The UK business of the fast-fashion company Shein has failed to disclose its ultimate ownership, a breach of company law that could disrupt the firm’s reported plans to consider listing in the UK.
UK companies are legally required to declare their ultimate human beneficial owner – their “person with significant control” (PSC).
However, Shein Distribution UK Ltd’s filing with Companies House lists Roadget Business Pte Ltd, based in Singapore, as its PSC and not an individual.
The issue was spotted by Dan Neidle, the founder of Tax Policy Associates, a thinktank established to improve UK tax and legal policy, who said that knowingly or recklessly making a false or misleading filing would be a criminal offence.
He called on Companies House to build a system that could automatically reject clearly unlawful filings.
Shein said: “We are grateful that this has been brought to our attention. Unfortunately, this error was not identified in the company’s registration process. We are currently working to rectify this.”
Shein, which was founded in China in 2008 by the billionaire Chris Xu and whose headquarters are in Singapore, is famous for its ultra-cheap clothing such as bike shorts, crop tops and bikinis, and has previously been associated with celebrities including Katy Perry and Rita Ora.
The company has risen from relative obscurity to dominate the fast-fashion market, and was most recently valued at $66bn (£52bn) in a March 2023 fundraising round, down from $100bn in 2022.
It has faced allegations of labour abuse and in late 2022 it pledged to invest in improving standards at its supplier factories.
Shein’s UK business made £1.1bn in sales last year, and a pre-tax profit of £12.2m in the 16 months to 31 December 2022, according to documents filed with Companies House. Globally, the group made $30bn in revenues last year.
Shein is reportedly in the early stages of exploring a London listing because it believes it is unlikely that the US Securities and Exchange Commission would approve its initial public offering (IPO).
If it were to go ahead, it would be one of London’s biggest ever corporate listings and a boost to the country’s reputation as an international financial centre, after a number of companies including the British chipmaker Arm opted for the Nasdaq in New York, despite the UK government’s efforts to persuade more firms to list in London.
This week, Companies House received greater powers to tackle factually inaccurate information on its register and crack down on abuse, hailed by its chief executive, Louise Smyth, as the biggest shake-up in its 180-year history.
Companies House said it did not comment on individual companies. It said failure to provide accurate information on the PSC register and failure to comply with notices requiring someone to provide information were criminal offences, adding that evidence of anomalies was fully investigated and appropriate action taken.
Under company law, a relevant legal entity, a corporate body that owns or controls a company, can be registered as a PSC if it is the first relevant legal entity in that company’s ownership chain and keeps its own PSC register, is subject to the Financial Conduct Authority’s disclosure rules, and has voting shares admitted to trading on a regulated market in the UK or Europe, Switzerland, the US, Japan and Israel.
Neidle said: “This isn’t good enough. The filing is clearly wrong on its face. Identifying such errors automatically isn’t a difficult task, but it looks like Companies House doesn’t even try.”
