Enhancing Transparency of Beneficial Ownership Information of Foreign Companies - Response Form

Enhancing transparency of beneficial ownership information of foreign companies - response form

The discussion paper is available at:

Submissions of evidence should be emailed to clearly marked as a response to the ‘Beneficial Ownership Transparency discussion paper’. Evidence will be reviewed thereafter. If further information or clarification is required, we will make contact as appropriate.

We are therefore inviting submissions and evidence by Friday 1 April 2016 to inform our consideration of proposals to enhance.

When responding, please state whether you are responding as an individual or representing the views of an organisation. If you are responding on behalf of an organisation, where applicable, please make it clear who the organisation represents and how the views of members were assembled.

In exceptional circumstances we will accept submissions in hard copy. If you need to submit a hard copy, please provide two copies to the following address:

Transparency and Trust Team
Department for Business, Innovation and Skills
1 Victoria Street
London
SW1H 0ET

We regret that we are not able to receive faxed documents.

Respondent type
☒ / Business representative organisation/trade body
☐ / Central government
☐ / Charity or social enterprise
☐ / Individual
☐ / Large business (over 250 staff)
☐ / Legal representative
☐ / Local government
☐ / Medium business (50 to 250 staff)
☐ / Micro business (up to 9 staff)
☐ / Small business (10 to 49 staff)
☐ / Trade union or staff association
☐ / Other (please describe)

Principle

Question 1 (Page 10)

1. UK companies will have to provide beneficial ownership information under domestic legislation or declare that there are no people with significant control. Do you agree that foreign companies who want to buy land or property in England and Wales should be under a similar obligation?

☐Yes☒No☐Not sure

Comments:Companies owning property in the UK need to operate a bank account to service the needs of the company. The relevant information will be catered for under the new CRS rules. CRS needs to be given the opportunity to prove itself, and to not be confused by additional possibly conflicting bureaucracy. Furthermore, service providers to companies, including in particular companies operated on behalf of the owners are subject to relevant anti-money laundering and counter terrorist financing regimes. The same result can be achieved through implementation and policing of such regimes in the UK on those service provides required to assist in the acquisition, maintenance and disposal of UK real estate such as UK banks, solicitors, real estate, and insurers. An alternative method is to have the information provided on request as described in Q2.

Question 2 (Page 10)

1. Do you have any views on the options for holding information set out above?

Comments:Information should be on request only, using a similar approach to S793 -794 Companies Act 2006, whereby notice is given to disclose interests and an ability to restrict is provided – details cut and pasted for information……. 793Notice by company requiring information about interests in its sharesE+W+S+N.I.This section has no associated Explanatory Notes(1)A public company may give notice under this section to any person whom the company knows or has reasonable cause to believe—(a)to be interested in the company's shares, or(b)to have been so interested at any time during the three years immediately preceding the date on which the notice is issued.(2)The notice may require the person—(a)to confirm that fact or (as the case may be) to state whether or not it is the case, and(b)if he holds, or has during that time held, any such interest, to give such further information as may be required in accordance with the following provisions of this section.(3)The notice may require the person to whom it is addressed to give particulars of his own present or past interest in the company's shares (held by him at any time during the three year period mentioned in subsection (1)(b)).(4)The notice may require the person to whom it is addressed, where—(a)his interest is a present interest and another interest in the shares subsists, or(b)another interest in the shares subsisted during that three year period at a time when his interest subsisted,to give, so far as lies within his knowledge, such particulars with respect to that other interest as may be required by the notice. (5)The particulars referred to in subsections (3) and (4) include—(a)the identity of persons interested in the shares in question, and(b)whether persons interested in the same shares are or were parties to—(i)an agreement to which section 824 applies (certain share acquisition agreements), or(ii)an agreement or arrangement relating to the exercise of any rights conferred by the holding of the shares.(6)The notice may require the person to whom it is addressed, where his interest is a past interest, to give (so far as lies within his knowledge) particulars of the identity of the person who held that interest immediately upon his ceasing to hold it.(7)The information required by the notice must be given within such reasonable time as may be specified in the notice. 794Notice requiring information: order imposing restrictions on sharesE+W+S+N.I.This section has no associated Explanatory Notes(1)Where—(a)a notice under section 793 (notice requiring information about interests in company's shares) is served by a company on a person who is or was interested in shares in the company, and(b)that person fails to give the company the information required by the notice within the time specified in it,the company may apply to the court for an order directing that the shares in question be subject to restrictions. For the effect of such an order see section 797. (2)If the court is satisfied that such an order may unfairly affect the rights of third parties in respect of the shares, the court may, for the purpose of protecting those rights and subject to such terms as it thinks fit, direct that such acts by such persons or descriptions of persons and for such purposes as may be set out in the order shall not constitute a breach of the restrictions.(3)On an application under this section the court may make an interim order.Any such order may be made unconditionally or on such terms as the court thinks fit. (4)Sections 798 to 802 make further provision about orders under this section.

That said, if a register is created, something we do not support whatsoever, It is absolutely imperative that any records kept are on a private not a public register

Question 3 (Page 10)

1. Are there any additional considerations for where and how the information is stored that we should consider at this stage?

Comments:No

Question 4 (Page 10)

1. What information about their beneficial ownership should foreign companies be asked to provide?

Comments:The respondent does not believe this process to be beneficial to investment in the UK. Beneficial ownership should only relate to the direct ownership of the real estate holding company. Any queries should be referred back to the jurisdiction of administration of the company in question who will hold the information required.

Extent

Question 5 (Page 10)

1. Should the requirement to provide beneficial ownership information be applied to foreign companies that already own property or land in England and Wales?

☐Yes☒No☐Not sure

Comments:As above

Question 6 (Page 10)

1. Should the Government work with Devolved Administrations to ensure a single approach across the whole of the UK?

☒Yes☐No☐Not sure

Comments:A non-standard approach will lead to arbitrage and other inefficiencies.

Costs and benefits

Question 7 (Page 10)

1. What are the costs and benefits to business, the economy and society of transparency of the beneficial ownership of foreign companies that own land/property or wish to enter into the public contracts?

Comments:In respect of land / property the costs will be passed on to the investors, there will be no benefits for the investors, or the industries servicing the investors. Ultimately the costs will simply render the UK a less attractive place to conduct business. In respect of public contracts, the benefits will be seen in making it more difficult for UK civil servants and elected officials from participation in corrupt practices. It is surprising this information is not already a legal requirement in compliance with the Bribery and Corruption Act 2010, and therefore the need for additional disclosure is questioned.

What enforcement mechanisms should be used? (Section 5)

Question 8 (Page 12)

1. How should any new requirements to provide beneficial ownership information of foreign companies purchasing property in the UK be enforced?

Comments:Through CRS or using a similar tool that exists under S793-4 Companies Act 2006.

Question 9 (Page 12)

1. What type of sanctions do you think would be proportionate, effective and dissuasive to ensure beneficial ownership information is obtained:

a)in the case of new foreign companies acquiring land or property in England and Wales; and

b)in the case of existing foreign companies owning land or property in England and Wales (if the obligation to provide beneficial ownership information is extended to them)?

Comments:by using the same mechanisms as found under S 793-4 Companies Act as already mentioned.

Public procurement (Section 7)

Questions 10 (Page 16)

1. Do you agree that knowing the beneficial ownership information of those companies participating in public contracting will help the contracting authorities operate a fair and straight forward approach towards the procurement?

☒Yes☐No☐Not sure

Comments:the respondent questions why this is not already being done in compliance with the Bribery and Corruption Act 2010 and therefore questions the need for more legislation covering the same requirement.

Question 11 (Page 17)

1. Do you agree this £10million (procurement) threshold would be appropriate for the ideas set out below?

☐Yes☒No☐Not sure

Comments:Public procurement is at the core of bribery and corruption and anti-money laundering regulations globally place this as business of the highest risk, resulting in severe penalties for non-compliance. Given the importance placed on this issue globally the respondent questions why the UK Department for Business Innovation and Skills feels it should have a threshold when non politically connected business viz a viz general real estate ownership does not.

Question 12 (Page 19)

1. What are the potential benefits and burdens for contracting authorities and for bidders of this approach in option A (procurement)? Would it provide a proportionate way to deliver the proposal taking into account the 3-year exclusion that would apply for not providing a beneficial ownership unique identifier number?

Comments:Failure to provide for public procurement or provision of false information should be treated in the same fashion as with the due diligence process applicable to financial services in respect to anti-money laundering. Criminal sanctions should apply to both beneficial owners and any politically connected parties the owners are deemed to be connected to (such as MPs).

Question 13 (Page 19)

1. What are the potential benefits and burdens for contracting authorities and bidders of the approach in option B (procurement)? Would the 3 year exclusion period be proportionate?

Comments:As per Q12

Questions 14 (Page 20)

1. What are the potential benefits and burdens for contracting authorities and bidders of the approach in option C (procurement)?

Comments:As per Q12

Questions 15 (Page 20)

1. What are the potential benefits and burdens for contracting authorities and bidders of this variation of option C (procurement)?

Comments:As per Q12

Questions 16 (Page 21)

1. How does the approach in option D compare with options A-C in practical terms? What are the potential benefits and burdens of option D for contracting authorities and bidders?

Comments:Given the opportunity for corruption that arises from non-disclosure resulting in mis-appropriation of public funds contracting parties with the government should be obliged to disclose with exclusion and criminal sanctions for evasion.

Questions 17 (Page 21)

1. What other issues should be taken into account when considering the options outlined about procurement in the discussion paper?

Comments:The options seem to give opportunity for non-disclosure on public procurement which does not exist on private enterprise. This causes readers and respondents to have the view that the authors of the consultation process are deliberately enabling opportunity in conflict with the Bribery and Corruption Act 2010.

Questions 18 (Page 21)

1. Are there other options potentially available to Government regarding procurement, which would achieve the same aims overall, that have not been set out here? If so, what are the associated likely practical constraints and benefits?

Comments:Click here to enter text.

International benefits from the new approach (Section 8)

Questions 19 (Page 22)

1. Would the approach proposed in this paper help developing countries combat corruption in the manner described above?

☐Yes☒No☐Not sure

Comments:Click here to enter text.

Questions 20 (Page 22)

1. What would be required from foreign governments in terms of access to local company and personal records in order for the England and Wales register to operate in support of developing countries?

Comments:For them to have records that are accurate and transparent. This is not likely. As always authorities that want to comply will, and those that don’t want to comply will find a way not to. There is a danger that these regulations will in themselves send business to less regulated jurisdictions. The CRS mechanisms is the most likely approach which will succeed.

Do you have any other comments that might aid the consultation process as a whole?

Please use this space for any general comments that you may have, comments on the layout of this consultation would also be welcomed.

It is essential that you give consideration to how these changes may discourage investment into the UK, and force business to less well regulated jurisdictions who are prepared to flout the rules.

The issues that this is intended to address are also being addressed in the EU 4th AML Directive and the outcome of this should be monitored prior to making separate moves here.

Thank you for your views on this discussion paper. Please be aware that we intend to publish the responses.

Information provided in response to this discussion paper, including personal information, may be subject to publication or release to other parties or to disclosure in accordance with the access to information regimes. Please see section 12 of the paper for further information.

If you want information, including personal data, that you provide to be treated in confidence, please explain to us what information you would like to be treated as confidential and why you regard the information as confidential. If we receive a request for disclosure of the information we will take full account of your explanation, but we cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the department.

I want my response to be treated as confidential ☐

Comments: Click here to enter text.

Thank you for taking the time to let us have your views. We do not intend to acknowledge receipt of individual responses.

At BIS we carry out our research on many different topics and consultations. As your views are valuable to us, would it be okay if we were to contact you again from time to time either for research or to send through consultation documents?

☒Yes ☐No

BIS/16/161RF