliance standards. In this regard, properly implemented transparency should not be viewed as an obstacle to investment, but rather as a tool to strengthen trust, reduce friction in international transactions and modernize the Honduran corporate environment.
Another aspect of particular relevance to the corporate sphere is that the law eliminates the possibility of maintaining or issuing bearer shares under the new regime and establishes a process for conversion into registered shares. Going forward, shares must be registered, which requires companies to formally identify their shareholders and maintain consistency between share ownership and the Shareholders’ Registry Book. This is probably one of the most significant corporate law reforms introduced by this legislation.
Now, it is important to understand that the purpose of the traceability provided by the Centralized Register of Ultimate Beneficial Owners is not to automatically attribute liability to the ultimate beneficial owner for activities that the companies under their control or ownership may eventually carry out. Its purpose is to provide authorities with a starting point to determine who actually owns or controls an entity and, based on that information, determine whether there are additional elements that justify a more in-depth review or investigation. The mere status of ultimate beneficial owner does not constitute evidence of participation in unlawful activity nor does it automatically give rise to liability of any kind.
Likewise, it is worth emphasizing that the identification of the ultimate beneficial owner does not alter the fundamental principles of Honduran corporate law. The effectiveness of this law does not modify the separate legal personality of companies, eliminate the existing separation of assets between entities and their shareholders, or alter the limited liability regime that characterizes corporations or limited liability companies. In other words, the law seeks corporate transparency and traceability, not to dismantle valid legal structures or disregard the individuality of the companies that comprise them.
More than a new corporate reporting obligation, the Transparency and Centralized Register of Ultimate Beneficial Owners Law reflects a paradigm shift in Honduran corporate and regulatory law. The focus is no longer placed exclusively on the formal ownership of shares and interests, but shifts toward identifying effective control of legal structures.
Honduras is thus taking an important step toward corporate transparency models promoted internationally and strengthening its alignment with standards advanced by organizations such as the FATF and GAFILAT in the areas of prevention of money laundering, terrorist financing, corruption and misuse of legal structures. This alignment is particularly relevant to the country’s interaction with correspondent banks, institutional investors, multilateral organizations and international counterparties subject to increasingly stringent due diligence and compliance standards.
However, it cannot be stated that these objectives have been fully achieved solely through the approval of the law. The true scope of the reform will depend on its practical implementation, including the issuance of the corresponding regulations, the development of the technological platform for the Centralized Register of Ultimate Beneficial Owners and the ability of the National Banking and Insurance Commission to ensure effective, secure and proportionate supervision.
If properly implemented, this law could become an important piece of legal infrastructure for Honduras: a tool that promotes greater transparency, strengthens confidence in its corporate structures and facilitates the country’s interaction with banks, investors, multilateral organizations and sophisticated counterparties in the international market.