Law Society calls for more clarity on PSC register rules
Law Society specialists last month gave evidence before the House of Commons on proposed new legislation, under which companies would need to take steps to investigate and obtain information on PSCs and to keep that information up to date.
The society, which warned that the new obligations would need significant clarification before they come into force, said that while it considered it a positive move for the UK to show leadership on issues relating to company ownership transparency, it was “concerned” that the UK would be put at a competitive disadvantage compared with jurisdictions that fail to introduce such changes at the same time.
A spokesman said that, in evidence, the Law Society had taken the opportunity to correct a common misconception that it was always easy to know who had significant control of a company, adding: “Due to the complexity of some company ownership and control arrangements, it may not be clear that a clause setting out events which, if they occur, would result in a change of control has somehow been triggered by a particular event.
“This means that, in addition to other owners being unaware of a change in control, the parties themselves who are now in a position to exercise control may also be unaware of that fact.
“Given that the legislation, if enacted, would introduce criminal sanctions for failure to comply with these new obligations, we are calling on the government to further clarify the steps that companies must undertake to ensure they remain compliant.”
Kathleen O'Reilly, chair of the society’s company law committee, added: “The Law Society is very pleased that the Department of Business Innovation and Skills has engaged with us on this proposed legislation and hopes it will continue to do so, to help ensure legislation that, if enacted, is easy to comply with and imposes the minimum administrative burden on companies and their controllers.”
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