Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps his Department is taking to mitigate the issues created by nominee directors and nominee shareholders on the registers of beneficial ownership.

The register of people with significant control requires companies to register individuals who meet one of 5 conditions with relation to a company to be recorded on the company’s PSC register and that information must be provided to Companies House when the company completes its confirmation statement (formerly the annual return).

The conditions for being a PSC are:

i. Directly or indirectly holding more than 25% of the shares,

ii. Directly or indirectly holding more than 25% of the voting rights,

iii. Directly or indirectly holding the right to appoint or remove a majority of directors,

iv. Otherwise having the right to exercise, or actually exercising, significant influence or control,

v. Having the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual.

Anyone who meets these conditions for a company is a PSC. Schedule 1A to the Companies Act 2006 provides for situations where someone may knowingly or otherwise structure their company to avoid these requirements. This includes provisions for the treatment of nominees with regards to the PSC register. This states that nominees should not be included in the register and any shares they hold should be treated as being held by the person that the nominee is holding on behalf of.