Company law specialists have cautiously welcomed the government’s approach to requiring all companies to declare their beneficial owners. A discussion paper published last week by the Department for Business, Innovation & Skills proposes creating a register of beneficial owners to meet a commitment set out at last month’s G8 summit.
The paper, Company ownership transparency and trust, also announces a review of the use of pre-pack administrations, which was the vehicle through which national firm DWF acquired the collapsed Cobbetts earlier this year.
Company lawyers and the Confederation of British Industry had raised concerns about the burden of complying with the new regime. ‘We do not want the rule to turn the clock back to incorporation taking days rather than hours,’ said Kathleen O’Reilly, chair of the Law Society’s company law committee.
There is currently no requirement for privately held companies to hold information on beneficial owners as a matter of course. Business lobbies are expected to urge the government not to apply a regime similar to anti-money laundering rules to company formations, but simply to extend the requirements already applying to listed companies.
O’Reilly said she was encouraged that the government had published its proposals for discussion rather than ‘setting them in stone’.
‘Clearly BIS are interested in the views of practitioners, which is good news. We are keen to ensure the attractiveness of UK company law is maintained. We welcome the opportunity to consider the objectives and the detail of the BIS action plan, including, for example, on how BIS sees the proposed beneficial ownership register working in practice and what the proposed role of Companies House will be.’
The review of pre-pack deals follows a call by the BIS select committee earlier this year, which said such deals are not transparent enough to unsecured creditors. The review will report back early next year.