The UK has recently become an active player in setting new transparency standards in corporate taxation. More particularly, the UK government introduced the Small Business, Enterprise and Employment Act (SBEE), which came into force in 2015. The SBEE was created after the G8 Summit in 2013 with the aim to improve transparency regarding UK company ownership and deal with misconduct stemming from loopholes in corporate legislation.
The SBEE includes provisions related to: (1) access to financial information regarding businesses and individuals; (2) corporate governance; (3) requirements for company registration;(4) prohibition of issuing bearer shares; (5) prohibition of the use of corporate directors (except for situations of low risk and high value); and (6) the creation of a public People with Significant Control (PSC) register.
It should be noted that all UK-registered companies (except AIM, the London Stock Exchange, LLPs, and certain other companies) are required to submit data about their beneficial ownership structure to the PSC register. Moreover, trustees are required to submit to the PSC register “accurate and current beneficial ownership information for their trusts, including the settlor(s), trustee(s) and beneficiaries”.
The PSC register aims at ensuring that the competent authorities have full access to the information about individuals who own and control UK-registered companies. Moreover, the register is supposed to “tackle the criminal misuse of companies”. The PSC register will become operational in June 2016.
What is beneficial ownership?
Under the SBEE, an individual is regarded as the beneficial owner of a company if he/she:
1) Directly or indirectly owns more than 25% of a company’s shares;
2) Directly or indirectly controls more than 25% of a company’s voting rights;
3) Directly or indirectly exercises the right to appoint or remove a majority of the board of company directors;
4) Exercises significant influence or control over a company (e.g., the ability to appoint and/or remove directors); or
5) Exercises significant influence or control over activities of a trust or firm, which meets one or more of the preceding four conditions.
What data will the PSC register contain?
The PSC register will contain personal information about individuals with beneficial ownership, such as (1) individual’s name,(2) date of birth, (3)nationality, (4)residential address, (5) service address, (6) details of individual’s interest in the company, (7) the date when the individual became a person with significant control, and (8) the nature of individual’s control over the company.
The UK-registered companies must not only submit information to the PSC register, but also keep the information in the register up to date and ensure that the data is accurate. As soon as any changes related to an individual with beneficial ownership occur, the company should update individual’s profile in the PSC register. It is worth mentioning that, during the incorporation process, prospective UK companies are required to submit initial statements regarding individuals with beneficial ownership to the UK Companies House. Such statements should be updated at least once every 12 months.
Most data about beneficial ownership which is kept in the PSC registry will be publicly accessible. However, certain information, such as dates of birth and residential addresses, will be disclosed only to specified public authorities in exceptional circumstances.
The PSC register is one of the most important measures taken by the UK government for enhancing transparency of the ownership of UK-registered companies, promoting “good corporate behavior”, and deterring individuals who facilitate illegal activities by concealing their interests in UK-registered companies.
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