October 31, 2014 Ownership and control
As part of its drive to increase transparency the Government has launched a consultation on the practical implications of its proposed new register of effective owners and controllers of businesses. The register of people with significant control (PSC Register) is being implemented as part of The Small Business, Enterprise and Employment Bill.
Part of the Government’s G8 commitments, the register aims to help the Government’s drive to increase transparency thereby positioning the UK as “an open and trusted place to invest and do business.” The current consultation which closes on 9th December 2014 aims to both clarify the information to be held on the register as well as aiding companies in understanding their role in maintaining the register.
An individual may be seen as having significant control over a company through ownership of shares or voting rights (25%+). But they may also be able to exert significant control through other means and the paper cites an ability to appoint or remove directors as one such aspect of PSC control. Controllers may also exert influence if they are significant persons in a separate organisation which itself influences a company. The discussion document therefore includes a proposal to list the nature of the control on the register.
One of the more interesting aspects of the consultation relates to those individuals who may face an increased level of personal risk if they are listed on the PSC Register. In those instances the consultation seeks agreement on the amount of information which should be suppressed and the types of cases to which suppression would apply. Examples given within the document include risk of violence to persons involved in companies working in controversial sectors, risk of asset stripping or kidnap if personal wealth is revealed and distortion of market forces.
Because of the sensitive nature of such considerations the discussion document asks for comments on areas including:
- Retrospective and prospective applications
- Cumulative applications
- Blanket applications
- Whether suppression should be for a set period or indefinite
- Revocations and appeals
The PSC Register will potentially have a significant impact on all companies and on all those who have effective ownership or control of those businesses. The consultation should therefore be seen as required reading for all those who are either directly or indirectly involved in corporate life. As Jo Swinson, Minister for Employment Relations and Consumer Affairs says in the forward to this document :” Transparency of company ownership and control is important. It matters because companies make a significant contribution to the UK economy. To maximise that potential it is vital that the UK is, and is seen to be, an open and trusted place to invest and do business. Knowing who ultimately owns and controls our companies will contribute to that objective.”