REGISTRAR’S PRACTICE DIRECTION RAISES MORE QUESTIONS THAN ANSWERS

Recent Practice Direction Sparks Uncertainty Among Stakeholders

A recent Practice Direction issued by the Registrar has left many stakeholders wondering about its implications and compliance requirements. The direction, applicable to companies, limited partnerships, foundations, and limited liability partnerships, requires beneficial owners and ultimate beneficial owners to be listed in alphabetical order in the register of a company.

Concerns Over Definition and Clarity

However, the direction’s requirement for listing the last known address of beneficial owners only applies to companies under the Companies Act, raising questions about whether this provision is being done away with. Additionally, the term “Beneficial Ownership Information” is used without definition, leaving stakeholders unclear as to what information needs to be lodged with the Registrar.

Unclear Terminology and Provisions

The Practice Direction introduces a new capitalized term “CBRD”, which refers to the Central Business Registration Database. However, it is unclear why the Registrar did not define this term or provide clarity on its intended meaning. Furthermore, paragraph 4 of the direction provides circumstances under which beneficial ownership information can be disclosed to third parties, but this appears to be surplusage as similar provisions already exist in relevant laws.

Inconsistencies and Concerns

The direction also requires beneficial ownership information to be kept for seven years, which is inconsistent with the Foundations Act’s requirement for a five-year retention period. The definition of beneficial or ultimate beneficial owner in paragraph 7 also raises concerns, as it curtails the far-reaching definition provided by the legislator in the parent legislation without any necessary powers.

Potential Offences and Uncertainty

Additionally, the direction creates an offence punishable by a fine not exceeding Rs 300,000, which is unclear and potentially illegal. The Registrar would do well to issue further clarifications and directions to ensure compliance with the relevant laws.

Conclusion

In conclusion, while the Practice Direction aims to provide clarity on beneficial ownership requirements, its ambiguity and inconsistencies have raised more questions than answers. It is essential for the Registrar to issue further guidance to alleviate concerns and ensure a smoother implementation of the direction.