Policy paper

Factsheet: improving transparency of company ownership

Updated 26 October 2023

What is the government doing and why?

Through the Economic Crime and Corporate Transparency Bill (“the bill”), and through regulations, the government will improve the transparency of company ownership.

A core purpose of the companies register is to provide details of company ownership. However, users of the companies register, for instance those who use the companies register to confirm basic information about a company or to carry out due diligence work, have reported that there are­­ some problems with the way company ownership data is recorded.

The government is introducing measures in the bill to improve transparency requirements of companies, including to increase the usefulness of the information held on the shareholders, subscribers and guarantors (referred to collectively as members). These measures will mean that users of the companies register will have more certainty as to who they are doing business with, build confidence in the integrity of the companies register, and prevent bad actors from exploiting the register.

How is the government going to do it?

The government will introduce measures that will improve the usefulness of information held on the owners of companies by:

• introducing a requirement for companies to record the full names of shareholders who are individuals, or the names of corporate members and firms, in their registers
• introducing a requirement for certain companies to provide a one-off full shareholder list: this will enable Companies House to display shareholder information in a more user-friendly way
• providing powers to companies to ensure member information is provided and kept up to date, and duties for members to provide their information and keep it up to date, with offences for failing to comply with the new requirements without a reasonable excuse
• introducing a requirement for non-traded companies to retain old information about a member where it changes
• refashioning existing duties on companies to collect information about their PSCs, place it on registers maintained by the companies and report the information to the registrar, so those duties now form part of a legal regime in which  a PSC register for all companies is held centrally by the Registrar
• aligning the time periods within which information notices must be sent in relation to the People with Significant Control (PSCs) of companies
• introducing new duties for companies to report pre-incorporation changes in PSC information to the Registrar and to send information notices to third parties to obtain information about their PSCs
• amending false statement offences in line with other similar offences
• streamlining reporting obligations where a company has no PSC, or has not yet been able to confirm who its PSC is
• taking powers to make regulations, including to a) create further duties to notify information in relation to PSCs, b) require companies to collect more information about their members and subscribers, and c) ensure information can be protected as appropriate

The government will also do the following through regulations made under the Companies Act 2006:

• collect and display more information from companies claiming an exemption from the requirement to provide details of their PSCs, including the reason for the exemption
• collect and display the conditions satisfied to which allow a relevant legal entity (RLE) to be recorded as a PSC

How will the measures affect the submission of member names?

Currently the Companies Act 2006 requires companies to provide names of their members, but “names” is not defined. The bill will introduce a requirement for companies to record the full names (i.e. forename and surname) of all company members who are individuals, or the names of corporate members and firms, in their registers, for instance ‘Trevor Smith’ as opposed to ‘T Smith’.

The government will also introduce a one-off requirement for private companies, and traded companies where shareholders hold at least 5% of the issued shares of any class of the company, to provide a full list of shareholder names.

What additional information will companies claiming a PSC exemption have to provide?

Companies claiming an exemption from providing PSC information will, under forthcoming regulations, be required to state why they satisfy the conditions for an exemption and if listed they must say which market they are listed on and where information on their shareholders can be found.

Exempt companies must provide the information via their confirmation statement.

This information will be publicly available on the register.

What additional information will companies owned and controlled by a “relevant legal entity” (RLE) have to provide?

Companies notifying that a RLE is their PSC will be required to state the conditions satisfied to be recorded as a PSC, and if the RLE is a listed company they must say which market they are listed on.

This will give assurance that the RLE meets the conditions as claimed.

What is the effect of non-compliance with any of these measures?

Those that do not comply may face criminal or civil sanctions.

When will these measures come into effect?

These measures will require consequential changes and new secondary regulations and guidance, as well as system development, following Royal Assent of the bill.

From the date the relevant measures in the bill come into force:

• companies must provide a full list of shareholder names via the next confirmation statement which falls due
• companies incorporating will have to provide full names for individuals, or the names of corporates and firms, for subscribers or guarantors
• companies will have the powers to ensure member information is provided and kept up to date, and members will be under duties to provide their information and keep it up to date, with offences for failing to comply with the new requirements without a reasonable excuse
• non-traded companies must retain old information about a member where it changes
• companies will have to send all information notices in relation to their PSCs within the same time period
• companies will have new duties to report pre-incorporation changes in PSC information to the Registrar and to send information notices to third parties to obtain information about their PSCs

From the date the relevant measures in regulations come into force:

• existing companies with a RLE must provide the information via the next confirmation statement due
• existing companies claiming an exemption must provide the information via the next confirmation statement due
• companies incorporating and stating their PSC is a RLE must provide the information as part of the incorporation application
• companies notifying Companies House that a RLE is a PSC must provide the information as part of the notice

The information as set out above for shareholders, companies claiming an exemption from the PSC requirements, and those providing a RLE as their PSC, will be publicly available on the register.

What is the government doing to tackle the misuse of nominee arrangements?

The government is aware of persons who market secrecy via nominee service providers and considers more could be done to deter this through the bill. The bill inserts new section 790IA (Power to impose further duties involving nominee shareholders) into the Companies Act 2006. This allows the Secretary of State to make regulations to make further provision for the purpose of enabling a company to find out who its PSCs are in cases where shares are held by a nominee.

This could include, amongst other things:

• imposing further obligations on companies to find out if they have nominee shareholders and, if so, for whom they are holding shares; and
• imposing further obligations on nominee shareholders to disclose their status, and for whom they are holding shares

The government is wary of imposing disproportionate burdens on legitimate businesses and investors. Before making any regulations, the government will work with relevant stakeholders to ensure burdens can be targeted effectively.

Assuming burdens can be targeted appropriately, the government will deliver such regulations in time for the resulting obligations to be delivered by Companies House as part of their wider transformation programme.