Companies House (the UK’s registrar of companies) has begun carrying out checks to ensure that applications to register certain types of corporate bodies do not contravene United Nations sanctions. Among its many functions, Companies House incorporates and dissolves companies, makes company information publicly available and ensures that company ownership is as transparent as possible.
Financial sanctions are measures employed by governments and other bodies such as the UN to restrict the financial activity of a sanctioned person or entity (often referred to as Designated Persons). They are used to fight terrorism and prevent Designated Persons from engaging in other activities condemned by the international community. The UN’s financial sanctions form part of EU and UK law in order to prevent Designated Persons from using ‘economic resources’ (including companies) in pursuing those types of activities.
In its press release announcing these new checks, Companies House explains that forming a corporate body with a Designated Person as part of its corporate structure would constitute making an ‘economic resource’ available. This would contravene the UK sanctions regime and could expose Companies House to prosecution as a result of its role in the registration process.
Since the new checks came into force on 12 December 2018, Companies House can now reject applications to register a UK company, a limited liability partnership, a Scottish limited partnership or a societas Europaea if the details of its proposed directors, secretary, members or people with significant control match the details of a Designated Person. Rejected applications can be resubmitted, together with evidence that the relevant individual or corporate body is not a Designated Person. Companies House has stated that it will then review the evidence and decide whether or not to approve the application.
These new Companies House incorporation checks have been implemented as an addition to the rules which came into force in June 2016 requiring companies to keep a list of their ultimate beneficial owners, known as the Persons with Significant Control Register (or simply, the PSC Register). They represent a further positive step in increasing the transparency of UK company ownership and the prevention of money laundering and other crimes.
Edwin Coe LLP has experience in providing company secretarial services and can help to ensure that your company’s filings are up to date and do not contravene company law. If you are interested in learning more about these services, please contact Christophe Robert or another member of the Corporate team.
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