27/02/2024 kde

UK’s New Laws: New Company Ownership and Directorship Requirements

Corporate transparency is now more crucial than ever, the UK government is introducing pivotal reforms through the Economic Crime and Corporate Transparency Act. Aimed at enhancing the transparency of company ownership and directorship, these measures are set to revolutionize the way companies operate and are regulated. This article delves into the key aspects of the new regulations and their implications for businesses across the UK.

Enhanced Transparency in Company Ownership

Under the new legal framework, the veil over company ownership will be lifted further. Companies will now be required to meticulously record the full names of individual shareholders, corporate members, and firms in their registers. This move is designed to peel away layers of anonymity that have previously obscured the true ownership of corporate entities.

In addition, a one-off requirement mandates companies to submit a comprehensive list of shareholders to Companies House. The goal is to make shareholder information more accessible and presented in a user-friendly manner. This initiative not only aids in ensuring accountability but also enhances the public’s ability to scrutinize corporate ownership structures.

Amplified Disclosure for Exemptions and PSC Conditions

Companies House is set to adopt a more stringent approach towards companies claiming exemptions from providing details about Persons with Significant Control (PSC). These entities will now need to disclose the reasons for such exemptions, bringing about a higher level of transparency. Furthermore, the conditions under which a Relevant Legal Entity (RLE) can be recorded as a PSC will also be made public, ensuring a clearer understanding of ownership and control mechanisms within companies.

New Restrictions on Corporate Directors

A significant aspect of the reforms is the imposition of restrictions on the use of corporate directors. Moving forward, only UK corporate entities with ‘legal personality’ will be eligible for appointment as corporate directors. Moreover, all directors of these corporate entities must be natural persons who have undergone a thorough identity verification process before their appointment.

The government is set to enforce these rules alongside the new Act, with specific regulations outlining the limited circumstances under which companies can retain or appoint corporate directors. Based on “principle-based” exception proposals from a December 2020 consultation by the Department for Business, Energy & Industrial Strategy (BEIS), these regulations will ensure that corporate governance standards are met.

Companies currently utilizing corporate directors will be granted a 12-month grace period to align with the new conditions. During this period, they must ensure their corporate directors comply with the stipulated requirements or proceed to resign them. New companies, or those looking to appoint a corporate director post-enactment, must immediately satisfy these conditions.

Conclusion

The Economic Crime and Corporate Transparency Act represents a significant step forward in the UK’s efforts to combat economic crime and enhance corporate governance. By making company ownership more transparent and placing stringent conditions on the appointment of corporate directors, the Act aims to foster a business environment grounded in integrity and accountability. Businesses must now prepare to navigate these changes, ensuring compliance and embracing the shift towards greater transparency and ethical corporate conduct.