Thursday, June 18, 2015
The introduction of a UK company ownership register from January 2016 raises privacy concerns for business owners, according to law firm Boodle Hatfield.
Under the changes, UK companies will be required to keep an updated register with details of individuals with significant control over the company. This will generally encompass anyone who ultimately owns or controls more than 25 percent of a company's shares or voting rights, or who otherwise exercises control over a company or its management.
This PSC register will include the individual's name, date of birth, nationality, address, and details of their interest in the company. In certain circumstances, the details of a parent company must be noted on the register instead as a "relevant legal entity." The information will be publicly available, with the exception of residential addresses. From April 2016, companies will need to file the information held on the PSC register with Companies House.
Boodle Hatfield said that while greater corporate transparency is to be welcomed as a deterrent to criminal activity, the changes will also impact on individuals with legitimate business interests.
Geoffrey Todd, Partner, Boodle Hatfield, commented: "The new regime raises some issues as to how confidential information is used and that may alarm individuals who value their privacy and are sensitive to how much the public know about companies they are involved in and the values of those interests. Individuals whose affairs are entirely legitimate but who want to retain privacy may find this new legislation makes it easier for others to pry into their affairs. This may particularly concern celebrities or other well-known public figures."
"There will be some scope for refusing requests for information but it remains to be seen whether the rather limited statutory provisions will provide adequate protection in sensitive cases."
The European Union (EU) is also proceeding with plans for a register of beneficial owners and trusts. The measures contained in the Fourth Anti-Money Laundering Directive will come into force from June 26 and must be implemented by EU member states within two years.
Todd added: "It is interesting to note that the EU proposes to go ahead with a register of beneficial owners of trusts, although it will not be publicly available. The UK decided not to proceed with this directly, despite initial plans to require disclosure of beneficial owners of both trusts and companies, whilst requiring greater disclosure from UK companies than will be required under EU law. However, details of individuals with significant influence or control over a trust which controls the company will need to be included on the PSC register, so some disclosure of trust interests may still be necessary under the UK legislation."
Todd advised that companies and individuals should start thinking about how they will comply with the new requirements. The UK Government is expected to publish detailed guidance on the rules later this year.