Identity checks for those setting up and managing companies, but better protection of directors' personal information, are among a package of reforms at Companies House put forward by the UK Government in a new consultation exercise.
The proposed reforms are intended to increase the accuracy and usefulness of the information available on the companies register, which last year was accessed 6.5bn times and, as of March 2018, included over 4m limited companies.
The package includes:
- People setting up, managing and controlling companies will have their identity verified.
- Companies House will be able to query and corroborate information before it is entered on the register. This will improve the accuracy and usability of data on the register, and also make it easier and quicker to remove inaccurate information.
- In a minority of cases the register can be misused to identify personal information, which can then be used for criminal purposes. Directors will be given additional rights over their information, for example personal home addresses, while ensuring this information is still available in a transparent manner to public authorities where appropriate.
- Better information sharing by Companies House, other Government bodies and financial institutions will better protect businesses and ensure faster and more sophisticated identification of possible criminal activity.
The proposals will be underpinned by a major transformation programme to upgrade digital services at Companies House, alongside a full review of its staffing and skills requirement.
In the last three years there have been almost 10,000 complaints to Companies House from people concerned about their personal details, with worries including fraud and use of personal details topping the list.
Unveiling the proposals, Business Minister Kelly Tolhurst said they would support the fight against the use of "dirty money" in the UK and enhance the protections for entrepreneurs and directors from criminal activity. She commented: "Knowing that a company’s information is accurate and transparent is a fundamental part of a leading business environment – giving entrepreneurs and businesses the confidence they need to do business in the UK."
Edwin Morgan, interim director general of the Institute of Directors, responded: "We welcome the thrust of these proposals. The IoD receives regular complaints from its members concerning the misuse of data published by Companies House. Transparency is a key feature of UK-registered companies, but if that transparency can be exploited by criminals or fraudsters, then trust in the legal framework of business is undermined.
"We look forward to working with Companies House on new powers to monitor and control company information on its register, which will help to provide a more secure and reliable repository of corporate data."
However Nienke Palstra, an anti-corruption campaigner at Global Witness, which campaigns for openness, while welcoming the proposals as an encouraging step forward for tackling anonymous UK companies, warned: "The devil will be in the detail and unless Companies House is given full statutory powers to check the information it receives, as well as the resources to do so, money launderers will be given a free pass to continue to use UK companies for their crimes."
Among other problems regarding company ownership, Global Witness reports that
- 336,224 companies simply say they have no beneficial owner, which is allowed if no individual holds more than 25% of the shares;
- 6,711 companies are controlled by a beneficial owner who themselves control over 100 companies, suggesting likely nominees;
- 487 companies are part of circular ownership structures, where they appear to control themselves;
- 8,872 companies name another foreign company as their ultimate owner which is unlikely to be listed on a recognised stock exchange (and therefore be compliant with the rules);
- 2,083 company owners are disqualified directors;
- 136,682 officers or beneficial owners are based in "secrecy jurisdictions" such as the British Virgin Islands; and
- 228,295 companies are registered at a company factory or mailbox address, with little or no connection to the actual place of business or owner.
Click here to access the consultation. The closing date for responses is 5 August 2019.