The Small Business, Enterprise and Employment Act 2015 received Royal Assent on 26 March 2015 and makes important changes to the law relating to the disclosure of interests in companies. Of particular note is that, as from 1 April 2016, private companies will be required to keep a public register of people (and entities) who have “significant control” over the company, details of which must, from 30 June 2016, be publicly disclosed to Companies House annually.
A person will have “significant control” if he (alone or jointly with others):
- holds, directly or indirectly, more than 25% of the shares or voting rights in the company;
- holds the right, directly or indirectly, to appoint or remove a majority of the board of the company; or
- has the right to exercise, or actually exercises, significant influence or control over the company.
It is significant that ultimate beneficial owners will be caught by under the new disclosure requirements because “indirect” holdings covers majority stakes in any legal entity that in turn either:
- holds the share(s) in question; or
- is part of a chain of legal entities:
- each of which has a majority stake in the entity immediately below it in the chain; and
- the last of which holds the share(s) in question.
A person will have a “majority stake” in a company if he:
- holds a majority of the voting rights in the company;
- is a member of the company and has the right to appoint or remove a majority of the board of directors of the company;
- is a member of the company and controls alone, or pursuant to an agreement with other members, a majority of the voting rights in the company; or
- has the right to exercise, or actually exercises, dominant influence or control over the company.
Under the new provisions, obligations are placed upon both the company and those with “significant control” in the company. The company must investigate, obtain and update information on the registrable persons, and those registrable persons must disclose their interests to the company (whether or not any request for disclosure is made of them by the company). Failure to comply with the obligations may result in criminal penalties.
The key effects of these changes are that individuals and other entities will no longer be able to remain anonymous as shareholders of a company by holding shares through a nominee or a chain of ownership, and companies will now have additional responsibilities to ensure that they comply with their statutory obligations to maintain their registers.