This will implement the Government’s ideological attempt to crack down on money laundering and financial crime in the UK, and stands to be the first of its kind in the world. It is no secret that the use of offshore companies to launder money via the UK property market is an increasing problem. The scale of the issue is in fact much larger than many might assume. Companies House recently reported that over 75% of properties currently under investigation use off-shore corporate secrecy.
That said, for the many legitimate offshore entities that choose to invest in the UK, this register will mean more administration, more fees, and more ‘red tape’, aside from a perceived loss of privacy given that information will be placed on a public register for all to see in a similar way to the PSC (People with Significant Control) Register.
Arguably, reporting requirements in some overseas territories are lax in comparison to the UK. This allows criminals to cover their tracks behind such companies by taking advantage of their comparative secrecy. By introducing the requirement, the UK Government hopes to clearly send a message that if you own property in the UK, then you will be held accountable in the UK.
It has yet to be decided how the register will work and be enforced. However, there have been suggestions that if an overseas company fails to comply with the requirements then they could face criminal sanctions as well as the ability to lose the power to sell the property.
Companies House will be releasing updates as plans develop over the next few years but have confirmed that the register is unlikely to be introduced until around 2021.
Companies House seems an unlikely bastion of moral standards, but it has a statutory obligation to reject company names that it deems too “offensive”. So it has just confirmed that last year it refused to register over 50 such applications.
As a result, there is no Blue Arsed Fly Limited, Sod it Systems Limited, or even Wags to Bitches Limited currently registered in the UK.
The Companies Act highlights that Secretary of State has the ultimate say as to whether a name is offensive or not, although statute fails to offer any additional specific guidance on what is arguably a subjective subject.
The disclosure follows a freedom of information request; Companies House has since pointed out that names can be adopted if there is suitable justification. Quite what that justification might be is a matter for the registrar.
Whether or not a name is offensive is also something of concern to the Intellectual Property Office, the public body that oversees trademark registrations. Their own guidelines stem from trademark law which is separate and distinct from company law, and these provide that marks cannot be registered if they are contrary to accepted principles of morality.
This year’s Q3 statistical release from Companies House paints a relatively encouraging picture of the UK’s corporate activity – but will it continue?
Figures show a healthy 4.4% increase in the number of registered companies when compared to the same period in 2016. This net figure takes into account those companies removed from the register in the same period due to dissolutions and liquidations, and stands 0.6% higher than at the end of Q2.
The figures, which take no account of how actively any individual company trades, show that by the end of Q3 the total number of registered companies in the UK stood at 3,961,786. Allowing for those in the process of dissolution or liquidation trims the figure to 3,703,135.
However, upon closer inspection, the quarterly figures when compared to the same period last year could be cause for concern, with Q3 2017 incorporations lagging those during Q3 2016, whereas dissolutions and liquidations both increased in the same timeframe.
Typically, Q4 is the quietest quarter of the year for company incorporations and figures for Q4 this year will be eagerly anticipated to see how Brexit jitters and a return to tighter monetary policy are impacting on corporate registration and dissolution activity.