A comprehensive summary of the requirement

For companies to create and maintain a register of people with significant control, which came into force on 6 April 2016.

Register of people with significant control: A summary of the new requirements

A comprehensive summary of the requirement for companies to create and maintain a register of people with significant control, which came into force on 6 April 2016.
 

What is happening on 6 April 2016?
 

From 6th April 2016, certain UK companies (including dormant companies) and Limited Liability Partnerships (“LLPs”) will be required to create and maintain a register of people or legal entities with significant control over them (“PSC register”). For convenience, this note refers to companies.
 

A person with significant control (“PSC”) is an individual who meets one or more of the following conditions:
 

  • An individual who holds more than 25% of the shares in the company.
  • An individual who holds more than 25% of voting rights in the company.
  • An individual who holds the right to appoint or remove the majority of the board of directors of the company.
     

If the above conditions cannot be met, the following questions must also be considered:
 

 

  • Is there an individual who otherwise has the right to exercise or actually exercises significant influence or control over the company?
  • Is there an individual who 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 above conditions if it were an individual?


If the answer is “yes”, then the individual identified will be a PSC.
 

What details should be included in the PSC register?
 

Once a PSC has been identified, the following details need to be entered on the PSC register:
 

  • name;
  • date of birth;
  • nationality;
  • country, state or part of the UK where the PSC usually lives;
  • service address;
  • usual residential address;
  • date when the individual became a PSC in relation to the company;
  • which of the conditions the individual meets for being a PSC (using the official wording);
  • any restrictions on disclosing the PSC’s information that are in place.
     

The company must keep the register up to date and make it available for inspection.
 

Relevant legal entities (“RLEs”)
 

If the company is owned or controlled by a legal entity as opposed to an individual, that legal entity’s details must be included on the PSC register if it is relevant and registrable.
 

A legal entity is relevant if it meets one or more of the conditions above and:
 

  • it keeps its own PSC register;
  • it is subject to Chapter 5 of the Financial Conduct Authority’s Disclosure and Transparency Rules; or
  • it has voting shares admitted to trading on a regulated market in the UK, European Economic Area or on specified markets in Switzerland, the USA, Japan and Israel.
     

A legal entity is registrable if it is the first relevant legal entity in the company’s ownership chain.
 

Where a registrable RLE has been identified, the following information must be obtained and entered on the PSC register:
 

  • name of the legal entity;
  • address of registered or principal office;
  • legal form of the entity and the law by which it is governed;
  • if applicable, a register in which it appears and the registration number;
  • date when it became a registrable RLE in relation to the company;
  • which of the conditions it meets for being a PSC.
     

What are a company’s obligations?
 

  • Take reasonable steps to find out if any individual or legal entity has significant control over the company.
  • Contact people who are identified as having significant control or others who might know them to confirm whether they meet the relevant conditions.
  • Enter information on the company’s PSC register.
  • File the information at Companies House in the Confirmation Statement from 30th June 2016 (please see below).
  • Keep the information on the PSC register up to date.
     

Although there is no required format for the PSC register, the government does prescribe information that it must contain.
 

A company’s PSC register cannot be empty. Even if the company identifies that it does not have any PSCs, it will still need to keep a PSC register stating as follows:
 

“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.”


Alternative to keeping a PSC register
 

From 30th June 2016, a company may elect to maintain the information that must be entered in its PSC register on a central register kept by Companies House.
 

What steps should you take if you are a PSC?
 

You must respond to any request for information or to confirm that the information provided is correct. If you have not heard from the company within one month of being a potential PSC, you must notify the company of your status.
 

What are the sanctions for non-compliance?
 

Failure to comply is a criminal offence, punishable by a fine and/or imprisonment. Companies can restrict the rights attaching to shares in question.
 

Annual Return replaced by Confirmation Statement
 

The information in the PSC register will have to be included in the information delivered to Companies House annually in the Confirmation Statement which replaces the annual return from 30th June 2016.
 

For more detailed advice, please contact our Corporate & Commercial team.

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