My Lords, I am grateful to the noble Lords, Lord Flight and Lord Borwick, for their amendments. I thank them and the noble Lord, Lord Naseby, for the many points that they have made at a series of meetings and in correspondence, and express the hope that they will encourage business representatives with an eye for simplicity to help with the implementation process so that it is as business friendly as possible.
We are reasonably confident about our 2016 timeline. We have clear plans in place at Companies House which are already being implemented. All being well, we are on track to meet our 2016 deadline. I know that there can be problems with software, but that is the plan.
Amendments 39 and 40 would allow a company’s own PSC register to be held solely at Companies House. I agree that flexibility is important. That is why the Bill gives private companies the option of holding their company registers solely at Companies House. However, it is important that companies can continue to hold their own register at their registered office, service provider’s office or other suitable location should they wish to do so.
Amendments 41 and 43 would restrict access to a company’s own PSC register to law enforcement and tax authorities. Amendments 55 and 56 would do likewise in respect of PSC information held centrally at Companies House. As I explained during our Committee debates, reducing the level of access to PSC information runs entirely counter to our public commitments on this reform.
Company transparency matters, and it is not just about tackling criminals. The Prime Minister set out the rationale for this back in October 2013. He said that transparency of company control allows businesses better to identify who really owns the companies they are trading with, that it gives developing countries easy access to data without having to submit endless requests for information, and that a public register allows public scrutiny and therefore supports data accuracy.
I know that there are concerns about the impact on privacy of this reform. We are satisfied with the balance that we have struck. We will not, for example, place residential addresses in the public domain, and we will put in place a protection regime that allows individuals at serious risk of harm to apply for their information not to be disclosed.
Of most practical importance, in the coming months the EU will adopt the fourth money-laundering directive, which will require member states to implement semi-public central registers of company beneficial ownership. This will ensure that all with a “legitimate interest” can access the register. My noble friend Lord Flight asked
what “legitimate” meant. We believe that a legitimate interest would include civil society organisations and journalists in the context of their money-laundering investigations. He also asked what “proper purpose” means. The term is intended to have a wide interpretation and application. We are satisfied that there is no need to define it in the Bill. This is in line with the approach taken for the inspection regime for the register of members. I was reassured to know that if a company suspected that a person wanted access to a company’s PSC register for the purpose only of carrying out identity theft or fraud or using junk mail, that would not be a proper purpose.
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Concerns have been expressed about the UK being the first to move on this agenda. We have seen and are continuing to see growing international momentum. G20 leaders committed to implement the G20 high-level principles on beneficial ownership at the G20 summit last November. It was a commitment on a par with that made by the G7 in 2013. This obviously includes the US, and I know that my noble friend Lord Hill was in Washington recently talking about the importance of transparency issues. The White House published beneficial ownership proposals as part of the President’s budget proposal for fiscal year 2015. Those proposals would modify and expand the Internal Revenue Service’s existing tax reporting mechanism to provide a federal solution to beneficial ownership transparency. The US Treasury has been developing a legislative plan to take this measure through Congress. I hope that that gives some comfort to my noble friend Lord Naseby.
The noble Lord, Lord Borwick, asked about costs and benefit. I shall not repeat what I have already said, but his Amendment 43A would make it an offence for a person to disclose information obtained from a company’s own PSC register to another person if they suspected that it would be used by that other person for a different purpose from that told to the company originally. This desired outcome is already implicit in the Bill. In other words, it is already the case that a person should not disclose information to another person if they know the information will be used by that person for a different purpose. The penalty for breaching this requirement is up to two years in prison. This is the same penalty as that which applies to companies that fail to provide information or provide false information. I do not think that any further amendment is needed to make this clear, not least as we have followed an established precedent in respect of the inspection regime for the register of members.
Amendment 43B seeks to provide that where an offence in relation to PSC register inspection is committed by a company or organisation, every officer of that body would be guilty of the offence. I understand the noble Lord’s desire for this change. However, I hope that I may reassure him that common-law principles would mean that, if a company committed the offence, the officers of the company who were in default would be guilty of the offence without us needing to make any changes to the Bill. In the case of an organisation, the same principles would apply. I am sure that my noble friend will agree that punishing only those who committed the offence is a proportionate response.
I hope that I have dealt with the key points that have been raised in debate.