I reported earlier this year about the Government’s plans to introduce what were then being referred to as “registers of beneficial interests”. Each company will be obliged to maintain a register noting the beneficial ownership of shareholdings which are registered in the name of a nominee.
The registers have now been re-branded as registers of “people with significant control” (PSC) but the substance is the same. It appears to be the Government’s intention to push these reforms through as soon as possible and certainly to ensure that the legislative changes are made before the next general election.
The registers will be introduced as part of the Small Business, Enterprise and Employment Bill which is currently being debated in Parliament. However, the mechanics of how a PSC’s interest will be recorded in the relevant register and the matter of protecting certain pieces of data which are contained in the register are still to be determined. The latter point is something which requires consideration more generally; such as the suppression of the full date of birth of directors of companies to assist with the prevention of fraud.
In order to consider these points the government has issued a discussion paper.
Significantly the discussion paper also asks for views on the guidance which would be provided to ensure that companies (and PSC’s) understand their obligations under the act when it is passed. In my view the guidance needs to make it absolutely clear that (contrary to the headline grabbing title of “register of beneficial interests”) the registers should contain not just information pertaining to shareholdings, but also the ability to exercise voting rights or the ability to appoint or remove directors or similar powers held by an individual through another corporate entity.
We also note that it is proposed that the guidance will supplement that produced by Companies House. I wonder how the content of one set of guidance would vary materially from the other as I would expect the main aims of both to be to assist parties: (i) to understand what a PSC is; (ii) to correctly record all relevant information in the register once the format has been agreed pursuant to this discussion paper; and (iii) the consequences of failure to have and maintain the register.
We would hope that no more information is recorded in the register than is absolutely necessary. The members of a company may have chosen to enter into a shareholders’ agreement to reflect control arrangements precisely because they do not want them in the articles of association to maintain a certain amount of privacy.
Responses are sought before 9 December 2014.
Other Small Business, Enterprise and Employment Bill changes
Anyone who has a burning interest in company legislation may have noticed that there will not be an obligation to file an annual return once the bill takes effect. I would suggest that you do not celebrate the removal of a piece of company administration just yet, as it is to be replaced with a “click and confirm” process. How this will differ in practice from submitting an annual return is unclear at present. Perhaps the process will be streamlined when Companies House website is incorporated into the wider www.gov.uk site, but this remains to be seen.
The Bill will also bring into effect the changes to the director disqualification rules which Ellis Walls reported on earlier this year and will abolish corporate directorship. There will be a period of 12 months to remove a corporate director currently appointed from the time the legislation comes into force.Kelly Craig Solicitor – Corporate & Commercial www.blackadders.co.uk