DRAFT REGISTER OF PEOPLE WITH SIGNIFICANT CONTROL REGULATIONS 2016 DRAFT LIMITED LIABILITY PARTNERSHIPS (REGISTER OF PEOPLE WITH SIGNIFICANT CONTROL) REGULATIONS 2016

Richard Fuller Excerpts

Monday 22nd February 2016 General Committees

[Anna Soubry]

It is a pleasure to serve under your chairmanship, Mr Rosindell. This area is covered by an uncontentious Act of the previous Government. There was much collaboration and co-operation between both sides and an important part of the legislation is now being introduced through regulations. I will not go into all the detail. My officials have kindly provided me with a speech that might, with a fair wind behind me, take me 15 minutes to read. In any event, the regulations are clear about what they set up and why. I want to deal with why the regulations are now before us. In 2013, the Prime Minister set out the UK’s ambition to improve corporate transparency and tackle criminal abuse of UK corporate entities. The regulations, which I am pleased we are considering today, underpin the detail of the register of people with significant control and bring that ambition one step closer to reality.

The register is the central pillar of the United Kingdom’s ambition to increase the transparency of UK corporate entities. It will record the people who own and control UK companies, limited liability partnerships and societates Europaeae—a little-used pan-European form of company. Information about the ownership and control of UK corporate entities will bring benefits for law enforcement, business, civil society and citizens. By making such information publicly available, free of charge, via a central register, the Government are setting the standard for open government that we are encouraging international partners to follow. It was therefore gratifying to see that the Dutch Government recently announced their intention to make public their beneficial ownership register.

The register of people with significant control, or PSC register, will record the details of those who own or control UK companies. There are five conditions for being a PSC: an individual holds, directly or indirectly, more than 25% of a company’s shares; an individual holds, directly or indirectly, more than 25% of the voting rights in a company; an individual holds the right, directly or indirectly, to appoint the majority of the board of directors; an individual has the right to exercise, or actually exercises, significant influence or control over a company; and, finally, the trustees of a trust or the members of a firm that is not a legal person would meet one of the first four conditions in relation to a company, or would do so if they were individuals, and have the right to exercise, or actually exercise, significant influence or control over the activities of the trust or the firm.

The regulations set out the detailed requirements for the PSC register and are self-explanatory, so, as I said, I will not go into the details. In short, they set out the scope of the register, the fees that a company can charge for providing copies of its own register, the information to be included on the register, the contents of warning and restriction notices, and how the protection regime will work for PSCs at risk of harm through their information being made public. The limited liability partnership regulations, or LLP regulations, apply the provisions contained in part 21A of the Companies Act 2006 and the companies regulations to limited liability partnerships with appropriate modifications.

Rather than going into all the details, I will happily take questions and answer them as best I can. The regulations are an invaluable part of improving corporate transparency in the United Kingdom.

[Richard Fuller (Bedford) (Con)]

My right hon. Friend says that she will answer questions, so I will get mine in early. Do these regulations come under the one-in, two-out rule for regulation, and can she give some advice on what the consequential changes to other regulation will be when she sums up the debate?

[Anna Soubry]

Of course I undertake to answer my hon. Friend’s question. As he will know, with all regulation we are absolutely determined—and indeed we do this—to check the cost, if any, to business and to mitigate it in any way we can; and in any event we have as an overarching principle the absolute determination to cut red tape and to reduce bureaucracy and regulation as much as we can.

--- Later in debate ---

[Anna Soubry]

I am afraid I cannot. I would be delighted if the figure that I had been given is wrong and the one that the hon. Gentleman has is correct. One thing that is for sure is that if I am wrong—if the figure I have been given is incorrect, as I hope it is—I will happily write to all members of the Committee to correct that. If the hon. Gentleman is right, that will be good news all round. Obviously, we are determined to make sure we keep the cost as low as possible. The regulations are serious and important, with the aim of tackling a genuine problem; it is sometimes a mark of their seriousness that such things cost money. However, I will sort that matter out.

[Richard Fuller]

Of course the Minister will come back with the answer, and I very much appreciate that. However, the Government’s objective over the next five years is to reduce the burden of regulation by £10 billion. So if the figure is close to the Minister’s number, and the matter is out of scope, it rather calls into question the veracity of the Government’s deregulation agenda. If we can have an extra £1 billion of regulation that is out of scope, while we are trying to get rid of £10 billion, that seems a matter of concern. Can the Minister assure the Committee that she will not only validate the number but consider the issue of what is in scope or out of scope about the regulations, and perhaps give us some advice on that?

[Anna Soubry]

I think the best thing I can do, although I am always happy to talk to my hon. Friend, is to write to him in more detail. We have saved a huge amount of money—around £5 billion—for businesses over the past five years through deregulation, and it is now accepted that we are one of the best places in the world to do business, specifically because we do not over-regulate in the way that we did. We have made huge strides. There is more to be done in the next five years, but we have made enormous progress, which is now being recognised. When I meet smaller businesses and, notably, the Federation of Small Businesses, they do not complain as they used to about the amount of regulation, but it is absolutely accepted that more can be done.

On the question asked by my hon. Friend the Member for Totnes, I am told that the Act introduced robust penalties to deter and sanction those who seek to misuse UK companies. Those penalties will, of course, support law enforcement tax authorities’ existing powers of investigation. The details, if I may be so bold, are in the Act, but if she would like me to point to them, I am more than happy to do so. However, as I have said from the outset, this is a serious piece of work due to the nature of the threat to the security of our nation, particularly in the business sector.

I agree with some of what the hon. Member for Nottingham North said, but it is often the case that the United Kingdom is doing all that it can, and this is a good example. Others will no doubt come and play, but we cannot force other countries to follow our example, any more than we can force companies registered in other countries to abide by our law. That has always been the case, and rightly so.

I hope that I have been able to answer right hon. and hon. Members’ questions. It is an important new regime for companies, increasing the transparency of who owns and controls UK companies. It is important to maintain the United Kingdom’s high standards of corporate trust. Anti-corruption is a key priority for this Government, and our Prime Minister has taken a serious personal interest in it. I know that there is, quite rightly, cross-party support for the issue.