LONDON (Reuters) - Britain may ban stock certificates known as bearer shares that can be transferred without needing to register ownership, a government minister said, tapping into a drive for greater corporate transparency.
Other measures proposed on Monday by Business Secretary Vince Cable included plans to force nominee directors to reveal more about who benefits from company ownership and proposals to ban companies from acting as directors themselves.
Leaders of the Group of Eight (G8) major economies agreed to tackle global tax evasion and avoidance schemes at their annual summit in June and Britain, as the chair of that event, is under pressure to show it is serious about the problem.
“We are proposing that we simply stop bearer shares,” said Cable. “There are people out there who set up shell companies issuing bearer shares precisely because they make ownership so opaque.”
At the G8 summit, Britain said it wanted to create a registry of ‘beneficial ownership’ to help tax authorities track down those seeking to launder money or evade taxes by using complicated company structures.
Monday’s ‘Transparency and Trust’ discussion paper will be a starting point for government policy in this area. Cable said he invited industry views over the next two months to help shape the proposals before the government enacts any reforms.
The Institute of Directors (IoD), which represents over 38,000 directors, said it welcomed greater transparency and steps to increase trust in business - provided they did not generate burdensome red tape for small firms.
“‘Anonymous companies’ in which the corporate veil is used to conceal illegal activities, have no place in a modern economy and bring the entire business sector into disrepute,” said Simon Walker, Director-General of the IoD.
Cable also said courts could be allowed to disqualify directors for five years, rather than the current two years, and make directors who are culpable for company misconduct pay compensation to creditors.
“This would hit directors where it hurts and provide more direct accountability to those affected,” he said.
Additional reporting by Olesya Dmitracova; Editing by Andrew Osborn, John Stonestreet