[16.05.16]

Just a reminder that from 6 April 2016 most UK companies and limited liability partnerships (LLPs) will be required to keep and maintain a new register – a register of persons with significant control (PSC) over the company or LLP.

This new requirement is part of the government’s drive to increase transparency and trust in UK companies, whilst at the same time tackling crimes such as terrorist financing and money laundering.

Companies and LLPs will need to keep this information internally from 6 April 2016 and will need to file this information at Companies House from 30 June 2016 – either as part of the new annual confirmation process (which will replace the annual return in June 2016) or on a new incorporation.
What is a PSC register?

The PSC register will identify and record people who have significant control over the company/LLP and contain stipulated information about them.
What is this new requirement?

In summary, companies and LLPs will need to:

• keep an internal register of their PSCs from 6 April 2016
• take reasonable steps to identify those persons who should be registered on the PSC register
• enter the required information on the PSC register – and keep this information updated
• make the PSC register available for public inspection free of charge or provide copies on request for an optional flat fee of £12
• file information about their PSCs at Companies House (as set out above) from 30 June 2016 onwards.

PSCs will be under a corresponding duty to notify the company/LLP of their interest.  Failure of the PSC or the company/LLP to comply with these duties is an offence.  And if a relevant person fails to respond to a company’s requests for information this may eventually result in the company being able to apply restrictions (for example restrictions on transfer) on the affected shares.

All companies must keep a PSC register – even if they have no PSCs or the process of investigating who may be a PSC is still ongoing. The PSC register can never be empty – and there is prescribed wording to be included depending on the specific circumstances.

Who is a PSC?

Very broadly speaking, a person is a PSC if he/she:

1. holds, directly or indirectly, more than 25% of the nominal value of the company’s issued shares;
2. holds, directly or indirectly, more than 25% of the voting rights in the company;
3. holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
4. has the right to exercise, or actually exercise, significant influence or control over the company; or
5. exercises or has the right to exercise significant influence or control over a trust or firm, which itself meets any of the above conditions.

The test for LLPs is very similar but is amended to reflect their different ownership structure.

The fourth point above is potentially very wide – and recently published draft statutory guidance has sought to clarify who this is intended to catch. This guidance also provides examples of ‘excepted roles’ which would not generally be caught.

The legislation also draws a distinction between those PSCs that are registrable and those that are not and should be consulted to check whose details should be included on the PSC register in any given situation – especially where the person has indirect ownership through corporate entities for example.

What do you need to do?

Based on what is currently available, it is likely that at the very least a company/LLP will need to contact its shareholders/members to ask them to confirm or provide details to enable completion of the PSC register. Both the Regulations and statutory guidance are still in draft form at this stage, so it is probably best to start your compliance process by considering whether you have any potential PSCs and possibly what procedures you will need to put into place in order to ensure you take ‘reasonable steps’ to identify them.

For companies/LLPs with a simple ownership structure, this should not involve too much additional work. The situation becomes more complex where there are larger corporate groups containing overseas companies or shares held on trust. The new requirement may also be of concern for some companies/LLPs who have prior to now managed to keep confidential any commercially sensitive ‘influence’ or ‘control’ elements of shareholder or investor agreements.

Castletons Accountants