Key Facts

• Government amendment 1 aims to prohibit individuals subject to an asset freeze from acting as directors after the clause comes into force.
• Individuals in breach of this prohibition can face up to two years' imprisonment or a fine.
• The amendments narrow the definition to only include designated persons under asset-freeze measures, excluding those sanctioned for reasons unrelated to assets.
• The Foreign, Commonwealth and Development Office does not designate people for non-asset freeze financial sanctions.
• Travel bans are considered a type of non-asset freeze sanction.
• Amendments to the Bill aim to prevent automatic director disqualification measures from applying to individuals subject to travel bans or similar sanctions.
• Amendment 93 seeks to expand the criteria for disqualifying individuals from being company directors to include those suspected of facilitating evasion of UK sanctions.
• Any person enabling or facilitating the evasion of certain sanctions would already be committing an offence under regulation 19 of the Russia (Sanctions) (EU Exit) Regulations 2019, with a maximum penalty of seven years in prison or a fine.
• The clause limits the scope that prohibition by disapplying it for several types of organisations such as building societies and charitable incorporated organisations.
• The Bill enables regulations to ban corporate directorships unless all directors are actual persons and ID-verified.
• Individuals exerting significant control over companies must be named and ID-verified under the definitions in the Bill.
• The Bill addresses both ownership and directors, with a focus on making person of significant control information public.
• The World Bank report explained how nominee directors can neglect duties and fail to submit accounts.
• Delinquent nominee directors are not UK residents in most cases and tend to claim legal immunity.
• The Foreign Affairs Committee report concluded that the UK is financing President Putin’s war in Ukraine through laundered assets.
• The amendment targets issues where designated individuals move their assets before sanctions take effect.
• In July 2022, OFSI issued a red alert detailing evasion tactics used by sanctioned individuals.
• Usmanov transferred shares in his London property firm to Metalloinvest days before being sanctioned.
• Petr Aven, worth £5.3 billion, was sanctioned but allowed to use part of his assets for living expenses.
• The current sanctions regime and supervision at Companies House are considered unfit for purpose.
• Approximately 1,200 individuals and 120 businesses have been sanctioned since Russia's invasion of Ukraine.
• Companies House does not currently have the power to bring about suspended directorships.
• The Bill facilitates information sharing among relevant agencies.
• Glencore has pleaded guilty to failing to prevent bribery, highlighting the effectiveness of current legislation in some cases.
• Any director acting outside the terms of the legislation could face jail time for up to two years.
• Amendments 4, 5, and 6 modify clause 34 of the Economic Crime and Corporate Transparency Bill.
• New clause 35 proposes adding a disqualification for individuals convicted under section 31 of the National Minimum Wage Act 1998.
• These amendments aim to strengthen measures against sanctioned individuals and those who violate minimum wage laws.
• The Bill introduces a prohibition on individuals acting as company directors without verified identity.
• There have been 16 people convicted under the National Minimum Wage Act 1998.
• Clause 37 establishes exemptions to the general natural person director rule through regulations following the Bill's enactment.
• Clause 36 inserts proposed new sections 159A and 169A into the Companies Act to prevent disqualified individuals from being appointed as directors.
• Clause 37 amends section 87 of the 2015 Act to ensure that shadow directors remain liable for contraventions even after removal.
• Clause 39 introduces provisions requiring director ID verification or specified exemptions, with penalties for non-compliance.