The introduction earlier this year of the register of people with significant control (PSC register) was a well-publicised step in the Government's pursuit of corporate transparency. The drive for transparency, as a means of tackling crime and corruption, does not stop there and other measures are in the pipeline to bring beneficial owners out into the open. There will be some changes to the new PSC regime, and legal entities which have so far escaped its reaches could soon face similar beneficial ownership disclosure obligations.
Under the PSC regime, UK limited companies (and limited liability partnerships) must record information about their beneficial owners, and others who can exercise significant influence or control over them, and make it publicly available at Companies House. Companies with shares listed on the LSE Main Market or trading on AIM are exempt. For details of the current PSC regime please see our earlier briefing.
The PSC regime represents, in many respects, an early adoption by the UK of the EU commitment to transparency of beneficial ownership as set out in the Fourth Money Laundering Directive, which must be implemented in member states in 2017. Under the Directive, member states must use a central register to hold information on the beneficial owners of corporate and other legal entities incorporated in their territories. Member states can choose to make the register public (as with the UK PSC regime) or, as a minimum, make it accessible to law enforcement and others with a "legitimate interest".
UK companies and other UK legal entities
The Government is now consulting on how certain beneficial ownership requirements under the Directive, which have not been covered by the current PSC regime, will be implemented in the UK. The Directive is wider than the current PSC regime in two key ways:
- Under the existing PSC regime, effective from June 2016, UK limited companies (and LLPs) must report PSC information to Companies House annually (as part of the new annual confirmation statement). The requirement under the Directive is for the information on the central register to be kept current; the consultation seeks views on the implementation of this more onerous obligation.
- The requirements of the Directive in respect of the capture and disclosure of beneficial ownership information potentially cover UK legal entities which are not within the scope of the current PSC regime. These might include, amongst others, open-ended investment companies (OEICs), Scottish limited partnerships, co-operatives, community interest societies and building societies. The Government welcomes views on whether particular entities fall within the scope of the Directive and, if they do, how those entities would register beneficial ownership information.
Trusts and foreign companies
As well as the extension of the beneficial ownership regime for UK legal entities described above, the Government is taking other steps in the name of transparency:
- The Government consultation also looks at the Directive's requirements in the context of trust beneficial ownership. Trustees will be required to maintain information on the beneficial owners of express trusts (and similar) governed under member state law, make this information available to competent authorities and, in some cases, disclose it on a central register. The consultation paper asks for views around these issues and on what form the regime for a central register of trust beneficial ownership should take.
- At the Anti-Corruption Summit in London in May this year, David Cameron announced that the UK will establish a public register of beneficial ownership for foreign companies (which are not caught by the UK PSC regime) who own or buy property in the UK or who bid on UK central government contracts. The details of this regime have not been finalised but a Government discussion paper published in March this year considered a range of proposals. It is expected that a formal consultation will follow.
The deadline for responding to the consultation is 10 November 2016. The Directive is due to be implemented in member states by 26 June 2017 although there are proposals to bring this forward to 1 January 2017. The exit of the UK from the EU will not affect the implementation of the Directive in the UK; until exit negotiations run their course the UK remains a full member of the EU and must continue to apply EU legislation. In any event, the UK has positioned itself at the forefront of the international movement for transparency and it is highly unlikely that an exit will dilute the way in which it continues to implement this strategy.