The beginning of the end of corporate secrecy?

April 2014

IN THIS ISSUE

— Proposed United Kingdom Company Registry Changes Could Increase Disclosure

GREETINGS!

Welcome to the April edition of our newsletter! In this issue, we’ll examine the potential ramifications of proposed changes to the United Kingdom’s corporate registry.

PROPOSED UNITED KINGDOM COMPANY REGISTRY CHANGES COULD INCREASE DISCLOSURE

In late April 2014 Vince Cable, the United Kingdom’s business secretary, announced legislation that would make public all beneficial owners of United Kingdom-registered companies; currently if an investor uses a company located elsewhere, such as in the Cayman Islands, to own a portion of a company, the true owners of that foreign company are not disclosed in United Kingdom records. If someone wanted to identify the owners of the foreign entity, they would have to search in that country’s records — typically somewhere that was opaque for a reason: to encourage investment and discourage disclosure.

The new legislation would counter that, theoretically making identification of true owners a much quicker and cost-effective proposition. Opponents have countered that the new regulations will drive down investment, but proponents claim that the rules will make it much harder for corrupt businesspersons and government officials to carry out their misdeeds, previously perpetrated across a web of shell companies. While it remains to be seen how thoroughly the new measures are implemented and enforced — let alone whether such trends are duplicated in other countries — these developments may make it easier for a business to know who they’re truly dealing with.