Register of Beneficial Company Ownership
With effect from 6 April 2016, all companies and Limited Liability Partnerships (“LLPs”) in the UK need to keep a record of their ‘controlling parties’. There are criminal penalties for non-compliance, potentially two years imprisonment and a fine could be applied.
Furthermore, from 30 June 2016 Companies House must be informed of who the beneficial owners are and the information will be publicly available. It is anticipated that HM Revenue & Customs will use this information in its investigations.
Beneficial ownership is different from legal ownership. Very broadly, the legal title may be in one name but for tax purposes the owner is someone else.
Under the Companies Act 2006, an individual will be a person with significant control if at least one of the following is met in relation to company incorporated in the UK:
- direct or indirect holding more than 25% of the company’s shares;
- direct or indirect holding more than 25% of the company’s voting rights;
- direct or indirect holding of the right to appoint or remove the majority of directors;
- otherwise having the right to exercise or actually exercising significant influence or control over a company (e.g. through loan capital);
- being a person having the right to exercise or actually exercising significant influence or control over a trust or partnership, where the trustees of the trust or the members of the partnership (other than LLP’s or Scottish Partnerships) would meet any of the first four conditions or would do so if they were individuals.
Each condition must be considered in turn, but if someone meets one of the first three then there is no need to consider the remaining conditions for that person.
In most cases, the controlling interest will be an individual but there are circumstances where other legal entities will be included on the register. Where shares are owned jointly, each owner is treated as owning all the shares.
Currently, legal owners of company shares are listed at Companies House and this is declared through an Annual Return, along with other statutory details. From 30 June 2016 a ‘Confirmation Statement’ will replace the Annual Return and will need to be updated annually or confirmed that no changes are due
The requirements apply to UK incorporated companies limited by shares, limited by guarantee (including charities), unlimited companies, LLP’s and Community Interest Companies. These entities must keep a Register of persons with significant control and it must be available for inspection at the company’s registered office, free of charge, unless Companies House have been informed of a different address.
If you have any concerns on the above or about releasing additional information to Companies House please contact our Director Oliver Ross.
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