Some significant reforms have been put forward in a recent BIS consultation document on corporate transparency. But has the government taken its crusade a bit too far, asks Jennifer Adams.
Last month, a post from AIA Accountancy e-News alerted us to government proposals to radically improve company transparency and boost public trust in business. At the time of writing, just over 100 AccountingWEB members had viewed the item, but perhaps more should take an interest, as the BIS paper includes some far-reaching proposals that could have a profound effect on every UK plc and private company.
By focusing on the technical accounting aspects, the AIA document misses some of the most significant company law changes. But a closer reading of the 89-page BIS ‘Transparency and Trust’ document reveals that the continuing campaign to crack down on criminals, terrorists and international money launderers will have a direct effect on ordinary sole director, private limited companies around the country.
Making larger public companies more accountable is the primary focus, but the following measures will be just as significant for private limited companies:
- Abolish the annual return sent to Companies House
- Require every company and LLP to maintain a register of beneficial owners (those who control 25% or more of a company)
- Prohibit the use of corporate directors. Currently companies must have at least one director who is a “natural” person, but the other directors can be companies. According to the BIS, “only 11,600 separate companies have corporate directors on their boards, representing less than 0.5% of all active UK companies”, but it still wants to abolish the practice for transparency reason
- Require nominee directors to disclose details of their nominator
- Abolish bearer shares (any existing shares being converted to ordinary shares).
- Tighten up regulations regarding the disqualification of directors, including a right to compensation for creditors who are victims of a director’s “fraudulent or reckless behaviour”.
As ever, the devil will be in the detail that emerges post-consultation. Some of the proposals...
Register and log into AccountingWEB.co.uk for more details of these proposals. AccountingWEB will submit a summary of comments and suggestions to BIS on your behalf.