UK Beneficial Ownership
We have been sharing with our readers for 5 years that a time will come when beneficial ownership – back to human beings, will be required. The UK has taken the first step in that direct and announced in January to move forward on this process.
UK Companies will be required to keep a register of “people with significant control” (PSC) from January 2016 onward. The companies will have to file information about so-called PSCs at Companies House by April 2016, according to the Department for Business, Innovation and Skills (BIS).
BIS published a consultation paper on its plans last October, noting the disagreements about how a person’s control over a company should be recorded on the PSC register.
June 2016 the draft bill was published for comment. The implications for companies are very significant. Secondary legislation along with systems changes, guidance on application, and communication requirements with state holders are to be looked at. The draft bill was published in June of this year. You can see the bill at:
http://www.publications.parliament.uk/pa/bills/cbill/2014-2015/0011/15011.pdf
The key is that it is down to the 25% threshold for PSCs – no matter how the shares may be owned or controlled – directly or indirectly – or even though rights issued but not exercise – such as a large block of warrant for shares not yet issued. They are also looking further down to control through the ability to remove directors or trustees as well as joint interests and arrangements – such as control by contract sans ownership.
The issue was raised about those who for security reasons need to keep their ownership private. The body is of the mind that only those under risk of serious physical violence or intimidation be granted an exemption. Applications for anonymity will be accepted from a PSC’s professional advisers, and they could be able to apply in advance of their becoming a PSC so that protection will apply from day one. The issue of economic risks was raised and those will not be considered – period.
Further comment: This goes to the heart of KYC for the commercial client and the Relationships proffered and/or accepted. This appears – for now, to be the legislation that will be copied by other jurisdictions in time. Even if you are not in the UK – you need to read this legislation and be aware of what impacts these laws may have on those jurisdictions you service.
