After some delay, the Register of People with Significant Control Regulations will come into force on Thursday.

The UK will be the first country from the 'Group of 20' (actually only 19) industrialised nations to establish a publicly accessible register showing who really owns and controls companies within its borders. In its terminology, the register will list People with Significant Control (PSCs). The idea is to tackle corruption, money laundering and terrorist financing.
 
This information about PSCs must be filed annually at Companies House whenever a company makes its Confirmation Statement (the new form of annual return). Anyone who wants to incorporate a new company will have to send a statement of initial significant control to Companies House, alongside the other documents required for incorporation.

In exceptional circumstances - where there is a serious risk of violence or intimidation - information relating to a PSC may be kept private but otherwise failure to comply with the regulations will be a criminal offence and restrictions may be placed on the shares or voting rights of the person or entity withholding information to ensure that they provide it.

Edward Stone, a partner at Irwin Mitchell Private Wealth, told Compliance Matters: “The UK is very much leading the way in this drive for increased transparency. Although other countries in the European Union are required to introduce central registers of corporate beneficial owners by 2017, few have gone as far as the UK in making them publicly accessible and have restricted access to competent authorities and “persons who can demonstrate a legitimate interest” to access the information. Most of the impulse towards making the information public has come from David Cameron, so his impending departure might bring this trend to a halt.”

The point of the register

A person will be a Person of Significant Control if at least one of the following conditions is satisfied:

• He directly or indirectly owns more than 25% of the company’s shares; or
• He directly or indirectly holds more than 25% of the voting rights in the company; or
• He directly or indirectly has the right to appoint or remove the majority of the board of directors of the company; or
• He has the right to exercise, or actually exercises, significant influence or control; or
• He has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or a firm which is not a legal entity, but would itself satisfy any of the other conditions if it were an individual.

What each company should disclose

For each PSC the details to be registered include:

• name;
• date of birth;
• nationality;
• country or state of usual residence;
• residential address;
• service address;
• date on which the person became a PSC; and
• details of how the person qualifies as a PSC.

The European Union, which the UK has now decided to leave, legislated last year in favour of the Organisation of Economic Co-operation and Development's Common Reporting Standard (CRS) on behalf of its countries by amending its ‘Directive on Administrative Co-operation,’ but Stone said that this had been incorporated into English law by secondary legislation without being fully debated in Parliament. He wryly observed: "They had to listen to objections about privacy in the beneficial ownership register, and they are currently discussing the ins and outs of the snooper's charter in Parliament, but CRS is going to disclose lots of people's tax information without any debate at all."

For our foreign readers, the infamous 'snoopers' charter' is the Draft Communications Data Bill. If passed, it will grant widespread powers to government employees to look at people's electronic communications and regulate electronic communications services providers.

"It's not a register of trusts. Trusts are completely out. There was talk of extending the beneficial ownership register to include them but they reconsidered. Instead, you have to 'look through' a trust to find individuals who exercise control. We have seen trust registers in Belgium and France, where trusts are not very common. In England that's been held back because trusts are everywhere. They're used for insurance policies, there are pension trusts...the volume of them would have been too great."

When it was put to him that Sweden has been making every citizen's entire tax data available to the general public for the last 100 years without any visible harm to any Swedes, Stone agreed but pointed out that this was now changing slightly: "They're pulling back a bit. Now, in Sweden and Norway, if you want to see someone's information you have to say who you are, i.e. they must know who's looking. This has led to a 90% drop in the number of searches, probably because frivolous searches have been discouraged."