Transparency of Companies: Beneficial Interests

Stephen Downie
December 24, 2014

Small Business, Enterprise & Employment Bill (“the Bill”) that is proposed to come into force in April 2015. The Bill is currently undergoing readings before the House of Lords following the 1st reading on 19 November 2014 and the 2nd reading on 2 December 2014.

Part 7 of the Bill inserts a new requirement into the Companies Act 2006 to require that all companies keep a register of people who have a significant control over the company. The Bill requires companies to gather information on beneficial owners in a prescribed format, keep a register of various people with a significant control over the company (in terms of their voting rights) and deliver to the Registrar of Companies (Companies House) a statement of the initial significant control of the company.

This will of course have effect on the increasing prevalence of shadow directors, the classification of shares with and without voting rights and may also lead to companies being registered by third parties with a view to attempts to avoid including any beneficial owner names on the initial statement that it will be required to be filed at Companies House.

This requirement may subsequently become an ongoing requirement for companies and thus this risk will have to be reviewed regularly.

No doubt such changes will have an incredible effect on various tax structures and the use of off-shore companies as shareholders through trust schemes and the government’s attempts to increase the transparency of companies whilst commendable may lead in reality to far more complicated structures.

If you are a shareholder or director with concerns over such changes to the legislation, or alternatively are concerned as regards the transparency of a company or future investigations, then please contact Francis Wilks & Jones who will be able to assist you with the details of such changes and any risk assessment or other steps that should be undertaken in this respect.

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Stephen Downie

SENIOR ASSOCIATE at Francis Wilks and Jones

Stephen is a dual qualified lawyer and ACCA accountant, with over ten years experience in restructuring and insolvency law. He commenced his accountancy training with the Official Receiver and thereafter in several large private practice firms dealing with regulatory and asset recovery matters on behalf of liquidators, administrators, receivers and trustees in bankruptcy before qualifying as a solicitor. Prior to joining FWJ he was a lawyer at a large international law firm with offices in the City. Stephen is a Solicitor Advocate with experience of commercial litigation matters pertaining to dispute resolution, debt recovery and enforcement.