Investigating the Bank of England Nominees Limited

    The following article by Alistair McConnachie appeared in the October 2011 issue of Prosperity.

    Occasionally we encounter people who refuse to believe the fact that the Bank of England is a fully, publicly-owned national institution, and has been since it was nationalised in 1946(1)  

    They will point to something called the “Bank of England Nominees Limited” (BOEN) to allege that there is a “secret” company attached to the Bank, into which a flow of hidden profits is presumably being directed for the enrichment of a select few. Their sources are usually unreferenced conspiracy websites.     

    If our reform is to gain traction, it is important that we are neither distracted by misinformation nor labour under misapprehensions about normality.     

    The Bank of England is Publicly-Owned

    The Bank of England is wholly owned by the British government – meaning its profits go into the public purse at the Treasury. This is a plain fact and people who do not accept this are not being serious about our reform. See the statement on the Bank’s website where it states: 

     As a public organisation, wholly-owned by Government, and with a significant public policy role, the Bank is accountable to Parliament. The Bank’s Annual Report and Accounts are laid before Parliament each year before they are made available publicly. The principal means of accountability for the Bank is via the House of Commons Treasury Committee.(2)

    What is the “Bank of England Nominees Limited”?

    The Bank of England Nominees is a wholly-owned, non-trading subsidiary of the Bank of England, with 2 ordinary shares valued at £1 each, as the latest Bank of England Annual Report(3) states.     

    A reply from Ben Norman, the Deputy Secretary of the Bank, to an enquirer Mr E Danielyan, dated 5 March 2010 explains:

    BOEN acts as a nominee company to hold securities on behalf of certain customers. It is a private limited company, incorporated in England and Wales in 1977, and is a wholly-owned subsidiary of the Bank. The shareholders are the Bank and John Footman, who holds his share as nominee on behalf of the Bank. The directors are John Footman and Andrew Bailey.(4)     

    Both John Footman(5) and Andrew Bailey(6) are employees of the Bank and their biographies are on the Bank’s website. 

    What is the Purpose of BOEN?

    As the following written answer from the Commons’ Hansard from 21 April 1977(7) states, it is intended to hold shares on behalf of “Heads of State” and certain others. 

    Shareholdings (Disclosure) 

    HC Deb 21 April 1977 vol 930 cc151-2W      151W 

    Mr. Blenkinsop asked the Secretary of State for Trade whether he has granted any exemptions under Section 27(9) of the Companies Act 1976; and if he will make a statement. 

    Mr. Clinton Davis The Secretary of State has granted one exemption under Section 27(9) of the Companies Act 1976 in favour of Bank of England Nominees Ltd., a wholly-owned subsidiary of the Bank of England. Bank of England Nominees Ltd. have given a number of undertakings about the use to be made of the exemption. They will hold securities as nominee only on behalf of Heads of State and their immediate family, Governments, official bodies controlled or closely related to Governments, and international organisations formed by Governments or official bodies. They will in turn seek certain assurances from anyone in the eligible categories who wishes them to hold the securities as that person’s nominee. These assurances are to cover (a) the fact that the person is the beneficial owner of the securities to be held by Bank of England Nominees Ltd.; (b) that the beneficial owner will not use his interest in any securities held by Bank of England Nominees Ltd. to influence the affairs of the company in which shares are held except as shareholders in general meetings of that company; (c) that the beneficial owner is aware of his overriding obligation, under Section 33 of the Companies Act 1967 as amended, to disclose his interest to the company in which shares are held if he is interested in 5 per cent. or more of that company’s share capital.                                                   152W        

    Bank of England Nominees Ltd. has also undertaken to make a report annually to the Secretary of State for Trade of the identity of those for whom it holds securities, and, provided that it holds securities for two or more people, the total value of the securities held. The contents of such reports are to be confidential to the Secretary of State.

    BOEN – No Longer Allowed Disclosure Exemptions

    It is important to note, however, that BOEN is “no longer exempt from company law disclosure requirements”, as the following written answer from the Lords’ Hansard on 26 April 2011(8) makes clear.     

    This must mean that BOEN is no longer granted an exemption under Sec 796 of the Companies Act 2006 to the notification provisions required by Sec 793 – which it has been previously, according to Ben Norman above.

    Bank of England

     Questions

    Asked by Lord Myners 

    To ask Her Majesty’s Government when the accounts of Bank of England Nominees Limited were last published; when they will next be published; and whether they intend to review whether the company should remain exempt from company law disclosure requirements.[HL8302]

    The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): The most recent accounts of Bank of England Nominees Limited are available via the Companies House website and were published on 14 June 2010. It can be seen from these accounts that the company is currently dormant. The company is due to publish its next set of accounts by 30 November this year. The company is no longer exempt from company law disclosure requirements and currently no other persons are exempt from these requirements.

    Asked by Lord Myners

    To ask Her Majesty’s Government when the accounts of Bank of England Asset Purchases Facility Fund Limited will be published; whether these accounts will take into account an indemnity from HM Treasury; and whether the accounts of the company are exempt from any company law disclosure requirements.[HL8303]

    The Commercial Secretary to the Treasury (Lord Sassoon): The Bank of England will publish accounts for the asset purchase facility (APF) for the year ended February 2011 before the Summer Parliamentary Recess. The amount due to or from HM Treasury under its indemnity to the Bank will be identified. The accounts are not exempt from any company law disclosure requirements. 12

    Asked by Lord Myners 

    To ask Her Majesty’s Government whether the accounts of the Bank of England, Bank of England Nominees Limited and the Bank of England Asset Purchase Facility Fund Limited are all audited by the same firm of public accountants.[HL8310]

    Lord Sassoon: KPMG are the external auditors for the Bank of England and the Bank of England Asset Purchases Facility Fund Limited. As a dormant company, Bank of England Nominees Limited is not required under the Companies Act 2006 to appoint an external auditor.

         

    The BOEN Company Accounts for 2010 can be viewed online.(9) These Accounts state that, “There has been no income or expenditure on the part of the Company since its incorporation and accordingly no profit and loss account is submitted.” (p.2) It has Net Assets of £2. (p.4)

    In Summary

    As stated in Hansard, above, BOEN is a company set up with the intention of holding shares confidentially on behalf of “Heads of State” and certain others.

    That is to say, presumably, HM the Queen and her “immediate family” and certain governmental bodies.

    Presumably the thinking here is that if those people were to buy them through normal means, then they would be visible to staff at share dealing companies and would regularly be leaked. This could, possibly, raise various security-related matters, and it could also, possibly, raise various rumours about matters related to the economy and the health, or otherwise, of certain companies.

    In any case, BOEN is presently dormant, and is no longer exempt from company law disclosure requirements.

    Imagining strange goings-on at BOEN is a complete distraction from reality.

    The truth, as with most things, is quite prosaic.

    (1) Bank of England Act 1946, www.legislation.gov.uk

    (2) Bank of England, “The Bank’s Relationship with Parliament”,
    www.bankofengland.co.uk/about/parliament/index.htm

    (3) Bank of England, Annual Report 2011, p.69,
    www.bankofengland.co.uk/publications/annualreport/2011/2011full.pdf

    (4) This letter can be viewed in full and downloaded at
    www.whatdotheyknow.com/request/28738/response/74019/attach/2/D.pdf

    (5) Bank of England, “John Footman Executive Director, Central Services and Secretary of the Bank”,
    www.bankofengland.co.uk/about/people/biographies/footman.htm

    (6) Bank of England, “Andrew Bailey, Executive Director, Prudential Regulation Authority (PRA) – Deputy CEO designate”,
    www.bankofengland.co.uk/about/people/biographies/bailey.htm

    (7) Hansard, 21 April 1977, Written Answers,
    http://hansard.millbanksystems.com/written_answers/1977/apr/21/shareholdings-disclosure

    (8) Hansard, 26 April 2011, Written Answers,
    http://services.parliament.uk/hansard/Lords/bydate/20110426/writtenanswers/
    part021.html

    (9) www.scribd.com/doc/56089866/BANK-OF-ENGLAND-NOMINEES-LIMITED-Company-accounts-from-Level-Business