Business owners need to consider the implications of major new transparency rules being imposed on nearly all UK companies to combat tax evasion, money laundering and financing terrorism.
The Small Business, Enterprise and Employment Act 2015 - designed to boost trust and promote the UK as a sound business and investment destination - will clarify legal and beneficial ownership.
Business owners have been obliged to file and keep an up to date register of all people and companies - PSCs - that have a 'significant control' over them. PSCs are defined as anyone who holds, directly or indirectly:
25% (or more) shares
25% (or more) voting rights
The right to appoint or remove a majority of the board of directors
The right to exercise significant influence or control over the company, or
The right to exercise significant influence or control over a trust or firm which meets one or more of the above.
Relevant companies must keep the new registers from 6 April 2016 and file relevant details with Companies House from 30 June 2016.
The legislation could hit some firms badly in other ways - for example where PSCs have notoriety or if they work with other, controversial enterprises and customers shun them as a result.
Company officers must take all reasonable steps to pursue PSCs or risk fines or up to two years' imprisonment and they can impose heavy sanctions against anyone who does not cooperate. Businesses are responsible for collating and compiling a register as well as maintaining and updating records as changes occur.
Michael Cantwell, a partner in the Corporate Department of hlw Keeble Hawson, said: "The true impact of the PSC Register remains to be seen - and many companies will be affected in different ways. There is still time to prepare by finding out precisely what obligations you will have, your powers of enforcement - and how you must demonstrate that you are complying from April."
The new rules apply to all companies formed and registered under the UK Companies Acts, except those subject to the disclosure requirements of the DTR 5 (e.g. London Stock Exchange and AIM companies).
For more information contact Michael Cantwell on 0113 399 3457, or email firstname.lastname@example.org