The introduction earlier this year of the register of people with significant control (PSC register) was a step towards the government's well-publicised goal of corporate transparency. Under the PSC regime, UK limited companies and limited liability partnerships (and Societates Europaeae) must record information about their beneficial owners, and others with significant influence or control over them, and make it publicly available on a central register at Companies House. Under the PSC regime, companies with shares listed on the LSE Main Market or trading on AIM are currently exempt.
Legal entities which have so far escaped the PSC regime could soon face similar beneficial ownership disclosure obligations.
The EU beneficial ownership disclosure requirements (as set out in the EU Fourth Money Laundering Directive) are due to be implemented in member states by 26 June 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. The Directive is wider in scope than the PSC regime and potentially captures types of legal entities not covered by the PSC regime. The government has been consulting on which other entities will be affected by the implementation of the Directive in the UK.
The Department for Business, Energy & Industrial Strategy (BEIS) has published a discussion paper looking at this issue. In it, BEIS sets out a list of UK entities which it considers will fall within the scope of the Directive and will be required to disclose beneficial ownership information on a central register. These include:
- Open Ended Investment Companies and Investment Companies with Variable Capital
- Scottish Limited Partnerships
- Scottish Partnerships, each of whose members is a limited company
- European Co-operative Societies
- Certain unregistered companies, including some Royal Chartered bodies (but not universities).
BEIS also lists certain UK entities which it considers will fall within the scope of the Directive, but which should only be subject to the central register disclosure requirement where they actually have a beneficial owner (as in practice, almost none of them will). These include:
- Building Societies
- Cooperative Societies and Community Benefit Societies
- Credit Unions and Friendly Societies
- Charitable Incorporated Organisations and Scottish and Northern Irish CIOs.
BEIS goes on to list examples of UK entities which it considers do not fall within the scope of the Directive in respect of the central register of beneficial ownership. These include:
- Partnerships and limited partnerships (except those established in Scotland)
- Non-departmental public bodies not already covered by the PSC regime
- Higher education corporations, further education corporations and sixth form corporations
- Overseas companies.
How will the disclosure regime apply?
The details are not yet clear but the government's general intention is to introduce similar requirements to those which currently apply to UK limited companies and LLPs under the PSC regime. They intend to modify the definitions used for determining when a person has significant influence or control over a limited company as necessary to suit the structure of the relevant entities. It is also anticipated that the central register of beneficial ownership for each type of entity will be held at Companies House and that it will be publicly accessible in a similar manner to the PSC register.
The deadline for responding to the BEIS discussion paper is 16 December 2016. The Directive is due to be implemented in member states by 26 June 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.
- The BEIS discussion paper on the implementation of the Directive's beneficial ownership requirements.