12 Dec 2014
Ross Webb, Associate, discusses the UK Government’s proposal to promote greater corporate transparency and what this means for companies throughout the UK.
In June 2014 the UK Government first published their draft legislation requiring all UK companies, with the exception of publicly traded companies that already report under DTA 5, to create a register listing those individuals with significant control over the company. With the 2015 General Election fast approaching, the UK Government appear to be intent on pushing through the new register as quickly as possible.
This new register of ‘People with Significant Control’ (termed ‘PSC Register’) will contain information pertaining to those within a company who own or control 25% or more of a company’s shares or voting rights. Those who do not fall into this category however they exercise control over the company and its management, for example by appointing or removing directors, will also require to be listed on the PSC Register.
The new register is being introduced as part of the Small Business, Enterprise and Employment Bill currently being debated in Parliament. The catalyst for the PSC Register itself is the UK Government’s G8 commitment back in June 2013 to promote greater corporate transparency in terms of the ownership and control of companies in the UK.
The PSC Register looks to make significant inroads in this regard; the new register is set to look quite different from the shareholders register of the average company, as the individuals who actually control a company are often not those listed on the register of shareholders.
The actual mechanisms of how the PSC Register will work in practice are still to be determined, such as how the information itself is to be recorded and how sensitive data contained within this register is to be protected. This last issue in particular may prove to be a controversial one; individuals in a company who will be affected by the new PSC Register may wish to maintain their privacy, however the Government’s proposals published in October 2014 outline a wish to implement a publicly accessible register of PSC information.
Those individuals who are at a serious risk of harm if they are publicly known to be associated with a company or give out their personal address can apply to have their personal information protected from disclosure. Generally however there is hope from some that the information required for the purposes of the new Register will be no more than necessary.
With the new Register to come into effect imminently, companies will soon be faced with yet another administrative burden to create and thereafter maintain their PSC Register. This task can be made all the more difficult and time consuming where a company has a complex ownership system in place. It is therefore imperative that legal advice is sought to ensure a PSC Register is set up that is compliant, without stating on the new register more personal information than is required in terms of the legislation.