Since 6 April 2016 UK are required companies to create and maintain a new statutory register (known as a PSC Register). This requirement also applies to sports clubs structured as companies, including companies with charitable or community amateur sports club (CASC) status and community interest companies (CICs).
The PSC Register
This PSC Register will contain details of the individuals and relevant legal entities that have “significant control” over the company.
A copy of a company’s PSC Register will need to be filed with Companies House from 30 June 2016 when the company’s annual confirmation statement is due (previously known as the annual return).
Why is the Register being introduced?
The Government hopes that by making both the legal and beneficial ownership of a company publically available, this will help combat tax evasion, money laundering and terrorist financing.
What should be included in the PSC Register?
A company’s PSC Register must contain details of all individuals (PSCs) and relevant legal entities (RLEs) which have “significant control” over the company.
Who is deemed to have “significant control”?
An individual will be a PSC if he or she satisfies any one or more of the following conditions:
- He or she holds more than 25% of the company’s shares (directly or indirectly) – this will not apply to charitable companies;
- He or she holds more than 25% of the company’s voting rights (directly or indirectly);
- He or she has the right to appoint or remove a majority of the board of directors of the company;
- He or she otherwise has the right to exercise, or actually exercises, significant influence or control over the company; and/or
- He or she has as significant influence or control over a trust or firm which has significant control over the company.
Guidance from the Department for Business, Innovation and Skills (BIS) on the meaning of “significant control or influence” can be found here.
What is a RLE?
An entity will be registrable as a relevant legal entity (RLE) if it satisfies all of the following conditions:
- It must be a legal entity for the purposes of the PSC regime;
- It would meet one or more of the specified conditions if it was an individual (see above); an
- It must be subject to its own disclosure requirements under the PSC regime.
This will be relevant for companies with charitable or CASC status which own a subsidiary trading company, for example. The parent company will be registrable as the subsidiary’s RLE.
This may also be relevant where a professional sports club has set up a charitable company to carry on its corporate social responsibility programme and has retained certain constitutional rights (e.g. to appoint a majority of the charity’s directors).
What do I need to do?
You will need to:
- identify any PSCs or RLEs for your company and the nature of their control or influence; and
- enter the relevant information onto the company’s PSC register, including which condition they satisfy to be a PSC, and confirm the details are correct. If you do not already have the required information, you may need to serve a notice on the relevant PSC or RLE requesting this;
- keep the register up to date. From 30 June 2016 companies will be required submit a Confirmation Statement each year which will replace the annual return; and
- companies incorporated from 30 June 2016 will also be required to provide an initial statement of beneficial ownership on incorporation.
How might this affect me?
In most cases sports clubs structured as companies will simply need to make a note in the PSC register that they do not have any PSCs or RLEs. That is because in most cases the club will have a wide membership such that no individual is a PSC.
However, in some circumstances an entry in the PSC register will be necessary. Examples would include the following scenarios:
- Where a third party has rights to appoint or remove a majority of the board, or controls a company’s decisions, the third party will be the charity’s PSC or RLE;
- A corporate foundation will have a RLE where the corporate supporter is the foundation’s only member or has a right to control the board’s membership;
- Companies may each be RLEs where they collaborate as members of a joint venture company.
- Where a company has fewer than four legal members (with equal voting rights), the members will all be PSCs. This may also affect companies with fewer than four trustees where members and trustees are the same people and where the public can only join as “associate members” with no voting rights.
- Individual trustees of an unincorporated association or charitable trusts which have control of its subsidiary trading company may need to be named in the subsidiary’s PSC register. (This is likely to be the case even if they hold shares in the subsidiary company via a nominee).
How can we help?
We advise companies on all aspects of PSC Registers. We offer fixed price options for maintaining your register; giving you peace of mind and helping you avoid unnecessary fines.