Greater Clarity for Corporate Pension Trustees on Corporate Transparency

That legislation is designed to introduce greater transparency about the directors and ultimate beneficial owners of companies, to combat fraud among other things. That legislation is not specifically aimed at pension trustees, but it does apply to and impact on corporate pension trustees.

Under existing legislation, a company may not have only corporate directors, but must have at least one natural person as a director. This existing requirement is to be preserved under the new legislation.

New identity verification requirements and timeline

The new legislation (ECCTA and SBEEA) introduces two new requirements which apply to all companies in the UK, but which are of particular relevance to corporate pension trustees:

• An obligation on new and existing directors of a company and ultimate beneficial owners of a company (who by themselves or jointly own 25% or more of the beneficial interest in the company) to provide evidence of their identity to Companies House; and
• A ban on any company from being a director of any other UK company, subject to exceptions.

The Government has now clarified the position regarding those two requirements.

The obligation to provide evidence to Companies House of the identity of newly appointed directors and new ultimate beneficial owners of a company will come into force on 18 November 2025 and so will apply to all persons who become a director or ultimate beneficial owner of any company, including of a corporate pension trustee, on or after 18 November 2025.

An existing director or an existing ultimate beneficial owner of a company, including of a corporate pension trustee, on 18 November 2025 will be obliged to provide evidence to Companies House of his or her identity over a transitional period of 12 months running from 18 November 2025, i.e. by 18 November 2026. They will be required to provide such evidence to Companies House when the annual confirmation statement is due to be provided by the company to Companies House.

Restrictions on Corporate Directorships and further clarifications

The ban on companies being directors of other UK companies is not yet in force, although it is set out in an amendment to the Companies Act 2006. That ban is expected to come into force in 2027. The Government originally suggested that any exceptions to that general ban would be limited. However, the Government's latest guidance states that a company will be permitted to become a director of another UK company, provided that all directors of the company which is a director are themselves natural persons and not companies. All those natural person directors of that director company will be required to provide evidence of their identity to Companies House. This is a general exception applicable to all companies but would be of particular benefit to corporate pension trustees. On this basis, one layer of corporate directorship of a company will be permitted, but no further layers of corporate directorship will be allowed.

A further point to note is that only a UK company will be permitted to be a corporate director of another UK company. An overseas company will not be permitted to act as a director of a UK company.

Moreover, in some specific scenarios, such as where a pension scheme has an interest in a Scottish limited partnership, there may be additional restrictions on who can or must be directors of a corporate pension trustee.

The latest guidance from the Government provides welcome clarification for corporate pension trustees and other companies affected by the new legislation, although it should be noted that no change has yet been made to the legislation, in draft or final form, to reflect the Government guidance.