Register of People with Significant Control: Preparing companies for the new regulations
From 6th April 2016, all UK Companies and LLPs will be required to make public all details of their controllers and beneficial owners, known as ‘Persons with Significant Control’ (PSC).
The new regulations are described as a significant step towards improved transparency around the leadership of UK businesses. Information regarding a company’s Persons of Significant Control must be filed at Companies House from 30th June 2016 as part of the annual Confirmation Statement (replacing the Annual Return). In the meantime, company directors must begin to maintain a register and review internal governance structures to assess who is a PSC. This will mean that arrangements which may have been put in place for reasons of commercial confidentiality will be exposed to public view.
Who Counts as a Person with Significant Control?
Under the new regulations, a PSC will, directly or indirectly, have one of the following traits:
· Hold more than 25% of a company’s shares or, in the case of an LLP have rights over more than 25% of the surplus assets on a winding up
· Hold more than 25% of the company’s voting rights
· Hold the right to appoint or remove majority directors
A PSC may also have the right to exercise or actually exercise significant influence or control over the company or a trust/firm which would itself satisfy any of the above conditions were they an individual.
The conditions are met “indirectly” where, for example, the shares are held by an individual but via a company.
There is a broad range of thresholds and persons who will subsequently qualify as persons with significant control.
What Information is required?
The information that needs to be disclosed depends on whether the PSC in question is an individual or a legal entity.
Information required in relation to an individual who is a PSC includes his/her:
· Service Address
· Usual country/ state of residence
· Date of birth
· Residential address
· Date on which the PSC joined the register
· An explanation of which of the conditions are met qualifying the individual as a PSC.
This information must be provided by or verified with the individual PSC.
There are circumstances in which a legal entity is relevant to the company; the information then required includes:
· Corporate/firm name
· Registered office
· Legal form and governing law
· Applicable company register and number
· Date on which the entity joined the register
· An explanation of which of the conditions are met qualifying the company as a PSC.
The information provided to Companies House is open to public inspection, but personal information such as residential addresses and date of birth will not be visible. It is possible to make an application for all information relating to the PSC to be protected from public disclosure in exceptional circumstances e.g. where there is a serious risk of violence or intimidation.
What does a company need to do if no one holds 25% or more of its shares or voting rights?
A register always needs to be maintained and cannot be left blank. Accordingly, where a company has no PSCs an appropriate note should be made on the register as follows (according to available guidance - link below); “The Company knows or has reasonable cause to believe that there is no registerable person or registrable relevant legal entity in relation to the company.”
What needs to be done now?
From the 6th April companies must:-
1. Maintain a PSC register.
2. Identify individuals who fit the above criteria of a PSC . This information must be verified and kept up-to-date. It is the company’s responsibility to ensure that the registered details are complete and accurate at all times.
3. Ensure that the register reflects where verification/identification of PSCs is ongoing. If this is the position a note needs to be made on the register that “the company has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity in relation to the company”. The wording is confirmed at Chapter 3 of the document at the link below.
4. The register needs to be filed from the 30th June. Companies must issue an annual ‘Confirmation Statement’ confirming that their PSC register is accurate and up-to-date.
If your company has a simple ownership and structure, it may be straightforward to identify who is a PSC. More complex company structures will require more thought as to who qualifies and why.
All information on the PSC register (excluding residential addresses) must be made available within 5 working days of it being legitimately requested by any person or organisation. The company is permitted to charge a fee of up to £12.
Failing to comply with these new regulations is a criminal offence for both the company and its directors and may result in a fine or imprisonment. Should a PSC fail to disclose his or her information under this act, the Company may restrict their future dividends or prevent the PSC in question from selling their shares until this information is provided.
Additional guidance can be found here:-
If you require any further information or advice please contact James Hawkins at email@example.com.