In my last blog, I
looked at automatic exchange of information regimes and this blog carries on
the transparency theme but in the sphere of corporate transparency.
Britain is ‘having a
transparency moment’, as some might say.
Regular readers of this blog will know that Britain has already
introduced a public register of beneficial ownership and control of UK
companies and Limited Liability Partnerships (see my blog of 24 March 2016),
being the first of the G20 countries to do so.
However, it appears that matters will not stop there.
In March 2016, the UK
Government published a discussion paper on ‘Enhancing transparency of
beneficial ownership information of foreign companies undertaking certain
economic activities in the UK’.
Ownership of UK property by non-UK companies is singled out because of
the potentially large sums of money that can be invested in it. The paper reflects on whether information
should be made public and indicates that the existence of a public register, or
otherwise, in the company’s jurisdiction of incorporation may have a bearing on
the matter.
The paper envisages
that only new purchases of property would be affected. However, on 19 May, ahead of the
international Anti-Corruption Summit hosted in London, Prime Minister David
Cameron announced that a public register would be introduced and offshore
companies who already own UK property would be included as well. The Government believes that 100,000
properties will be affected.
If you think that all
this is a peculiarly British phenomenon though, think again. The Government’s website records that, as at
13 May, 40 jurisdictions worldwide had committed to the automatic exchange of
beneficial ownership information, including all three of Britain’s Crown
Dependencies (Jersey, Guernsey and the Isle of Man), though not necessarily in
the form of public registers. However,
it seems that the Government may not have anticipated some opposition. Shortly after the Summit, Jersey Finance
(which represents Jersey’s financial sector) questioned whether the measure was
proportionate to the perceived threat.
However, perhaps its concern that the measure could mark a ‘major
reassignment of capital investment away from the UK’ will diminish if the
movement morphs into another global standard which many more jurisdictions sign
up to. Since then, the Cayman Islands’
premier has indicated the Territory would be reluctant to sign up to exchanging
information unless the US does so first and the confidentiality and security of
the data exchanged can be guaranteed.
Of
course no professional adviser will disagree with the Government’s stated aim
of pursuing transparency of beneficial ownership which, according to the
discussion paper, is primarily in aid of ‘combatting illicit financial
flows’. As the Government admits, the
vast majority of offshore companies are used for perfectly legitimate reasons
and they, and their shareholders, pay their taxes. However, as the Caymans’ stance makes perfectly
clear, exactly who will be responsible for safeguarding that information and
how effective those processes will be is also a legitimate concern of families
who, for reasons of privacy, use corporate entities to hold their wealth. 
