UK company ownership register raises SME privacy concerns

It is part of the UK Government’s commitment to greater global corporate transparency around who ultimately owns and controls companies with the aim of helping to prevent the use of such companies as vehicles for tax evasion, money laundering, terrorist financing and other illegal activities.

However law firm Boodle Hatfield have said that the new regime raises some privacy concerns for individuals with legitimate business interests.

Geoffrey Todd, Partner, Boodle Hatfield, said:

“The new regime raises some issues as to how confidential information is used and that may alarm individuals who value their privacy and are sensitive to how much the public know about companies they are involved in and the values of those interests. Individuals whose affairs are entirely legitimate but who want to retain privacy may find this new legislation makes it easier for others to pry into their affairs. This may particularly concern celebrities or other well-known public figures.

“There will be some scope for refusing requests for information but it remains to be seen whether the rather limited statutory provisions will provide adequate protection in sensitive cases.”

UK companies will be required to keep an updated register with details of individuals with significant control over the company, broadly, anyone who ultimately owns or controls more than 25% of a company’s shares or voting rights, or who otherwise exercises control over a company or its management.  

The PSC register will include the individual’s name, date of birth, nationality, address, and details of their interest in the company.  In certain circumstances the details of a parent company must be noted on the register instead as a “relevant legal entity”.
The information on the PSC register will be publicly accessible, with the exception of the residential address, and available for inspection on request by individuals.  Further, from April 2016, companies will need to file the information held on the PSC register with Companies House.

The EU is also proceeding with similar measures contained in the Fourth Anti-Money Laundering Directive which will come into force from 26 June 2015 and must be implemented by EU member's domestic legislation within two years.

Geoffrey adds:

“It is interesting to note that the EU proposes to go ahead with a register of beneficial owners of trusts, although it will not be publicly available. The UK decided not to proceed with this directly, despite initial plans to require disclosure of beneficial owners of both trusts and companies, whilst requiring greater disclosure from UK companies than will be required under EU law.  

“However, details of individuals with significant influence or control over a trust which controls the company will need to be included on the PSC register, so some disclosure of trust interests may still be necessary under the UK legislation."