WELCOME TO CHARLES RUSSELL SPEECHLYS.
We would like to place strictly necessary cookies and performance cookies on your computer to improve our website service.
Otherwise, we'll assume you are OK to continue. Please close this message
Recent changes to UK and EU law combined with parallel G8, G20 and OECD measures mean that the beneficial owners of certain companies may need to accept the reality of possible unwanted public scrutiny.
Reacting to legitimate concerns about tax evasion, money laundering and the funding of terrorism, the UK Government has helped to make “transparency” about the beneficial ownership of companies an international priority.
Under the UK’s presidency at the Lough Erne Conference in June 2013, the G8 countries committed to implementing the Financial Action Task Force’s standards on corporate ownership transparency, and to require companies to obtain and hold information about their ultimate beneficial owners. They agreed that “some basic company information should be publicly available”. The G20 countries have agreed to similar “high-level principles”. Other international measures such as the US’s FATCA regime and the OECD’s forthcoming Common Reporting Standard will also increase the amount of personal data being collected by government agencies, raising data security concerns.
Similarly, the European Parliament has just introduced the Fourth Money Laundering Directive, which will require EU Member States to introduce beneficial ownership registers for companies incorporated in their respective jurisdictions. These registers will not necessarily be public but will be available to government authorities, banks, and others with a “legitimate interest” in their contents.
The UK has gone further and plans to introduce, together with a number of other wide-ranging measures, a full, publicly accessible, register of the details of the beneficial owners of companies (but not partnerships, including LLPs) which are incorporated in the UK.
From January 2016, UK companies incorporated under the Companies Acts will be required to obtain and hold a register of all persons who exercise “significant control” over the company. A person will be a “person with significant control” (or “PSC”) if he or she, directly or indirectly:
UK companies will be required to register the personal details of such PSCs with Companies House by April 2016 for inclusion in the public register.
Some individuals have expressed surprise that the Government is so concerned with introducing a public beneficial ownership register for UK companies, on the basis that very few (if any) UK companies are used to evade tax.
Individuals have historically put in place corporate structures for a number of reasons. Family Investment Companies are used as a kind of fund for holding family assets, allowing value to be passed down the generations without wealth being dissipated. It is of course true that companies can be used to ensure the privacy of individuals and to protect the confidentiality of their personal affairs. But there are often entirely legitimate reasons for this - in extreme cases, an individuals' personal security could be at risk if his or her overall net worth were made public. It should not be forgotten that any company or individual which fails to pay the correct amount of UK tax can rightly face criminal sanctions.
Depending on the circumstances, and notwithstanding the new UK rules, it may still be possible to have the benefits of corporate structures without the obligation to disclose information about beneficial ownership on a publicly available register. Furthermore, such companies can be tax resident either in the UK or overseas as circumstances require.
This article was written by James Austen, first published on 1 June with updates on 12 June. For more information, please contact James on +44 (0)20 7427 4547 or email@example.com.