The U.K. is pushing forward to increase corporate transparency by requiring greater disclosure from all companies. A new legislation, the Small Business, Enterprise and Employment Act 2015, will provide the public with more information about ownership structures and decision makers who are in a position to influence and exert control.
Holding beneficial owners accountable for their actions will now be much easier. While listed companies already disclose information about shareholders to the public, under the new mandate, all companies will have to prepare and maintain a register of persons who exercise “significant control”.
According to the Department for Business Innovation Skills (BIS), a person with significant control (PSC) meets the following criteria:
Directly or indirectly owns more than 25 percent of the shares in the company;
Directly or indirectly holds more than 25 percent of the voting rights in the company;
Directly or indirectly has the power to appoint or remove the majority of the board of directors of the company;
Otherwise has the right to exercise or actually exercises significant influence or control over the company. The definition of this will be set out in statutory guidance;
Has the right to exercise or actually exercises significant influence or control over a trust or firm that is not a legal entity, which in turn satisfies any of the first four conditions over the company.
Now companies will need to implement the right measures to identify individuals who hold significant control over an enterprise. As of January 2016, all companies will be required to maintain their own database of beneficial owners and from April 2016, they will have to provide this information to Companies House.
The law requires that all information about PSCs remain up to date. If a company or PSC fails to update their details or provide incorrect information may be fined or imprisoned.