On 15 July 2013, the UK Department for Business Innovation and Skills (“BIS”)published a discussion paper entitled "Transparency & Trust: Enhancing the transparency of UK company ownership and increasing trust in UK business" (the “Paper”).
Registry of beneficial ownership
One of the key proposals on which BIS is seeking feedback is in relation to the creation of a registry of the beneficial owners of UK companies.
BIS has proposed the creation of a new central registry of the beneficial owners of all UK incorporated companies. For these purposes, a beneficial owner is defined as an individual with an aggregate interest in over 25% of the shares or voting rights of a company or any individual who otherwise exercises control over the way the company is run, regardless of whether they hold shares in the company. The holdings of individuals acting in concert would be aggregated.
Under the current proposal, companies will be required to obtain and hold information on their beneficial ownership and make such information available to a central registry of company beneficial ownership information maintained by Companies House.This information will beavailable to law enforcement and tax authorities. There is a question as to whether this information should be publicly available and BIS intends to consult on this issue.
Companies traded on the Main Market of the London Stock Exchange are likely to be exempt from filing this information since they are already subject to stringent disclosure requirements. BIS is considering whether there are any other types of companies that should be exempt and it is also considering whether limited liability partnerships should be included in the regime set out in the Paper.
Identifying beneficial ownership
Part 22 of the UK Companies Act 2006 already enables a public company, if it wishes, to identify individuals with an interest in its shares, i.e. its beneficial owners. Individuals must confirm or deny their interest in the company’s shares in response to a request from the company. Where the ultimate owner of the shares cannot be identified, the company may apply to the court for a court order.
BIS proposes to extend Part 22 to private companies. This would provide all companies with the tools to identify beneficial ownership. This alone may not be sufficient to ensure that beneficial ownership information would be obtained for all companies. In light of this, BIS is consulting on what additional requirements may be required.
If interests in a company are held by an express trust, BIS proposes that the trustee should be disclosed as the beneficial owner. There is a question as to whether the beneficiary should also be disclosed.
The paper also discusses the frequency of reporting and the level of accuracy required to bring the proposals into effect.
The consultation period closes on 16 September 2013.