Transparency & trust in UK corporates: who really owns and controls them

Confirming plans for a register of companies’ beneficial ownership and to increase accountability of directors, the Government this week published a response to its paper ‘transparency and trust: enhancing the transparency of company ownership and increasing trust in UK business’. Vince Cable is reported to have said that “..for consumers, investors and the wider public to really trust a company they need to know who is really in charge.  This is why I’m making sure we take tough action tackling the darker side of capitalism and the smoke and mirrors which have existed for too long.”  The plans are a result of substantial lobbying in the UK and internationally for greater transparency in relation to corporate structures and control in the interests of fighting crime and tackling tax evasion.  If implemented as proposed, the plans will not only result in a major shift in the ability of business owners to keep their investments confidential, through the implementation of a public register of ultimate ownership, but also address issues relating to the accountability of those acting as directors and those who seek to control them.  The Government has been lobbying proactively, notably in the context of the G8, G20 and the EU, for other countries to take what it describes as “equally ambitious action”, but it is not yet clear how far other jurisdictions will follow suit.  We have been looking at the proposals in more detail and assessing the implications for UK corporates and their investors and managers.   Some commentators are concerned that by leading the way on this, UK business could be disadvantaged, particularly if we make the changes ahead of (or which go further than) other jurisdictions.  Other criticisms centre around privacy concerns for the many legitimate investors in UK business – are the Government going too far by requiring yet more information about individuals’ interests to be made public?

We have commented further on the potential implications of the proposals in the links below.  But we are interested to know what you think.  If you are a business investor or family in business, do you structure your affairs to maintain a certain level of confidentiality in your arrangements, or are you happy to accept that the interests which you hold will be available in a public registry?  Please do let us know your views by leaving a response below.

For more information please contact:

Kate Higgins


Legal Director, Corporate
+44 207 440 7433

Kate Higgins


Professional Support Lawyer, Corporate
+44 207 406 6259

3 Responses

  1. Raza Khan

    This is a finely balanced issue. On one hand, allowing creditors or third party debt collectors to bring claims directly against directors and others, rather than insolvency professionals, could potentially expose directors to frivolous or vexatious claims. This could arguably stifle entrepreneurism by discouraging those starting up new businesses from putting themselves forward as directors and could also prevent certain (perfectly legitimate) transactions from being completed in view of this additional liability risk. Equally, the insolvency legislation empowers administrators and liquidators with certain powers and claims which it may not be appropriate to transfer to other parties who do not have the same statutory or regulatory duties as insolvency practitioners. If such rights/claims were capable of being transferred, existing insolvency legislation would require fairly significant amendment.

    Conversely, insolvency practitioners are frequently prevented from brining claims due to a lack of funding. If such claims were assignable then it is likely that the number of claims that are brought will increase significantly which will have the effect of increasing recoveries for creditors and also act as a disincentive to directors to act in such a way as to dissipate the assets of an insolvent company.

  2. Anonymous

    You have to question how effective this would be in any event. Those that want to hide their identities are likely to use off shore jurisdictions where bearer shares and trusts can mask the ownership. Trust companies in those jurisdictions are extremely unlikely to respond to any UK company’s requests for information. For those that have nothing to hide, is this really an issue?

  3. Nadim Meer

    If the statutory duties of directors are going to be applied to shadow directors and those seeking to control directors, it will be important not to impede unduly the legitimate corporate governance practices of private equity investors. Whilst the government is right to be concerned about “those who seek to control a front director to no good end”, there is legitimate use in the private equity sphere of directors who are appointed to represent private equity investors.