New Law - Register of Persons with Significant Controls

The Small Business, Enterprise and Employment Act, which came into force in March 2015, has introduced the duty on the directors of a company to maintain a ‘Register of Persons with Significant Control’.

On the current timetable, all companies in the UK will be required to keep such a Register with effect from next April 2016 and will then be required to upload the information on its Register to Companies House from June 2016.

The legislation sets out five approaches aimed at capturing all situations where a person not previously named who may have ‘significant control’ over a company, and will catch any person who has control of more than 25% of the company or controls more than 25% of the voting rights of a company or a subsidiary company held via a network of holding companies.

The Government has said it will issue informal guidance on the scope of the legislation and in particular on what is meant more specifically on ‘significant control’ but persons who are able to exert influence on a company through a nominee shareholder can assume that it is intended that they will be required to have their names entered on the Register.

The Register held by the company will be open to the public and the names and information on the company’s Register will have to be supplied to Companies House.  Anyone will then be able to discern the identity of persons ultimately controlling or influencing a company either by demanding to see the company’s Register of Persons with Significant Control or by making a search at Companies House.  There will be criminal sanctions against anyone breaching the new rules (including directors and the persons who should be disclosing their interests).

From the middle of next year, anyone sufficiently interested should be able to identify the identity of a person on behalf of whom another shareholder holds shares.  Detailed guidance has still to be published, and so it is not yet possible to identify any possible loopholes but the Government has made it clear that they expect full disclosure and transparency and thus the scope to avoid the new rules is likely to be very limited.

Article Date: 21/10/2015