Update on Changes to Public Records at Companies House
Some changes are proposed to the public records of companies registered with Companies House. These changes are in Bill before Parliament and may not be in force for some months, but it is useful to be aware of what is coming up and what your responsibilities as company directors might be this time next year.
You probably know that a company and its shareholders or directors are treated as separate persons, even if there is only one director and one shareholder. This long-established legal principle is very useful for many business purposes. However, it does make it difficult for people dealing with the company to know who really owns or controls that company.
The government through BIS (the Department for Business, Innovation and Skills), last year, produced a discussion paper looking at company ownership and transparency in the context of increasing trust. They have now followed this up with the Small Business, Enterprise and Employment Bill which, amongst other things, proposes to set up a central registry of company beneficial ownership information giving details of persons with significant control over a company.
The central registry would show who ultimately owns 25% of the shares or voting rights or can control the management of the company by other means. This is also going to apply to limited liability partnerships.
There are a couple of other features of this Bill which will include a ban on bearer shares (these are shares that are not registered to an individual but belong to whoever holds them physically) and a ban on directors that are themselves companies.
One potentially helpful suggestion is that there will no longer be the annual return to be sent to Companies House, but instead there will be requirements to notify changes and, at least once a year, to confirm that the statutory information is correct.
For those of us of a "certain age" there will be the option to remove the date of birth from the public register.
These changes affect all or us who are directors or partners in an LLP. We will aim to keep you informed and let you know how the final legislation affects your employee share plan.