The Department for Business, Innovation and Skills (“BIS”) has published a consultation paper with a range of proposals to enhance the transparency of UK company ownership and increase trust in UK business. The paper invites views on the following areas:
- Requiring companies to obtain and hold information on who owns and controls them. Information on beneficial ownership would, in future, form part of the information that companies are under a statutory obligation to provide to Companies House with a view to it being placed on a public register.
- Bearer shares are regarded as open to misuse, because their holders may be concealing their identity from the authorities for the purpose of tax evasion or other criminal activity. BIS suggests prohibiting the issue of new bearer shares, and setting a time period for existing holders of bearer shares to convert to ordinary registered shares.
- BIS has a concern about the use of nominee directors because of the scope for abuse where they do not take any part in the running of the company. However, it is recognised that there are legitimate commercial reasons for use of a nominee director (for example, directors of a subsidiary company acting on behalf of the parent). The law treats nominee directors in the same way as other directors, and they owe the same statutory duties. Rather than an outright prohibition, BIS proposes increased transparency for nominee directors, possibly requiring nominee directors to disclose their nominee status and the beneficial holder on whose behalf they have been appointed.
- BIS has similar concerns about the use of corporate directors and thinks there is a strong case for banning corporate directors completely in order to increase transparency.
A copy of the discussion paper can be found here.