24/02/23

UK: Companies House ownership registers do not breach human rights, says government.

As published on step.org/industry-news, Thursday 23 February, 2023.

The UK government has updated a policy paper noting that the new register of overseas entities, established by the Economic Crime (Transparency and Enforcement) Act 2022, and the register of persons with significant control are both compliant with the European Convention on Human Rights (the Convention).

The government’s statement comes in the wake of the Court of Justice of the European Union's (CJEU’s) finding in November 2022 that the EU beneficial ownership register regime was unlawful because it did not comply with Articles 7 and 8 of the Charter of Fundamental Rights of the European Union. The articles protect personal data and privacy rights and are equivalent to Article 8 of the Convention. Both the register of overseas entities and the register of persons with significant control make the names and personal details of beneficial owners of companies freely available to the public, as did the EU Member States' registers mandated by the EU Fifth Anti-Money Laundering Directive.

In cases C-37/20 and C-601/20 WM and Sovin SA v Luxembourg Business Registers, the CJEU found that this free access to the registers, without any need to demonstrate a 'legitimate interest' in doing so, created a regime that allowed for privacy intrusions that were more than was strictly necessary to prevent and detect money laundering and terrorist financing and was thus unlawful.

This ruling is not binding on the UK but is likely to affect the policies of many jurisdictions around the world as well as EU Member States.

However, the UK government has now re-examined both regimes in the light of the CJEU ruling and declared that they are compatible with Article 8 of the Convention. It cites clauses in the relevant legislation (Companies Act 2006 as amended and Economic Crime (Transparency and Enforcement) Act 2022) allowing persons of significant control (PSCs), registrable beneficial owners (RBOs) and other individuals to apply to the registrar to suppress information from the publicly accessible register.

'The regulations made under the existing regulation-making powers...currently require the applicant to demonstrate that they or a member of their household will be at serious risk of being subjected to violence or intimidation if information about them is disclosed', the government said on 30 January 2022. 'The future regulations that will be made under the successor powers will provide, at the least, the same facility for PSCs and RBOs to apply for exemption for their information. This is a significant safeguard which will ensure that the PSC and RBO disclosure regimes do not unjustifiably establish blanket intrusions into PSCs' and RBOs' Article 8 rights. The Government assesses that the PSC and RBO disclosure regimes are therefore compatible with the ECHR.'