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April 23, 2014

UK government proposes public register on company ownership

By Vincent Huck

UK Business Secretary Vince Cable announced a series of reforms to improve the transparency on businesses’ ownerships.

"The UK is already one of the best places in the world to start, grow and run a business," Cable said. "However, for consumers, investors and the wider public to really trust a company they need to know who is really in charge."

To that effect the business secretary’s plan includes three major measures.

First, the creation of a public ownership register which will hold information on individuals with an interest in more than 25% of shares or voting rights in a company, or who otherwise control the way a company is run.

Second, the prohibition of bearer shares. These are shares issued by a company which belong to whoever owns the physical share warrant without needing to disclose the identity of the owner as the share can be transferred imperceptibly.

Third, to limit the use of corporate directors. These are companies or similar corporate bodies that have their own legal identity and are appointed as directors of other companies.

Cable described these measures as tough actions which aim at "tackling the darker side of capitalism and the smoke and mirrors which have existed for too long".

"No longer will UK companies be able to use complex structures and trails of paperwork to hide information and keep the public in the dark," he continued.

However since it was announced early last year, the business secretary’s plan has received little support from businesses.

The Confederation of British Industry, the Institute of Directors, the Law Society, as well as accounting firms have voiced tough criticism against the proposed reform.

International accounting network Deloitte UK commenting on the trust and transparency discussion paper published in September 2013 by Cable’s department said in a statement:

"Whilst supporting in principle the premise that transparency can lead to trust, we recognize that there are valid strategic and commercial reasons why companies prefer to keep certain information about their businesses confidential."

Related linkCompany ownership: transparency and trust discussion paper

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