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Beneficial owners under the spotlight

The UK Prime Minister David Cameron has announced his intention to create a new central registry of ‘beneficial owners’ of UK companies.

In many UK companies, the legal owner may not be the one who benefits most or has the most control over the workings of the business. Whilst this is legitimate in the majority of cases – for example somebody buying shares through a broker will be the beneficiary of any profits made, whilst the shares remain in the broker’s name – there have been concerns that the system is being used for tax avoidance or money laundering purposes.

The registry will contain information relating to individuals who hold 25 per cent or more of a company’s shares or voting rights, and to those who control the way the company is run. The information will be collected and the registry held by Companies House, and the registry will be available to the public.

It is estimated that in around 400,000 companies, the beneficial owner will be different to the legal owner. The register is not expected to apply to public companies listed on the Main Market of the London Stock Exchange, as there are already stringent rules in place for these. The government is considering whether to include other legal entities such as limited liability partnerships.

Whilst the move has been praised by some, others have criticised the public nature of the registry. In many cases, it is argued that there are many legitimate reasons why someone might wish to keep their ownership private. Some companies may be exempt, for example if someone may be at risk if their identity is revealed.

A formal response and proposals are expected from the Department for Business Innovation & Skills during the first half of this year.

Not sure about the best way to structure your company? Are you worried that you may fall foul of the various new rules being implemented? Here at St Matthew we make it our business to keep abreast of all and any changes to legislation, so we know how any changes will affect your business. Visit stmworldwide.com/services-solutions for our full range of services.

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