CORPORATE TRANSACTIONS & COMPLIANCE BLOG

United Kingdom Increasing Public Access to Entity Owner Information in 2016

By: Pushkala Sivaramakrishnan, COGENCY GLOBAL INC. on Thu, Jan 14, 2016

UK Small Business Enterprise and Employment ActThe following is the first in a series of blog articles we will publish on the United Kingdom’s Small Business Enterprise and Employment Act of 2015 (the Act). The intent of the Act is to reduce the red tape in relation to filing requirements for U.K. companies while increasing their transparency.

While the Act includes many provisions to increase the transparency of business entities for many non-public companies and anti-money laundering professionals, one of the most significant changes is the introduction of the concept of Persons with Significant Control (PSC) and related recordkeeping and filing requirements. (See Companies House web summary, updated Nov 17, 2015, explaining the implementation of the Act, for additional information.)

The Act defines a (PSC) as a person that meets one or more of the following conditions for a single company:

  • Directly or indirectly owns more than 25% of the shares in the company
  • Directly or indirectly holds more than 25% of the voting rights in the company
  • Directly or indirectly has the power to appoint or remove the majority of the board of directors of the company
  • Otherwise has the right to exercise or actually exercises significant influence or control over the company
  • Has the right to exercise or actually exercises significant influence or control over a trust or firm that is not a legal entity, which in turn satisfies any of the first four conditions over the company

 

PSC Register Requirement Starts in April 2016
Starting in April 2016, certain companies and limited liability partnerships will be required to keep a PSC register at their registered offices. The register, with certain information such as home addresses redacted, must be available for public inspection.

 

Starting June 2016, Additional Info Must Be Included in Formation Documents and Confirmation Statement
Beginning in June of 2016, newly formed companies will have to include information from their PSC Registers in their incorporation papers filed with Companies House. Existing companies will have to disclose the information in a newly required Confirmation Statement. The Statement replaces the formerly required Annual Return.

 

Public Disclosure of Ownership Information: Necessary Step or Invasion of Privacy?
While the public disclosure of owner information has many advocates as a necessary step to discourage corruption, tax avoidance and terrorist financing, it has also been resisted by many in the business community as the forced disclosure of sensitive business information and an invasion of privacy. The only certainty is the argument is not over and the discussion will go on.

 

In future posts, we’ll discuss the requirements for the PSC Register and the filing of the Confirmation Statement in more detail…

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: International Corporate Services