(London) Legislation requiring companies to declare publicly who are their true owners is set to be included in the Queen’s Speech in a crackdown on tax evasion and money laundering, Business Secretary Vince Cable has signalled.
Mr Cable confirmed ministers are ready to go ahead with plans for an open, publicly available register of beneficial ownership of firms in a drive against what he called the “darker side of capitalism”.
The Department for Business, Innovation and Skills said the register would require primary legislation – paving the way for the measure to be included in the Queen’s Speech in June setting out the coalition’s legislative programme for the final session of the current parliament.
The move has been warmly welcomed by anti-poverty campaigners who have long argued that the world’s poorest countries lose billions in tax revenues through the actions of firms who shield their profits through the use of shadowy “shell companies”.
David Cameron announced last October that the register – which he originally proposed as part of Britain’s chairmanship of the G8 – would be made available to the public as well as to tax authorities – a key demand of the campaigners.
Under the plans, firms registered in Britain will be required to supply information on individuals with an interest in more than 25% of the shares or voting rights, or who otherwise control the way the company is run, to a central register held and maintained by Companies House.
At the same time ministers will abolish physical ‘bearer shares’, which belong to whoever owns the share warrant and which can be transferred untraceably without the need for the owner’s identity to be listed in the company’s register of members.
The Government is also looking at imposing restrictions on the use of companies acting as directors of other companies and at better educating company directors on their duties before they start.
Mr Cable said: “For consumers, investors and the wider public to really trust a company they need to know who is really in charge. This is why I’m making sure we take tough action tackling the darker side of capitalism and the smoke and mirrors which have existed for too long.
“No longer will UK companies be able to use complex structures and trails of paperwork to hide information and keep the public in the dark.”
David McNair, of Save the Children, said the measures represented “an historic step” in the fight against corruption and tax evasion.
“For too long, shell companies have hidden vast profits behind bogus owners, while tax dodging has cheated the world’s poorest countries out of billions of pounds every year,” he said.
“These new rules on beneficial ownership will help tax authorities and corruption hunters root out secret forms of tax evasion and money laundering, which deprive developing countries of schools, hospitals and essential services.”
Joseph Stead of Christian Aid called on the Government to go further and ensure that the UK’s “tax havens” – overseas territories and Crown dependencies such as the British Virgin Islands, the Cayman Islands and Jersey – follow its lead and establish similar registers.
“We are pleased that the Government appears to have listened to our arguments on how the tax evasion and corruption that phantom firms facilitate is costing developing countries vital resources for tackling poverty,” he said.
“The UK now has the opportunity to set a new gold standard on transparency of company ownership, that other countries should be encouraged to follow.
“While we are pleased the UK is talking about encouraging the EU and G20 to follow its lead, we are concerned that there is no talk about the UK’s overseas territories and Crown dependencies.”