GENERAL CORPORATE

Transparency of Foreign Companies Minister of State for Business, Innovation and Skills ("BIS") confirms that the Government will be launching a consultation on previous proposals to enhance the transparency of beneficial ownership of Foreign Companies

In March, as covered in our previous weekly update, BIS published a discussion paper titled "Enhancing transparency of beneficial ownership information of foreign companies undertaking certain economic activities in the UK" in which it unveiled the Government's plans to enhance the transparency of foreign companies by requiring any foreign company that:

  • owns or purchases real property in England and Wales; or
  • enters into public procurement contracts

to provide information about its beneficial owners for inclusion on a central register. As set out in the discussion paper, the Government's intention was to lift the veil of secrecy over who ultimately owns and controls foreign companies to "expose wrongdoing and disrupt a key vehicle for illicit financial flows".

Last week the Minister of State for BIS confirmed, in an answer to a written question, that the Government is now progressing this idea and will be undertaking a formal consultation on the discussion paper's proposals during 2016. The Minister of State also confirmed that the implementation of the proposed regime would require foreign companies (that meet the specified criteria) to provide details of their beneficial owners for inclusion in a public central register.

The next step for the proposed foreign company regime will be for BIS to consult experts and develop draft policies before then consulting formally on the full detail of the policies.

Impact The Minister of State highlights in her written answer that "this will be the first register of its kind in the world".

When the impact of this new proposed regime is considered alongside the requirements of the forthcoming EU Fourth Money Laundering Directive and the recently introduced PSC transparency regime for UK Companies and LLPs, it clearly demonstrates the Government's continued commitment to increasing the public transparency of companies that are operating in England and Wales.

Companies and Limited Liability Partnerships (Filing Requirements) Regulations 2016

On 7 June 2016 the Companies and Limited Liability Partnerships (Filing Requirements) Regulations 2016 ("2016 Regulations") were laid before Parliament and will come into force on 30 June 2016.

The 2016 Regulations implement various provisions of the Small Business, Enterprise and Employment Act 2015 ("SBEEA") and consequently will make amendments to the Companies Act 2006 ("2006 Act"), the Limited Liability Partnerships (Applications of Companies Act 2006) Regulations 2009 and the Unregistered Companies Act 2009 ("UCA 2009"). The amendments relate primarily to how provisions of the 2006 Act that have been updated by SBEEA should be applied in the context of limited liability partnerships and unregistered companies.

The key changes in the context of LLPs are:

  • enabling LLPs to opt for their register of members and their register of members' residential addresses to be held solely on a public register at Companies House, rather than LLPs having to hold their own registers;
  • enabling the Registrar of Companies to omit the day from the date of birth of an LLP's members and PSCs from that LLP's publicly maintained register; and
  • replacing annual returns with confirmation statements to align LLP requirements with the new requirements for registered companies (as previously covered here).

In relation to unregistered companies, the 2016 Regulations have also amended the UCA 2009 to require them to file a confirmation statement, rather than an annual return.

Impact The 2016 Regulation will align LLP and unregistered company obligations under the 2006 Act with those required of registered companies following the recent amendments under the SBEEA.

The Law Society seeks guidance from the European Commission in relation to the interpretation of the Market Abuse Regulations ("MAR")

Following "grave concern and anxiety amongst Market participants" the Company Law Committees of the Law Society and the City of London Law Society (the "Law Societies") have written a letter to the European Commission ("EC") seeking guidance on how certain provisions of MAR should be interpreted and applied by market participants. In their letter the Law Societies explain that the guidance they have sought is essential because without it, market participants in the UK (and other EU States) will not be able to ensure that they are MAR compliant before the regime's implementation on 3 July 2016.

The key MAR provisions that the Law Societies have sought to clarify are:

  • Managers' Transactions - The Law Societies want clarification of the type of dealing that falls within the scope of `closed periods' under Article 19(11) MAR and also how `close periods` should be interpreted under Article 19(11) in the context of preliminary announcements (the FCA has issued supervisory advice in the context of `closed periods', as discussed here);
  • Buy-back programmes - The Law Societies would like clarification of the circumstances in which a buy-back programme will be considered abusive when it is operating outside the remit of the safe harbour provided in Article 5 of MAR; and
  • Stake-building - The Law Societies identify that there is "uncertainty in the market as to whether, and to what extent, stake-building is permitted under MAR" on the basis of the express exclusion of stake-building as legitimate behaviour under Article 9(4) MAR. The Law Societies therefore query whether it will be possible to bring stake-building within the remit of the "own knowledge" safe harbour set out under Article 9(5) MAR. They highlight that removing the ability of bidders to stake-build when the only inside information they have is knowledge of their own intention to bid would have a significant effect on the manner in which takeovers are currently being carried out.

Impact The Law Societies' letter highlights the concerns that have been raised in the market by differing interpretations of the MAR provisions. The ECs response to the Law Societies letter will greatly assist market participants in preparing for the implementation of MAR on 3 July 2016.

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