Responses were invited to the following question:
Q13. Do you agree with the principle that identity checks should be extended to existing directors and People with Significant Control? Please give reasons.
Views received
130. 74% of respondents agreed with the proposal that identity checks should be extended to existing directors and people with significant control. Respondents were keen to ensure consistency in the reliability of data across all parts of the register and to avoid creating a major loophole leading to a two-tier system.
131. Respondents highlighted the need for a transition period to prepare companies and, given the number of individuals involved, to consider a phased approach in order to spread the workload for Companies House.
132. Of the 14% of respondents who disagreed, some raised concerns over the volume of checks required and difficulties in assuring compliance. Some disagreed due to the increased burden on businesses or thought that the measures were
disproportionate given the relatively high level of accuracy on the register.
133. Some respondents from the legal sector suggested that requiring existing directors to verify their identities could cause issues about the legality of board decisions if failure to verify were to affect their legal status as a director. There were some suggestions of alternative options to ensure the credibility of information on the register, such as identifying red flags in the data and addressing concerns about false data in the register.
Government response
134. We will proceed with the proposal to extend identity checks to existing directors and people with significant control. This will help to ensure the entire companies register is built upon accurate, reliable data.
135. There are approximately 10 million existing directors and people with significant control. We will therefore take a carefully managed approach to implementation, giving companies and individuals sufficient time to comply with the new requirements.
136. Alongside a comprehensive communications strategy, we will consider the most effective ways of achieving compliance with the new requirements. For example, we could use annual confirmation statements as a means to prompt identity checks. Filing
dates are spread throughout the year, so it could be a practical way of dealing with the volume of individuals who will need to verify their identity.
137. We will also introduce sanctions for those companies and individuals who do not comply with the requirement to verify the identity of existing directors and people with significant control, recognising the concerns raised by some respondents about the possible adverse effect on board decisions and the legal status of directors.
Summary way forward
• We will proceed with the proposal to extend identity checks to current directors and people with significant control.
• We will allow companies a transitional period to comply with the new requirements but have sanctions available for those who do not comply by the end of this period.
Chapter 4: Requiring better information about shareholders
Information on shareholders
Responses were invited to the following question:
Q14. Should companies be required to collect and file more detailed information about shareholders?
Q15. Do you agree with the proposed information requirements and what, if any, of this information should appear on the register?
Views received
138. While there was some support (52%) for the proposition that companies be required to collect and file more detailed information about shareholders, it was noted that much of that support was predicated on an assumption that additional information would be made publicly available. Chapter 10 of the consultation document explained that the intention was rather to restrict access to such information to Companies House itself and to other public authorities. Of the 33% of respondents who disagreed with additional information requirements, accountancy bodies, along with legal and business representative organisations were not convinced that a case had been made that there would be demonstrative benefits which would outweigh the additional burdens that would be imposed on business. Business representative bodies were particularly concerned about burdens on those companies with a high volume of share turnover.
Other arguments against included a fear that employees share ownership schemes would be discouraged and the view that more demanding information standards already existed where it was relevant and appropriate in the form of the PSC framework. Those against also warned that further information requirements might be circumvented through the use of nominees and corporate vehicles. Those who disagreed with the principle of collecting more information did not generally respond on the question of what information should be collected.
139. While the credit industry was in favour, its enthusiasm was coupled with the view that credit reference agencies should have access to the information. Representatives from the banking and financial services sector agreed with the proposal but had
concerns about what would happen in merger/acquisition scenarios. Law enforcement bodies supported the principle of further access to information, and suggested that shareholders national insurance number should also be collected. Passport numbers, email addresses and phone numbers were amongst other suggestions. Civil society groups, for example, thought that the same information should be collected as for PSCs. A number of other respondents made suggestions about what information should be collected for corporate shareholders.
140. A small number of respondents made the point that the effect of the proposed exemption for traded companies would be to require more information from small and
companies. Some respondents also thought that more information should be required where the shareholder was a corporate entity, particularly a foreign company.
141. As far as disclosure of information on the register was concerned, many respondents (both in favour and against the proposal) made similar points about the need to ensure that information which is publicly available does not include personal information which would put individuals at risk, e.g. of identity theft or other harm. There was, however, less consensus around what information should be made available on the register. A few respondents thought shareholder identity verification in itself (see Q16) should be sufficient.
142. A number of respondents stated either that they did not understand the question or that they did not know what the current information requirements were for
shareholders. A number of responses confused information requirements for
shareholders with those for directors. Some respondents thought that information about shareholders should be available (either from the company itself or from Companies House) on request only. A couple of respondents also raised the issue of the public availability of a company’s Single Alternative Inspection Location (an address other than that where a company may hold its registers) on the Companies House register where this location was also a person’s residential address.
Government response
143. Given the restricted access the consultation envisaged, we agree on balance with those who felt that an insufficiently strong case had been made for the collection of the additional data proposed. In the meantime, recognising there is scope to make it easier to access company shareholder information, we propose to take forward action to require companies to provide full names for shareholders. At the same time,
Companies House will look to improve the format of the information by allowing users easily to view and inspect a full list of shareholders. This list will be updated annually at a company’s confirmation date. This will be a marked improvement on the present situation where forming a comprehensive picture of current share information requires research through historic filings. Introduction of this facility may require every company to file a full, one-off shareholder list.
Summary way forward
• We will restrict the additional shareholder information requirement to the collection and reporting of full shareholder name.
• In parallel, Companies House will make it easier for users to view a full list of company shareholders to enhance the transparency of current shareholder information.