- Transparency in company ownership: What shareholders need to know about the new proposals
Transparency in company ownership: What shareholders need to know about the new proposals
Transparency in company ownership: What shareholders need to know about the new proposals23 Mar 2015
The Department for Business, Innovation and Skills has published a paper on new proposals regarding The Small Business Enterprise and Employment Bill, which will, if passed, have the effect of increasing company ownership transparency. It is proposed that this change will manifest itself in a revised central registry of company beneficial owner information, with “simplified” filing requirements, managed by Companies House.
The Bill requires companies to make available a publicly accessible record of those persons who hold 25% of the shares or voting rights of a company, as well as those who exercise ‘significant control’ in the company. The meaning of ‘significant control’ is, it seems, intended to be quite wide in scope so that it will range from persons who hold (directly or indirectly) more than 25% of the company’s shares or voting rights, to, rather ambiguously, individuals who have the right to exercise, or actually have, significant influence or control in other ways over the company. The Secretary of State is yet to issue (much needed) guidance on the latter.
However, what seems to be clear at the moment is that the proposed new rules will require disclosure of nominee arrangements and capture shareholders who are afforded significant control under a shareholders agreement or similar document – the only consolation being that the actual declaration of trust, trust deed or shareholders agreement will not need to be made publicly available.
The Government proposes to take into account the fact that, in certain circumstances, individuals will be reluctant to provide their information. However, the circumstances currently being touted by which persons of significant control can keep their details private are limited. The primary pieces of information to be kept off the publicly available register are:
• A person’s usual residential address (although this will still be accessible by credit agencies)
• Date of birth, which will be restricted to the month and year.
An area of this newly proposed legislation, which is still being considered, concerns applications by persons for non-disclosure of details where they are at serious risk of harm – for example, shareholders of companies involved in controversial sectors.
It is currently proposed that the changes will come into effect in early 2016. Kuits will be providing regular updates on these developments to our clients and via our website; however, if you would like to discuss this further, please contact us or call 0161 832 3434.