The government has published draft legislation setting out the minimum standards for British Overseas Territories (OTs) when they publish details of the owners of companies registered there, with the requirement to develop their register within three years
The legislation – which is supported by the 14 OTs –is intended to improve corporate transparency and deter illicit finance.
The registers will mean that members of the public will be able to look up who owns a company if it is registered in an OT, and are expected to be in place by the end of 2023.
All of the OTs with financial centres already share confidential information on company beneficial ownership and tax information with UK law enforcement bodies in real time.
The agreement to introduce publicly accessible registers of company beneficial ownership marks a major step forward, with the British Virgin Islands (BVI) committing to the policy recently. Gibraltar has already introduced its register.
The draft legislation sets out the form that the registers must take and contains provisions to ensure that the information in OTs’ registers is broadly equivalent to that available in accordance with the provisions of Part 21A of the UK Companies Act 2006.
It sets a framework for territory governments to use when developing their own registers and includes a set of minimum requirements for what the government deems to be a compliant publicly accessible register of company beneficial ownership in the OTs.
In addition, the legislation provides a minimum definition of ‘beneficial ownership’. This encompasses both direct and indirect control over companies and includes, but is not limited to, control through shareholdings, voting rights or the right to appoint or remove a majority of directors.
Where an OT attaches a percentage to the type of control, this cannot be higher than 25%.
The information on an individual must include their name, country of residence, nationality, month and year of birth, and these details should be accurate and complete as far as reasonably practicable.
Where the public release of personal information would reasonably put a person at risk of violence, kidnapping, intimidation or other similar harm the information can be withheld.
The government said it expects OT registers to be proportionate to their circumstances. For example, it would not be proportionate to expect the Pitcairn Islands to produce a register as sophisticated as the Cayman Islands, as long as they make the required information available in a manner that conforms to the minimum standards set out in the draft legislation.
OTs will also be able to make public more detail in their registers than is set out in the draft legislation, for example if there are different types of corporate and legal entities registered which do not completely map across to the definitions in Part 21A of the Companies Act.
The government has acknowledged that meeting the 2023 date will be a considerable task for many OTs, given their limited resources, and especially for those that do not yet have a company beneficial ownership register. It will involve significant legislative and operational changes. It took the UK over three years to introduce its own register.
Open Ownership, a not-for-profit organisation that supports countries in implementing beneficial ownership registers, has been given funding to provide individualised assistance to all OTs, and targeted support is ongoing.