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Registrar’s Practice Direction Raises More Questions than Answers

The recent Practice Direction by the Registrar has left many questions unanswered, particularly regarding its scope, application, and compliance requirements. The direction aims to regulate the recording of beneficial ownership information in various companies and entities.

Unclear Requirements

The first paragraph requires every company or entity to maintain a register of beneficial owners in alphabetical order, with the last known address also required for companies. However, this requirement is not found in the Foundations Act, Limited Partnerships Act, and Limited Liability Partnerships Act, leaving room for confusion.

Lack of Definition

The second paragraph introduces a new term, “Beneficial Ownership Information,” without defining it. This information is to be lodged with the Registrar, but the direction fails to clarify what exactly constitutes this information. Furthermore, the term “CBRD” appears in the direction, which refers to the Central Business Registration Database established under section 5 of the Business Registration Act. However, the law does not provide sufficient clarity on whether the Registrar is referring to the database or the Corporate and Business Registration Department.

Confusing Communication

The third paragraph provides that this information must be communicated to the CBRD, but fails to clarify what this means in practical terms. The direction also raises questions about the scope of disclosure of beneficial ownership information, which appears to add nothing new to existing provisions under various laws.

Retention Period

Paragraph five requires beneficial ownership information to be kept for seven years, which is inconsistent with the Foundations Act’s provision for a five-year retention period. It is unclear whether the Registrar has the power to impose a more onerous retention period than that specified in the parent legislation.

Definition and Powers

The definition of beneficial or ultimate beneficial owner in paragraph seven resembles the 2017 definition, but with a different threshold. The direction also raises questions about the scope of the Registrar’s powers to curtail definitions provided in the parent legislation.

Offence and Fine

Paragraph eight creates an offence for failure to comply with the Practice Direction, which is questionable given that the power to create offences lies with the legislator. Furthermore, the fine imposed by the direction exceeds those specified in existing laws.

Unclear Application

Lastly, paragraph nine fails to clarify whether the direction applies to companies, leaving room for confusion.

Conclusion

In conclusion, the Registrar’s Practice Direction raises more questions than answers, and further clarification is needed to ensure compliance and avoid confusion. It is essential that the Registrar provides clear guidance on these matters to ensure transparency and accountability in the recording of beneficial ownership information.