After a long running consultation exercise, the Government has confirmed that the public register of beneficial interests will come into force from 6 April 2016. From 30 June 2016, companies’ annual returns (in future to be known as ‘confirmation statements’) to Companies House must contain beneficial ownership details. The details must also be provided when companies are incorporated, and both limited liability partnerships and Societas Europaea will also be required to report on the people who own or control their businesses.
Companies whose shares are listed on a regulated stock market in an EEA state (and a number of other recognised exchanges that the final regulations will list) will not be required to return details of their beneficial owners.
Anyone will be able to request to see the information in a company’s register (or obtain a copy for a fee) unless the company refuses and informs the court of its refusal. The Government expects that it will be used by financial institutions and other businesses to help them with customer due diligence exercises. It is also likely to be used by HMRC and the police to support their investigations and those of Government agencies in other jurisdictions.
Obligations for businesses
To successfully report on the beneficial ownership of a business, the directors or partners who run it must first “take reasonable steps to find out if there are people that have significant control or influence over the company”. This will be relatively straightforward in many cases where it is easy to identify ‘persons with significant control’ (PSC) - see table. However, significant investigations may be needed in some cases where shares are owned by trustees or complex family arrangements. Where one individual owns and/or has control over various parcels of shares, they may together add up to a holding that meets the one of the 25% tests or otherwise constitutes significant control.
Where appropriate, company directors will have to contact shareholders or trustees or those “who might know them” to build an accurate picture of beneficial ownership. For example, trustees will be required to disclose their status, and provide beneficial ownership information relating to the trust.
Even where the PSCs for a business are easy to identify, it will be necessary to contact them to collect all the information that is needed for the register – and warn them that their details will be publically available in future.
For each PSC the register will show the individual’s:
- Date of birth
- Nationality and country, state or part of the UK where they live
- Service address
- Residential and service addresses (although residential addresses will remain hidden both at Companies House and in the company’s register)
- The date that the individual became a PSC
- How the individual qualifies as a PSC
- Any restrictions on disclosing the PSC’s information that apply.
Similar details are required if a legal entity (eg a trust or another company) has significant control over the business.
An individual is a PSC if he or she:
A. Directly or indirectly owns more than 25% of the shares
B. Directly or indirectly holds more than 25% of the voting rights
C. Directly or indirectly holds the right to appoint or remove the majority of directors
D. Otherwise has the right to exercise, or actually exercises, significant influence or
E. Holds the right to exercise, or actually exercises, significant influence or control over
the activities of a trust or firm which is not a legal entity, but would itself satisfy any
of the first four conditions if it were an individual.
Read how BDO can assist you with a wide range of company secretarial issues.
Read the draft guidance on the register.
View the Business Edge 2016 index