People with Significant Control Register (PSC Register)

You must now under The Small Business Enterprise and Employment Act 2015 maintain a register of persons or entities with significant control over your company

1. Introduction

This Memorandum gives company directors and secretaries of limited liability companies, charities and social enterprises established as companies and designated members of limited liability partnerships, an overview of their obligations.

It is essential that you read the Government’s guidance that explains the law.

You can consult us at any time if you need legal advice on setting up your PSC Register, the information that needs to be included, when you arerequired to carry out an investigation and how to respond to requests.

2. People with Significant Control Register (PSC)

From 6th April 2016 UK incorporated companies and LLPs must collect information about people with significant control over them in a PSC Register to increase transparency about their ownership to help deal with anti money laundering and terrorist financing.

Companies must keep their PSC Registers accessible. A company can keep its PSC register at its registered office, or at another location provided it has notified Companies House. Anyone may have access to the company’s PSC Register free of charge, or have a copy of it for an appropriate fee.

Failure to comply is a criminal offence and you will face a conviction of up to 2 years imprisonment and/or a fine.

3. Who needs to keep a PSC Register?

• Unlisted UK incorporated companies limited by shares or guarantee, including dormant companies and community interest companies;
• UK Societas Europaeae; and
• UK LLPs.

4. What is the requirement?

• keep a register of people with significant control over the company;
• take reasonable steps to identify those who are registrable on the PSC Register;
• enter the required information on the PSC Register nd;
• provide the information to Companies House; and
• monitor and update the information on your PSC Register.

5. Who is a person with significant control?

A person or entity that:
• directly or indirectly owns more than 25% of the shares of the company;
• directly or indirectly holds more than 25% of the voting rights of the company;
• directly or indirectly holds the right to appoint or remove the majority of the directors of the board;
• otherwise has the right to exercise, or actually exercises, significant influence or control; and/or
• holds the rights to exercise, or actually exercises, significant influence or control over the activities of a trust or firm which is not a legal entity, but which would itself satisfy any of the above if it were an individual.

6. What if another company has significant control?

If some or all of a company’s shares are owned by a legal entity, known as a Relevant Legal Entity (RLE), you must enter the RLE on your PSC Register.

Where a PSC interest is held through an RLE, it is the RLE that is entered in the PSC Register. You then need to obtain information about persons with significant control.

You must take reasonable steps to determine whether any individual or legal entity meets the conditions for being a PSC or registrable RLE.

You will need to consider the position where shares are held by nominees or are subject to any other arrangement including trusts before making an entry in your PSC Register.

7. Investigation as to what is significant influence or control

The Government guidance has information on the meaning of significant influence or control. You must have regard to that guidance when considering if a person exercises significant influence or control.

The legislation sets out detailed procedures for investigating the position. You must give notice to anyone who you know to be registrable or you have reasonable cause to believe to be registrable.

You must also give notice to anyone who you know, or have reasonable cause to believe, knows the identity of a PSC or registrable RLE.

It is vital that you send appropriate notices to people before the information can be included on the PSC Register. This also applies to updating the information when PSC details change.

Although Government guidance contains template notices you may need notices based on the guidance which contain additional user friendly wording.

A person who has been given a ‘notice’ has one month to reply. If there is no response, the company must then give a ‘warning notice’ stating that if they don’t respond that may lead to them having restrictions placed on their interests in the company. If the notice is still not complied with, the company may issue a ‘restrictions notice’ after a further one month.

You must keep the PSC Register up to date. For example, the PSC Register may contain the following wording:

The company has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or registrable relevant legal entity in relation to the company.

The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company.

The company has given notice that has not been complied with, but if complied with the PSC notice must be updated with a new statement e.g. The notice has been complied with after the time specified in the notice, together with the PSC’s information.

8. How to respond to requests for information

It is a criminal offence to refuse a request without applying to court.

The company must respond to a request within five working days of receipt. The company’s reply must include the requested information and the date its PSC Register was last updated but a request must include a proper purpose for seeking the information.

If the company believes the request was not made for a proper purpose and wishes to refuse the request, the company must apply to court within five working days of receipt and reply to the request saying that they have made the application. However it seems that the circumstances in which a PSC request would be considered improper are limited.

A company can charge a fee of £12 for each copy of the PSC Register.

9. Residential Addresses

Companies must enter PSC information on their register and the central public register held at Companies House, through their annual Confirmation Statement. All of the information about the PSC, will be registered at Companies House.

The only information that will not be registered is the PSC’s usual residential address. The usual residential address on the register must not be made available for public inspection or when a company provides copies of the PSC Register.

Companies House can make residential addresses available to credit reference agencies and certain public authorities.

In exceptional circumstances, meaning where there is a serious risk of violence or intimidation, PSCs can prevent their residential addresses from being shared with credit reference agencies.

The Government’s guidance sets out more information if a company feels that their PSCs need protection.

From 30 June 2016, private companies have the option to elect to maintain their PSC register at Companies House instead of at their registered office. Companies can only do this if they give notice to their PSCs of their intention to make this choice and if the PSC doesn’t object.

10. Limited Liability Partnerships

The Government’s guidance details the PSC regime that applies to LLPs and it is in all material respects similar to UK companies.

11. Charities and Social Enterprises established as companies

The PRC Register regime extends to companies limited by guarantee, Community Interest Companies and any charity trading subsidiary incorporated as a company or LLP. The obligation to maintain a PRC Register but does not currently include Cooperative Societies, Community Benefit Societies and Charitable Incorporated Organisations.

12. Summary

You must establish and maintain a PSC Register, file those details at Companies House and keep them at your registered office or another address that you have notified to Companies House.

If you fail to comply with this new PSC Register requirement, you will face criminal conviction by imprisonment and/or a fine.

Copyright: The Brooke Consultancy LLP 20 March 2016

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