The UK division of fast-fashion firm Shein failed to disclose the ultimate owner, which is a violation of company law and could affect the firm’s planned plans to list in the UK.
The UK law requires companies to declare the ultimate beneficial owner of their company – “person with significant Control” (PSC).
Shein Distribution UK Ltd has filed with Companies House and listed Roadget Business Pte Ltd based in Singapore as its PSC, not an individual.
Dan Neidle spotted the issue and said that making false or misleading statements knowingly or recklessly would be a crime.
He called for Companies House to develop a system which could reject filings that were clearly illegal.
Shein stated: “We appreciate that you brought this to our attention. This error was not detected during the registration process. “We are working to correct this.”
Shein was founded by billionaire Chris Xu in China in 2008. Its headquarters is in Singapore. Shein is known for its cheap clothing, including bike shorts, bikinis and crop tops. They have previously been associated with celebrities such as Katy Perry and Rita Ora.
The company rose from relative obscurity and dominated the fast-fashion industry. It was valued at $66bn, (£52bn), in March 2023, down from 100bn in 2020.
The company has been accused of labor abuse, and by the end of 2022, it will invest in improving standards in its suppliers’ factories.
documents filed at Companies House show that Shein’s UK company made £1.1bn last year in sales and generated a profit before tax of £12.2m over the 16-month period ending 31 December 2022. The group’s global revenues were $30bn last year.
Shein has reportedly begun exploring a London listing, as it believes that it is unlikely the US Securities and Exchange Commission will approve its initial publicly offered (IPO).
It would be the largest corporate listing in London’s history and boost the reputation of the city as an international financial hub. This is after several companies such as the British chipmaker Arm chose to list on the Nasdaq, in New York. Despite the UK’s attempts to convince more firms to do so, the UK government has been unsuccessful in persuading them to list in London.
Companies House has received new powers to deal with inaccurate information in its register, and to crackdown on abuse. Its chief executive, Louise Smyth hailed this as the most significant shake-up of its 180-year-old history.
Companies House stated that it does not comment on specific companies. Companies House said that failure to provide accurate data on the PSC Register and failure to comply to notices asking someone to provide certain information are criminal offences.
According to company law, an entity that controls or owns a company can be registered as PSC, provided it is the first entity to own or control the company and maintains its own PSC Register, adheres to the Financial Conduct Authority disclosure rules and has voting share admitted to trading in a regulated UK or European market, or in Switzerland, the US or Israel.
Neidle replied: “This isn’t good enough.” On its face, the filing is obviously wrong. It’s not difficult to identify such errors automatically, but it appears that Companies House does not even try.