Corporate Update On PSC Register

Date Added 05.04.16

The Small Business, Enterprise and Employment Act 2015 has been phased in at various stages since it received royal assent in March 2015.

One of the headline corporate changes becomes effective today (6 April 2016). From this date, companies and Limited Liability Partnerships (“LLPs”) will be required to maintain a register of Persons with Significant Control (a “PSC”). This covers both individuals and corporate entities. The purpose of this change is to encourage transparency over corporate ownership with a view to reducing financial crime including money laundering and tax evasion. Accordingly, companies and LLPs must disclose details of their major shareholders who have or exert significant control or influence.

From 30 June 2016, all companies and LLPs will be required to file at Companies House details of all PSCs. This will be delivered together with the new confirmation statement (which will replace the annual return from 30 June 2016). As with the annual return, the information filed in the confirmation statement will be publicly available (with the usual exception of the PSC’s residential address).

In certain circumstances, PSC details can be withheld if that person is at serious risk of harm or intimidation due to the activities of, or association with, the relevant company or LLP. Those persons who qualify as a PSC have 12 weeks in which to relinquish or dispose or their interest or control in order to avoid appearing on the PSC register.

A person is deemed to hold significant control over a company if they:

–          hold more than 25% of shares or voting rights (whether directly or indirectly);

–          have the power to appoint or remove the majority of the board of directors;

–          exercise, or have the right to exert, significant influence or control over the company; or

–          exercise or have the right to exert significant influence or control over any trust or other entity which satisfies any of the above conditions.

Draft guidance has been published in respect of LLPs which indicates a similar approach to companies based on 25% or more of rights to assets of the LLP on a winding up, 25% or more of voting rights of LLP members, and the right to appoint or remove a majority of the management team of the LLP.

The statutory guidance for companies (which can be accessed via the web addresssets out a number of factors and examples which are indicative of significant influence or control.

The obligation to maintain a register includes noting where there are no registrable PSCs, if the company or LLP believes it has registrable PSCs but has not been able to confirm the relevant details, or if the company or LLP does not have the relevant information having made reasonable steps to investigate. A PSC itself is obliged to provide the relevant information to the company or LLP. Failure to comply with these obligations is a criminal offence by every officer or registrable PSC in default, punishable by a fine and/or imprisonment of up to 2 years.

Companies and LLPs must make their PSC register available for inspection for free, but can charge £12 per request for a copy of the PSC register.

For more information, talk to Tollers! Our Corporate Law team can advise you on the PSC register requirements, your obligations in respect of the new changes and corporate governance generally.

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