Who’s in control?
A (brief) introduction to the new Persons with Significant Control (PSC) Register
The Small Business, Enterprise and Employment Act 2015 introduces the requirement from 6 April 2016 for all companies to keep and maintain a register of persons with significant control. The new regime applies to all UK companies and LLPs other than those subject to the requirements of DTR 5 and companies with voting shares admitted to trading on a regulated stock market in any EEA state.
The PSC register is being introduced to increase transparency over who owns and controls UK companies, help inform investors and support law enforcement agencies in money laundering investigations.
What you need to do:
· Identify the people with significant control (the PSCs over the company and confirm their information;
· Record their details on the PSC register;
· Provide this information to Companies House as part of the annual Confirmation Statement (formally the Annual Return, more on that later); and
· Update the information on the register when it changes and update Companies House when the next Confirmation Statement is made.
A PSC is an individual who meets one or more of the following conditions:
i. Directly or indirectly holding more that 25% of the shares in the case of a company or rights over more than 25% of the surplus assets on a winding up in the case of an LLP
ii. Directly or indirectly holding more that 25% of the voting rights
iii. Directly or indirectly holding the right to appoint or remove a majority of directors, or those involved in management in the case of an LLP
iv. Otherwise having the right to exercise, or actually exercising, significant influence or control
v. Having the right to exercise, or actually exercising, significant influence or control over the activities of a trust or firm which is not a legal entity, but would itself satisfy any of the first four conditions if it were an individual
A legal entity is a PSC or registrable legal entity (RLE) if it is relevant and registrable. It is relevant if it meets one or more of the above AND one or more of the following:
1. It keeps its own PSC register
2. It is subject to DTR 5, or
3. It has voting shares on a regulated trading market in the UK or certain other places
Meeting one or more of the above does not necessarily mean the entity (RLE) must be entered on the PSC register. To be registrable it must be the first relevant legal entity in the company’s ownership chain.
Reasonable steps must be taken to identify PSCs or registrable RLEs. Notice must be given to anyone believed to be registrable, unless you have already been informed of the person's status and been given the required information. Notice may also be given to a person if it is known or you have reasonable cause to believe that the person either knows the identity of someone that is registrable, or knows the identity of someone likely to have that knowledge.
The Act sets out detailed requirements for these notices and failure by an individual or legal entity to respond to enquiries will entitle the company to impose restrictions on any shares they hold.
You will be required to provide the information on the PSC register to Companies House from 30th June 2016. From that date private companies and LLPs can elect to hold their PSC register at Companies House. If such an election is made, you must send details of your register to Companies House, along with your election notice. To update the register from thereon in you must file a new set of PSC forms each time the details on the register change. If no such election is made, the PSC register is updated each time the Confirmation Statement is filed.
This is just a brief introduction to the new register, detailed guidance can be found here: https://www.gov.uk/government/publications/guidance-to-the-people-with-significant-control-requirements-for-companies-and-limited-liability-partnerships