Confidential 111 The Financial Industry Business Ontology – Business Entities Introductory Explanatory Material – with notes Mike Bennett, EDM Council

Confidential111

The Financial Industry Business Ontology – Business Entities

Introductory Explanatory Material – with notes

Mike Bennett, EDM Council

August 31 2012

ConfidentialConfidential

Overview

• These slides introduce the basic concepts in the FIBO Business Entities ontologies

• Examples are included in the screen shots, to give an idea of the scope of each concept

• This should be read in conjunction with the basic introductory slides provided elsewhere. A base minimum of the underlying theory is repeated here.


This Deck

• Two parts, introducing

– [I] The types of entity in the model

– [II] Ownership and Control hierarchies

• Powerpoint “Notes” are provided for each slide – these should be read to make sense of these diagrams

• The model contains many other relationships and

facts which are not shown here


Reminder: Theory of Meaning

• Any FIBO model consists of:– Things (OWL Classes)

• A Thing in this sense is a set theory construct• Arranged in a hierarchy called a “Taxonomy”

– Like taxonomy of species

– Facts (OWL Properties)• Simple facts (names, dates etc.)

– e.g. “Issue Date” is a date

• Relationship Facts (relate one thing to another thing)– e.g. “Share confers Voting Rights”– Things so referenced are also in taxonomic hierarchies

– Other set theory concepts• Disjoints, Unions


Reminder: Theory of Meaning

• Taxonomy: Like Taxonomy of Species– Animal v Plant– Vertebrate v invertebrate– Mammals, fish etc.

• Each thing is defined by what facts distinguish it• For each new thing:

– What sort of thing is it?– What facts distinguish it from other things?

• If it has a backbone, it belongs to the set of all things which are a vertebrate; if it also suckles its young it belongs to that set of vertebrates which are a mammal.


PART I

TYPES OF ENTITY IN THE MODEL


Types of Entity


Types of Entity


Types of Entity: Company


Legal Persons Fundamentals


Legal Entity Fundamentals

11Copyright © 2010 EDM Council Inc.


Legal Entity v Legal Person



Legal Persons Overview


Formal Organization Fundamentals


Formal Organization Overview


Business Entities Taxonomy


Corporation Facts


PART II

RELATIONSHIPS BETWEEN ENTITIES


This part – overview

• In this part of the presentation, we introduce the most basic of the relationships between Incorporated Companies.

– These are not between “Entity” or even “Legal Entity” but are specific to the kind of entity which is an Incorporated Company.

– This is because those relationships arise from the holding of shares in one such entity by another such entity.

– In fact, since these relationships are about controlling ownership, they arise only from the holding of voting shares

– Similar but different relationships may hold for relationships to or among other kinds of Legal Person

• Relationships of control such as managerial control, the ability to appoint board members and so on, are separate to the relationships shown here. They exist in the model but are not shown in these slides.

• Similarly, ownership in and of itself i.e. beneficial ownership, is a separate concept. This may be with or without control. These are elsewhere in the model and not illustrated here.


This Part: Overview

• We start by introducing the basic concepts of share ownership

• These are then specialized according to :– What kinds of shares are owned (voting shares)– What kind of entity owns them (a limited company)

• Note that parent and subsidiary relationships may only be between companies, therefore we have to narrow down the scope of ownership, from that of any entity, to that entity which is itself a limited company.


Share Ownership


Control = Voting Share


Company Based Control


Ownership Relationships


Part Ownership


Parent Ownership


Resultant Model


Ultimate Parents


Taking it Forward

• There are many other relationships– Ownership versus Control

– Ownership by entities other than Corporations

– Beneficial Ownership

– Management control versus share-based control

• There are different definitions of “Parent”– 50% + 1 share

– Other thresholds

– LEI: 25% + 1 share

• Next Iteration:– Define type of party which has a lower and upper threshold within which it is

defined as being of interest

– This party then participates in relationships which are of interest for various regulatory and reporting purposes.


Main Take-away Points

• We have shown the basic kinds of entity which exist– Organizations are distinct from Legal Persons– Legal persons may be natural persons or artificial persons– Legal Entity is a separate but similar concept

• We have looked at how the important relationships between most entities are defined– These are relationships of ownership with control– Exist only because voting shares are held– Apply only to Incorporated Company

• Other relationships exist in the model but only a sub-set will be in the initial release


Contact

• Mike Bennett– [email protected]


Documents

Confidential 111 The Financial Industry Business Ontology – Business Entities Introductory Explanatory Material – with notes Mike Bennett, EDM Council