With less than one month to go before the new PSC Register comes into force, company directors need to start planning now for their PSC Register, if they have not already done so.
The Small Business, Enterprise and Employment Act 2015 (the Act), which passed into law early in 2015, brings some significant changes to UK company law which will impact on UK companies of all types and sizes. In this article we look at one of those changes, the new PSC Register; a register which nearly all UK companies (other than UK listed companies, which are broadly exempt) must keep of persons with significant control (PSCs) over the company.
The information on the new PSC Register will need to be filed at Companies House from 30 June 2016, but companies must have their PSC Register in place from 6 April 2016.
The new PSC Register
- The changes introduce a public register of people with significant control (“PSC”s) over UK companies
- Broadly, a PSC is a person who directly or indirectly owns more than 25% of the company or has the right to exercise, or actually exercises, significant influence or control over the company
- Companies have to keep a register of PSCs and file information about the PSCs at Companies House
- Filing this information will be done via an annual check and confirm process which will replace the requirement for an annual return
- Companies are required to send notice to known/suspected PSCs requiring their confirmation of their PSC status
- PSCs also have obligations to inform the relevant company of their PSC status
- Breach is a criminal offence with sanctions of fines or imprisonment
Key dates for the new PSC Register are:
- Companies to keep a PSC Register from 6 April 2016
- Companies to file PSC information at Companies House from 30 June 2016
At present companies record only the immediate, legal owners of their shares.
In future, following the introduction of the new PSC Register, companies will have to look through that and also through however many layers of ownership there are above that to identify relevant persons who ultimately have significant control of the company, and keep a register of such people.
If you have any queries on the above or want to discuss in more detail how it affects you and your business, please do not hesitate to contact us.
For more information on the new PSC Register, please read the detailed briefing below.
What is the PSC Register and who is a PSC?
Under the new PSC register rules there are five specified conditions by which a person may have significant control over a company and therefore meet the criteria of a PSC. The legislation demands that companies take reasonable steps to identify and record all PSCs.
A PSC is anyone who meets one or more of the following conditions:
- Holds more than 25% of the shares in the company
- Holds more than 25% of the voting rights in the company
- Holds the right to appoint or remove a majority of the board of directors of the company
- Has the right to, or does, exercise significant influence or control over the company; or
- Has the right to, or does, exercise significant influence or control over a trust or firm satisfying any of the first four conditions.
The conditions for identifying a PSC will, for instance, catch persons having control of more than 25% of the company or controlling more than 25% of the voting rights of a company. Where two or more persons collectively have the relevant interest, they will all be caught in certain circumstances. In the case of a trust in the chain of ownership, the trustee will normally be regarded as the person with significant control, but it is possible that the beneficiaries may be considered to be significant controllers in certain circumstances.
One condition that is subjective and potentially broad, is that the person has the right to exercise, or actually exercises, ‘significant influence or control over the company’. The Secretary of State has published statutory guidance on the meaning of ‘significant influence and control’ in this context – please see the link at the bottom of this page.
For some companies, particularly those with complex ownership structures, the process of identifying PSCs may be challenging and will likely lead to a significant additional administrative burden.
When a company has identified that it does not have any PSCs, that company will still need to keep a register.
How will the new PSC Register work?
At present, companies record only the immediate, legal owners of their shares.
As mentioned above, following the introduction of the new PSC Register, companies will have to look through that and also through however many layers of ownership there are above that to identify relevant persons who ultimately have significant control of the company, and keep a register of such people.
The Act contains detailed provisions of steps the company must or may take to obtain relevant details. In particular, the company must send notice to anyone whom it knows or has reasonable cause to believe to be a registrable person (a PSC) requiring that person to confirm the position. Companies could, therefore, be expected to give notice to any shareholders holding more than 25% of the shares. A company may also give notice to a person if it knows or has reasonable cause to believe that the person knows the identity of a significant controller (or knows someone likely to have that knowledge).
A PSC will also be required to notify the company of their interest (or confirm their interest to the company).
The company will also be required to file the information on PSCs with Companies House. In the case of an individual, that individual’s name, month and year of birth, nationality and service address will be publicly available, together with details of the interest concerned. Where a company elects to keep its registers at Companies House, the day of birth will also be disclosed. The residential address will be available from Companies House (along with the full date of birth) only to the certain public authorities.
A company’s PSC Register is open to public inspection, subject to application to court that a request is not for a ‘proper purpose’.
Breaches of these provisions will be a criminal offence with sanction of fines or imprisonment.
Preparing for the new PSC Register
To prepare for the new PSC Register, companies must take action now to ensure that their PSC Register is in place by 6 April 2016. Companies must also ensure that their PSC Register is populated with the relevant information of its PSCs.
If for any reason the company does not have the relevant information of its PSCs by 6 April 2016, the company will still need to ensure that they have the appropriate official wording recorded in their PSC Register.
The company’s PSC Register must never be empty.
Government guidance states that when a company is in the process of taking reasonable steps, this fact must be entered on the PSC Register. The register must say that: ‘The company has not yet completed taking reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity in relation to the company’.
For more information and advice
The deadline for establishing a PSC Register is less than a month away so companies and company directors need to start planning and putting in place the necessary processes and procedures now if they have not already done so. Completing and maintaining the new PSC Register may not always be a simple task, so please contact us if you want to discuss the requirements in more detail.
The Government has produced guidance for the new PSC Register, to help people understand and comply with the new rules. You can download the guidance here.
If you have any queries on the above or want to discuss in more detail how it affects you and your business please do not hesitate to contact us.