Company owners and directors under spotlight

The Government has announced plans for a publicly available register of company ownership. Under the plans, businesses registered in the UK will have to supply information on individuals with controlling company interests to a central register held by Companies House.

Individuals who own more than 25 per cent of the shares or voting rights of a company, or who control the way a firm is run, will be required to provide their information.

Other proposals include:

  • a ban on 'bearer shares' - where the owner's identity doesn't have to be entered into the company's register of members
  • restrictions on companies acting as directors of other companies.

Business Secretary Vince Cable said:

"For consumers, investors and the wider public to really trust a company they need to know who is really in charge. 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."

The Institute of Directors (IoD) welcomed the plans for greater transparency, as did the Confederation of British Industry, though the latter said it was vital to distinguish between legitimate equity investment and the "illicit financial activity targeted by this new measure."

Reckless directors face tougher penalties

In a separate announcement, Vince Cable said that he plans to introduce tougher penalties for disqualified company directors.

Directors can currently be disqualified for abusing the corporate and insolvency regimes or for treating creditors unfairly. Around 1,200 directors are disqualified each year.

Measures include:

The Government could ask the court to award compensation to victims of disqualified directors
Judges would have to consider a wider range of matters when considering whether to disqualify an individual
A conviction for an offence relating to a commercial matter overseas could see a director barred in the UK.

The IoD's Dr Roger Barker welcomed the proposals:

"The buck stops with the board, and the public rightly expects directors to maintain the highest standards. Most directors take their role extremely seriously, and will not be affected by the measures announced by the Government today. However, the growing extent of directors' responsibilities and potential liabilities highlights the need for proper induction and training for those that are assuming significant board roles."

Are you a company director or owner? Talk to us about these proposed reforms and what they would mean for your business.