The UK’s coalition government’s business secretary, Vince Cable, has announced plans to make it easier to identify the individuals that are the major shareholders of companies based in the UK. The new scheme which requires parliamentary approval to become law, would require that anybody holding 25% or more of a company’s shares would need to be identified on a public register. The move is designed to boost transparency and crack down on tax evasion, tackling, as Mr Cable put it, “the darker side of capitalism”.
Announcing the initiative, 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."
The new register would be held by Companies House and would need to be updated on an annual basis. If approved, the plans would see an end of “bearer” shares which give rights to the holder anonymously and can be transferred readily. It is also planned to bring an end to companies (rather than individuals) being able to be directors of ventures. The move ought to make it more difficult for shell companies to engage in tax evasion practices (tax avoidance, however, remains perfectly legal).
The G8 and the G20 both stated last year that they wanted to see concerted international efforts to end tax evasion which costs exchequers many billions of pounds collectively. Parliaments will need to legislate to tackle tax avoidance measures whereby companies use strategic accounting to legitimately minimise their tax obligations.