This will be a public register allowing anyone to find out who the beneficial owners of a company are, intended to force UK-registered companies to provide details of anyone who owns 25 per cent or more of the shares of a company or has 25 per cent or more of the voting rights. The intention is for the register to be held at Companies House and companies will be required to update the register every year.
At the moment companies are required to file a register of members which is held at Companies House. This will include the shareholders names and addresses for service (although this need not be a residential address). Anyone can gain access to the register, although they first have to make a request in writing to the company setting out their name and address and stating what the information is to be used for.
The company then has five days to either comply with the request for access or apply to the court for permission not to comply. The court will permit a company not to comply if it is satisfied that the request for access to the register is not being made for a proper purpose. The court has a wide discretion of what is considered to be a proper purpose .
The government also intends to try and limit the use of corporate directors. This type of director allows companies, rather than individuals, to be directors of companies, making ownership even less transparent and more difficult to unravel.
The intention is that HMRC will be able to use the public register to identify the beneficial owners of companies in the right to combat tax evasion and money laundering.
The proposals have generally been welcomed as it will allow the authorities to take action and fight corruption. It is felt that a more transparent system will give both national and international businesses more faith and confidence in the UK and will in turn promote growth. The reasoning for this is that if we know who is really in charge this will increase trust and confidence leading to investment.
Small private businesses may view the changes as an invasion of their privacy and reveal information to the public about their company which they would prefer to keep private. Undoubtedly it will make individuals more easily traceable but on balance the proposals are likely to be of benefit to all businesses and to some extent an even the playing field.
The rules still require parliamentary approval so at this time this remains a proposal but it is unlikely there will be much opposition to the plans.
Tracy Lacey-Smith is joint head of SA Laws Commercial Litigation and Dispute Resolution department.