From 6 April 2016, all UK companies (other than publicly traded companies) and limited liability partnerships (LLPs) are required to create and maintain a record of people who own or control their company on a register of people with significant control (PSC Register). In this article, “company” includes “LLP”.
The requirement has been introduced as part of the government’s commitment to increase corporate transparency. Companies will have to reveal who owns and controls them in reality, irrespective of their corporate structure. The aim is to provide more accurate information for investors and to support law enforcement agencies in investigating and combatting money laundering, tax evasion and terrorist financing.
A person with significant control (PSC) of a company is an individual who either:
- directly or indirectly owns more than 25% of the shares;
- directly or indirectly has more than 25% of the voting rights;
- directly or indirectly has the right to appoint or remove a majority of directors;
- otherwise has the right to exercise, or actually exercises, significant influence or control; and/or
- has the right to exercise, or actually exercises, 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.
In the majority of cases, it will be obvious whether or not someone is a PSC. However, there are some less common and less obvious situations which may mean an individual is a PSC. For instance, shareholders with small holdings who act jointly to exercise an aggregate 25% of the voting rights may also qualify.
Failure to keep a PSC Register is a criminal offence. To comply with the new requirements, officers of a company must take the following steps:
- identify the PSCs of the company;
- record the details of the PSCs on the company’s own PSC register;
- from 30 June 2016, provide this information to Companies House as part of the annual Confirmation Statement (which will replace the Annual Return); and
- update the information on the PSC register when it changes and update the information at Companies House when the next Confirmation Statement is made.
It is possible that a company, especially if it is a charity or academy, will not have a PSC. However, this does not mean that it is exempt from the requirement to create and maintain a PSC Register. If a company has taken all reasonable steps and is confident that there are no individuals or legal entities which meet any of the criteria of a PSC, it must record that fact on its PSC Register.
If you would like any further information, please contact Joanne Gallagher, Partner in the Corporate & Commercial team at Thomson Snell & Passmore, on 01322 623708.