The UK has become the first country to legislate for transparency of ultimate beneficial ownership of corporates. This is part of a wider world-wide drive, going through the G20, to combat fraud and corruption. UK corporates (including LLPs) and their owners should familiarise themselves with the changes, set out in the Small Business, Enterprise and Employment Act, which are due to be implemented between now and mid-2016.
From January 2016, companies and LLPs will be required to maintain registers of "People with Significant Control" (PSCs) and to seek to obtain the information for their registers from PSCs. Qualifying persons who do not give this information will risk sanctions for non-compliance. A person will have "significant control" over a company if (directly or indirectly) they: own over 25% of the shares; can control over 25% of the votes; can appoint or remove a majority of the board; or can otherwise exercise significant influence or control over the company. From April 2016, companies and LLPs will have to file their PSC register information with Companies House in an "annual information update" (which will replace the annual return).
The creation of bearer shares will be prohibited from 26 May 2015; voluntary surrender of existing bearer shares and conversion into registered shares will be allowed during a nine-month transition period.
Subject to certain exceptions, the scope of which is yet to be finalised, the act also bans corporate directors. The prohibition is expected to come into force in October 2015, with existing corporate directors automatically ceasing to be directors in October 2016.
Some of the detailed mechanics of the transparency measures will follow in secondary legislation and statutory guidance (including on the meaning of "significant influence or control"). Watch this space.
For further Information please contact:
Legal Director, Corporate
Professional Support Lawyer, Corporate