New rules have been unveiled that will see companies forced to declare who their beneficial owners are. The Government has indicated that it will legislate where necessary as soon as Parliamentary time allows. Shareholders with more than a 25% stake in a company registered in the UK will have to supply Companies House with personal details such as their name, date of birth, nationality and residential address etc. All of this information will be accessible to the public, with the exception of dates of birth and residential addresses.
As part of the move to force businesses to become more transparent about their ownership, the Government will abolish so-called bearer shares that allow an individual or group anonymously to own a company and to transfer control untraceably. A set period of time will be provided for existing bearer shareholders to surrender their shares for conversion to registered shares. Companies with bearer shares remaining after the period set for surrender will have to apply to court for an order cancelling those shares.
The Department for Business, Innovation & Skills (BIS) set out its proposals which include the following:
- A central registry of company beneficial ownership information, based on the existing definition of beneficial ownership as applied for anti-money laundering purposes. Beneficial owners will be required to inform the company of any changes to the information recorded, and it is intended to allow applications to the Registrar of Companies to protect beneficial ownership information from public disclosure only in ‘exceptional circumstances’.
- The prohibition of the creation of new bearer shares, with a set period of time being provided for existing bearer shareholders to surrender their bearer share warrants
- The prohibition of corporate directors, with ‘limited and specific’ exemptions where the use of corporate directors is deemed to be of higher value and lower risk
- Improving the standard of information available to ensure directors understand their statutory duties and the potential for breaching them by acting as an ‘irresponsible front’, including legislation ‘as necessary’
- Updating the directors’ disqualification regime with a broader set of provisions setting out the factors which will be considered
While these proposals do not relate to tax directly they are interesting in the context of the debate on tax transparency and corporate governance more generally.
For further information please contact Peter Taaffe.
