Legal update – The Register of People with Significant Control

On the 6th April 2016 new legislation will be enacted called Register of People with Significant Control Regulations 2016.

All limited companies must keep a public register detailing those with “significant control” over the business. This will require more than a list of shareholders and must include a description of the structure of the company and each individual’s actual control. This means that shares held by others, through trusts or nominee companies to secure the beneficiary’s anonymity will no longer be effective.

From 30 June 2016, a company’s annual return to Companies House must also contain these details.

Why is this important?

The intention is to make company ownership more transparent. The information can be used by stakeholders such as suppliers, customers and professional service organisations and will be designed to help assess credit ratings and support HMRC and other government departments with potential investigations.

Failure to comply

Nikki Ashfield, a corporate finance solicitor at ASB Law advises: “It could lead to sanctions on the directors and the suspension of the shareholders’ right to vote. The implications could result in decisions being invalid, and restrictions placed on the drawing of dividends and transfer/ issuance of shares.”

Your D&O insurers will also expect their customers to be complying with the Regulations.

What should you do about it?

Nikki also advises that: “As the requirement comes into force tomorrow, to begin with, we would recommend reviewing the register of members in your company records to ensure compliance and create the new register required by the regulations from 6 April.”