Many accountants will not be overly concerned with the new requirement to keep a “Register of People with Significant Control” (the PSC register), says Jennifer Adams. NB: The original article covered the draft guidance and was updated to reflect the final guidance when it was released. The comments below were made in response to the original article.
After all, the information on directors is readily available from Companies House and in the Register of Members. However this is a significant change to company law affecting all UK companies, LLP's and Societas Europa (European Companies) and clients need to be aware of the changes taking place.
The detail is to be found in the final Guidance on PSC’s published by the BIS on 27 January 2016.
Articles have already been published on AccountingWEB detailing the reasons for the regulation, the format, conditions and entries that will need to be made on the new register – links to these articles are given at the end of this article.
Reminder 1 - the government has had no say in this matter being part of its commitment to meet objectives laid out in the UK G8 Action Plan, published after the 2013 G8 Summit.
Reminder 2 - The rules require the creation of a new statutory register to contain the names of individuals who hold or control more than 25% of the company’s shares or voting rights or who has the power to appoint or remove a majority of the board of directors (whether directly or indirectly via a majority stake in the company) or who has the right to exercise (or who actually does exercise) control over the company. In addition a trust or firm that would satisfy any of the conditions if it was an individual must also comply.
The 86 page Guidance is comprehensive in defining what is meant by ‘control’ giving examples as to how to identify the persons to be included. The text also details how that information is to be confirmed, the procedure should that information not be available and the restrictions that can be imposed. On page 26 there is a useful table that gives the differences in information and practice should the register be kept at Companies House rather than at the company’s address. The main difference being that although a PSC’s full date of birth needs to be registered (whether in the company held register or the Companies House held register), then should the register be kept at the company address, only the month and birth will be shown on the public register at Companies House.
- The PSC register is in addition to and not a replacement of the Register of Members
- Even if a company has no interests to be registered (or is dormant), it must still keep a register
- The rules permit a fee to be charged per request for a copy or part of a copy of the register. That fee can be anything up to £12. The request must be fulfilled within five working days of receipt; failure to respond appropriately following a bona fide request is an offence. There is an exception for legally privileged information
- It is a criminal offence not to provide the information or to comply with requests for information and failure could result in a fine and /or prison sentence of up to 2 years
- It is up to the company to decide who is a PSC not the person themselves however, should someone believe themselves to be a PSC they are legally required to notify the company of his interest (or confirm his interest to the company). Breach of notification is an offence and may also result in loss of rights in the company associated with the interest
- The register must indicate the condition a person satisfies such that they are a PSC. However, if a person already meets one of the first three specified conditions, the company does not have to record if and how the person meets the fourth specified condition
- The guidance gives specific wording of text that must be entered on the PSC register after all required steps have been undertaken to ascertain status. The same official wording is required when information is filed on the central public register at Companies House. For example, if the company has no PSC’s or no “relevant legal entity” (RLE) the text must read: “The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company” (a RLE is defined in the guide as being “the first relevant legal entity in your company’s ownership chain”)
- The register must never be blank
- From June 2016, the PSC information will be required to be included with the new Confirmation Statement, the replacement of the Annual Return
- If a company is incorporated after 30 June 2016 a statement of initial control will be completed containing the PSC information, as part of the incorporation process
Who is a “protected” person
In the government's response to the December 2015 consultation paper headed ‘Register of People with Significant Control’ published on 17 January 2016 the area of the new requirements that caused most concern amongst respondees was the definition of a ‘protected person’, how difficult it will be to confirm ‘protected’ status and thus not appear on the public register.
The provisions are still vague but the document does confirm that it is only if the person is at the risk of ‘violence or intimidation (“physical harm”)' will Companies House consider removing that person from the public register.
The document states that the National Crime Agency (NCA) has agreed to be involved in the assessment process stating that “The expertise in risk assessment from the NCA, and others in that field, such as the intelligence services, will ensure that assessments are structured, consistently applied, and robustly interrogated”. This statement, in itself, shows that although the information must still be provided, permission not to appear on the public register will not be an easy process and will only be granted in exceptional circumstances. If permission is granted and the register is kept at the company then the detail on this individual is to be withheld on any request for information.
A transitional period has been granted to enable individuals who are already PSC's to apply for 'protection' and if refused, to still avoid appearing on the register. Subsequent to the refusal, if that individual ceases to be a PSC within 12 weeks then their details will never be made available for public inspection.The transitional period commenced in January and will cease on 6 April 2016.
- A person who is already a PSC and who does not want their details to be shown on the register has until 6 April 2016 to reduce their holding to 24%.
- Simply Docs has produced a series of documents to support the creation and upkeep of the PSC register.
- The BIS has also published a useful basic guide to the new rules that could possibly be given to clients.
Jennifer Adams FCIS TEP ATT (Fellow) is associate editor at AccountingWEB. A professional business author specialising in corporate governance and taxation, she has written for many of the leading specialist providers of legal, tax and regulatory publications.