March 6, 2015 Ownership and control – key changes
In October 2014 we reported on a Government consultation in respect of its proposed new register of effective owners and controllers of businesses. This new register was to be introduced as part of a package of measures which aimed to increase transparency and prevent effective owners from hiding behind a web of companies or nominees.
With the consultation at an end, in January the Government published an implementation timetable as part of the Small Business, Enterprise and Employment Bill. Although a number of supplementary memorandums have since been issued, the latest being on 5th March, these tend to be clarifications in respect of minutiae within the bill and have not, as yet, affected the published timetable. The Bill is currently at the Report stage within the House of Lords.
Although the Bill has not yet received Royal Assent, company directors and secretaries may well wish to start to consider what changes may be required once assent has been granted. Key milestones within the timetable as currently set down are as follows:
- Phase 1 – Two months after Royal Assent has been granted – companies will no longer be able to issue bearer shares. Those companies which have bearer shares in existence will have a nine month window in which holders can apply for bearer shares to be surrendered for conversion into registered shares; failing which the company will have to apply to the courts for cancellation of the shares.
- Phase 2 – October 2015 – the prohibition of corporate directors, ie companies holding directorships, will come into force. There are some exceptions to this rule which are still under consultation.
- Phase 3a – January 2016 – Companies will be required to keep a register of people with significant control from this point onwards. Significant control includes ownership of shares or voting rights (25%+), the ability to appoint or remove directors, significant persons in a separate organisation which itself influences a company.
- Phase 3b – April 2016 – Changes to statement of capital come into effect, the annual return is replaced by a confirmation statement and those deemed to have significant control will have to be included on a return filed at Companies House.
Although the final phase is over a year away, it may pay company secretaries now to start the process of identifying persons with significant control and to consider what actions to take if bearer shares are in existence. We have only provided a flavour of the measures above and therefore would recommend that directors and company secretaries take steps to understand the full implications of the measures proposed and take advice where appropriate.