Companies will now be required to announce changes to their key stakeholder team within 14 days as a result of the Fourth Money Laundering Directive.
It has always been something of an anomaly that publicly available details of shareholders and other PSCs (Persons of Significant Control) are updated annually, whereas almost every other change triggers the need for a prompt announcement. Often boardroom changes are the only external indication that ownership of a private limited company has changed hands, with full details of the new owners only revealed once the next confirmation statement is filed. Details of a well-timed deal could be kept in the dark for as long as twelve months, and a quick succession of transfers may never see the light of day at all.
All of this is due to change on June 26 as a result of the implementation of the Fourth Money Laundering Directive. Current proposals are for PSC reporting to be removed from the confirmation statement in favour of prompt filing of any changes. Companies will have 14 days to update their internal PSC register, and then a further 14 days to file at Companies House.
Further changes will see rules on PSC exemptions tightened.
Interestingly, Companies House has made it clear that it plans to improve the accuracy and completeness of PSC data by introducing new compliance activities marking a distinct departure from taking information provided on trust. The new plans include contacting those with clearly incorrect data as well as the introduction of a “report it now” feature to simplify third party enquiries.
Whether or not this will see the UK becoming the most transparent place in the world to do business remains to be seen. It is consistent with recently announced requirements for overseas corporates to provide PSC information if they tender for government contracts or acquire UK property, a pioneering move compared to other developed economies. However, there are concerns that in the absence of similar requirements in other jurisdictions, the move could dampen overseas investment from legitimate sources preferring to keep activities private. Exact details of these plans are still being worked on pending the conclusion of a public consultation.
If you’d like to understand more about the Fourth Money Laundering Directive and what this might mean for your business, please contact Edward Garston, a Senior Associate in the Company Commercial Department. Call on 01708 229444 or email firstname.lastname@example.org. This article was written by Edward Garston, a company commercial solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of April 2017.