Since 6 April 2016, the Small Business, Enterprise and Employment Act 2015 will require all UK companies (except those whose shares are traded on markets such as AIM and the London Stock Exchange Main Market), and all UK LLPs to create and maintain a new statutory register know as a PSC Register.
From 26 June 2017, and with the introduction of the People with Significant Control (Amendment) Regulations 2017, these rules now apply to AIM companies.
This register will contain details of the individuals and relevant legal entities that have “significant control” over the relevant company/LLP.
Companies House must be notified of any PSC changes within 14 days of updating the PSC register.
Why is this register being introduced?
The Government hopes that by making both the legal and beneficial ownership of a business publically available, it will help combat tax evasion, money laundering and terrorist financing.
What should be included?
A PSC Register must contain details of all individuals (PSCs) and relevant legal entities (RLEs) which have “significant control” over the company/LLP.
What is a PSC?
Anyone who meets one or more of the following conditions:
- owns more than 25% of the company’s shares (directly or indirectly);
- owns more than 25% of the company’s voting rights (directly or indirectly);
- has the right to appoint or remove a majority of the board of directors of the company;
- has significant influence or control over the company; and/or
- has significant influence or control over a trust or firm which has significant control over the company.
The conditions for LLPs are similar to the above but also state that an individual is a PSC of an LLP if they hold rights over more than 25% of the surplus assets on a winding up of the LLP.
What is a RLE?
A legal entity (other than an individual) is a relevant legal entity (RLE) if it:
- would have been classed as a PSC had it been an individual; and
- is required to maintain its own PSC Register or it is an exempt company.
What do I need to do?
You will need to:
- identify any PSCs or RLEs for your company/LLP; and
- obtain the relevant information you need to enter their details onto the PSC register and confirm this is 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 – you have 14 days from the date of change to update the PSC register ; and
- notify Companies House of any changes within 14 days of the PSC/RLE being entered on the register.
IMPORTANT: Even if a company does not have any PSCs or RLEs it must nevertheless keep a PSC Register.
How will this affect me?
Most companies and LLPs in the UK will be required to create and maintain a PSC Register. This requirement is likely to be burdensome for many companies, especially where there are complex shareholding structures.
In addition, a good knowledge of the rules relating to the PSC Registers is required as there is a set process for obtaining information on PSCs/RLEs and “official wording” must be used when making entries in the PSC Register.
We would recommend starting to prepare your PSC Register now to ensure it is ready for 6 April. All companies/LLPs and their directors/members who fail to comply with their duties could face criminal liability.
How can we help?
We advise companies and LLPs on all aspects of PSC Registers. We offer fixed options for maintaining your register; giving you peace of mind and helping you avoid unnecessary fines.
If you have any questions regarding the new legislation or you require help in compiling your register please contact me or one of the team.
Corporate Compliance AssistantContact Annik Young