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The new register for Persons with Significant Control (PSC)

The 6th April 2016 is a date to be saved, as almost all UK companies and LLPs must maintain a Persons with Significant Control register. This statutory register that almost all UK companies and LLPs will be ordered to keep, is absolute key in establishing those who not only own shares in the company, but to also establish those who have significant control – their holding will be made public.

The 30th June 2016 is when all information will be delivered annually to Companies house, by each company when filing its confirmation statement (which from that date will replace the annual return.)
The new register is aimed at increasing transparency over the control and ownership of UK companies and LLPs, in an aim to highlight the UK leading the way on implementation, of the EU Fourth Money Laundering Directive.
What are the new obligations that all UK companies and LLPs must ensure?
  •  Maintain a register of registrable PSCs
  • Take reasonable steps to identify any PSCs and obtain/confirm their relevant details
  • The PSC register must be available for public inspection at their registered office and respond to requests for copies; and include details of any PSCs in their annual confirmation statements submitted by Companies House.
Diane Chadwick, a Professional Support Lawyer stated that ‘The Government hopes that the introduction of the PSC Register and the other measures relating to transparency contained in the Small Businesses Enterprise and Employment Act 2015 (SBEEA) will help combat tax evasion, money laundering and terrorist financing by allowing a full picture of both the legal and beneficial ownership of businesses to be created.’
Anyone that is a PSC in respect of their company or an LLP, or those who ought to reasonably have known this, as well as those that do not have up to date particulars on the PSC register, must notify the company or LLP of any amendments as soon as possible.

What defines the specified conditions for being a PSC?
The legislation sets out five specified conditions by which a person may have significant control over a company. You must meet one or more of the following threshold conditions for a single company:
  • Directly or indirectly own more than 25% of the shares in the company
  • Directly or indirectly hold more than 25% of the voting rights in the company
  • Directly or indirectly have the power or appoint to remove the majority of the board of directors of the company Otherwise, have the right to exercise or actually exercise, significant influence or contrl over the company
  • Have the right to exercise or actually exercise, significant influence or control over a trust or firm that is not a legal entity
Statutory guidance on the meaning of ‘significant influence or control over the company’ for companies and for LLPs are available from this link.
Who can access this register?
Any person has the right to inspect the PSC register without a charge, and they are able to request a copy for a fixed fee of £12. If the inspection is not considered to be for a proper purpose then the company or LLP must seek a court order to reject the inspection. In all other instances a company or LLP must comply.
A lot of the information that will be stored in this register will also be available to inspect from Companies House.

Sanctions for non compliance
Companies and directors who do not comply with the above will commit an offence punishable by imprisonment or fine.

In first instance a company or LLP can be served a warning notice that it intends to follow up with a restrictions notice. Restriction notices can also be served one month later if the original notice has still not been complied with for no valid reason.

The effects of the restriction notice in relation to a particular shareholding is that any transfers of those shares are void, no rights may be exercised in respect of the m and the company may not pay any sums due on them except in liquidation.