The Small Business, Enterprise and Employment Act of 2015 will mark huge changes to UK company law beginning April 6. These new rules are focused on increasing transparency between beneficial owners and controllers of the companies, authorities say.
The set of new rules will also aid the wider scene of international diplomacy, including the EU’s Fourth Money Laundering Directive, which demands full disclosure regimes for the beneficial owners of major companies across the European Union by June 2017.
Under the rules of the United Kingdom, companies must keep a register of their individuals with “significant control” (PSCs) from April 6 this year. This will be one of a company’s statutory registers, with similar content logged in the register of directors. The register must be open for public inspection, Lexology reports.
The companies are issued a mandatory order to make their PSC information available from 30 June 2016 if they are to file their annual confirmation statement. Companies in the UK now must make their PSC information publicly available at Companies House when they file their annual “confirmation statement” (which replaces the annual return). On failing to do so, they will be subjected to criminal penalties.
The government has issued extensive guidance on the new regime, although this is not yet in final form.
These new sets of rules apply to unquoted UK companies, as well as (under separate regulations) UK limited liability partnerships and Societates Europaeae. The majority of quoted British companies, however, will not have to keep a PSC register. This privilege is granted on the basis that their major investors are already a matter of public record. Their UK subsidiaries must have a PSC register, but this will largely be without major complications.
According to Lexology, the person who has the following controls over a company is filed under “significant control”.
- more than 25 percent of its shares, or
- more than 25 percent of its shareholder voting rights, or
- the right to appoint or remove a majority of its board of directors.
An individual is also equivalent if they have a “majority stake” – usually, 51 percent of shareholder voting rights – in another company, or a chain of companies, that holds the shares or rights in question.
In addition to these tests, the individual is also subjected to further two elaborate tests:
- where someone has “significant influence or control” over the company, or
- where someone has “significant influence or control” over a trust or partnership that meets any of the above tests – in effect, someone who “pulls the strings” of a trust or partnership that has significant control over the company.
The primary objective of the new law is to identify and disclose the individuals with significant control over UK companies. This law also implies that most overseas companies cannot be entered on a PSC register, so UK companies will need to look through them to the individuals or RLEs behind them.
There are some details that cannot be missed in PSC registration process. These include the likes of service address, country of residence, nationality, date of birth, the date the person behind became registrable, and the nature of their control.
The register must give equivalent information for a registrable RLE, but there is no need to wait for the RLE to confirm its details before registering them. The rules say the register can never be empty, and they set out specific statements that the company must include to show the status of its enquiries, as well as any non-compliance with its information requests.
“Incorporating a limited company or LLP is a very simple process. You complete an application form and filing fee, submit it for approval, and start trading as soon as you like. The quickest, easiest, and most popular way to do it is to use the online services of a formation agent,” according to 1st Company Formations.
According to The Financial Times, the United Kingdom has also slashed the cost of registering new companies to only £10. It will provide further aid to Britain’s appeal as a cut price hub for company formations.
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