Beneficial ownership information to be publicly accessible
In April 2014 the UK Government published proposals to improve transparency and accountability of companies. It is proposed that a central registry of company beneficial ownership will be established at Companies House which will be publically accessible. Individuals who ultimately own or control more than 25% of a company’s shares or voting rights will be classified as ‘beneficial owners’. Companies will be obliged to provide information about their beneficial owners on the central registry as well as maintaining their own register.
New powers will be introduced to enable companies to investigate which persons are “interested” in their shares. Beneficial owners will also have a continuing obligation to disclose their identity and how their beneficial interest is held. On incorporation, a company will have to provide an initial statement of beneficial ownership, and the company will have to update this information at least once every 12 months.
Clarification of procedures
Along with this, the Government state they will be making efforts to clarify and simplify procedures for the convenience of companies and individuals alike. The aim is to rationalise requirements for business, allowing companies to provide the most useful set of information in the most sensible way, with new requirements reducing duplication or complexity whilst minimising opportunities for companies and individuals to evade requirements.
Under new proposals private companies will have the option of not keeping their register of directors, register of members and certain other statutory registers at their registered office provided that they ensure that the information on the public register at Companies House is up-to-date. This option would also apply to the proposed new register of beneficial owners.
Prohibition of bearer shares
Other key changes proposed include the prohibition of bearer shares. Bearer shares are shares, the legal title to which is evidenced by possession of a certificate, and not entry of the owner’s name in a register of members. Ownership of bearer shares can therefore be transferred simply by delivering the certificate to another person, without the company knowing of the transfer. Existing bearer shares will have to be converted into registered shares within the implementation period.
Elimination of corporate directors
It is also proposed that corporate directors will generally be banned. This addresses concerns of transparency and accountability over who influences and controls the company. Certain exceptions could be allowed, e.g. in large group structures.
The government is also clarifying and updating the conditions for disqualifying directors who are guilty of misconduct, with the objective of providing investors with better protection and improving public confidence.