PSC Register Services

As a result of legislation enacted by Parliament, from 6 April 2016, most UK Companies and Limited Liability Partnerships (LLPs) will have to hold, maintain and keep available for inspection a new statutory register, of People with Significant Control (PSCs) over the company or partnership. From 30 June 2016, the majority of PSC information will have to be included within the new Annual Confirmation Statement which will replace the current Annual Return that is filed at Companies House and also disclosed as part of company formation requirements.

Why are UK Government implementing a PSC Register?

The measures have been taken by the Government as part of the Small Business, Enterprise and Employment Bill which has been designed to create improved transparency and to provide a clear picture of both the legal and beneficial ownership in UK companies. The EU is also introducing similar measures as part of the Fourth Money Laundering Directive which came into force in June 2015 and which must be implemented by all member states by June 2017. As such, the register will identify those individuals who are the ultimate beneficial owners together with those individuals who exercise or have the right to exercise significant influence or control over the business of the company.

Who is a PSC?

• A person who holds, directly or indirectly, more than 25% of the shares in the company or in the case of an LLP a person holding the right to more than 25% of the assets on a winding up.
• A person who holds, directly or indirectly, more than 25% of the voting rights in the company.
• A person who holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company.
• A person who has the right to exercise, or actually exercises, significant influence or control over the company.
• A person who exercises significant influence or control over the trustees of a trust or partners of a firm, where that trust or firm is not a separate legal entity, but where those trustees or partners would otherwise meet the conditions above.

What is significant influence or control?

Long awaited draft statutory guidance on the obligation to maintain a register of persons with significant control (PSC) has now been published.

• “Significant influence’ is where an individual can ensure that the company adopts those policies or activities which are desired by the holder of the significant influence.
  
• “Control” means the power to direct the policies and activities of a company. Significant influence or control also extends to the direct or indirect right to exercise actual significant influence or control, whether created in the company statutes, via a shareholders agreements or similar, share rights or otherwise. An individual who holds such a right is also required to be entered on the PSC register irrespective of whether the right has or will be exercised.

Will your company need a PSC register?

It will apply to UK private companies and LLPs only.

It will not apply to Foreign entities operating in the UK or  Companies that already disclose information about ownership of shares under the FCA’s Disclosure and Transparency Rules (DTR5 issuers) or are listed on a regulated market in the UK, in an EEA state or certain specified markets in Switzerland, the USA, Japan or Israel.

Relevant Legal Entity

It is not possible to enter a Company (e.g. a parent company) as a PSC unless it is a relevant legal entity (RLE). A RLE includes any other UK entity that is also subject to the PSC Register regime itself, a DTR5 issuer, or is itself listed on a regulated market in the UK, in an EEA state or certain specified markets in Switzerland, the USA, Japan or Israel. In this event the details of the RLE should be disclosed.

Draft Guidance provides non-exhaustive examples which include an individual:

• Who has absolute decision rights or veto rights over decisions related to the running of the business of the company (but not where these derive solely from being a prospective vendor or purchaser in relation to the company, for a temporary period of time, or for the purpose of protecting minority interests such as in respect of constitutional or share capital changes, additional borrowing or winding up the company).
• Who has absolute veto rights over the appointment of the majority of directors.
• Who is involved in the day to day management and direction of the company where they are not a member of the board (or even a shareholder).
• Whose recommendations are always or almost always followed by shareholders which hold the majority of the voting rights in the company, when they are deciding how to vote.

What information needs to be recorded?

• Name
• Date of Birth
• Nationality
• Usual residential address (this will not appear on the public record)
• Service address
• Usual country/state of residence
• Date on which the individual became registrable
• Nature of control (25-50%, 50.1%-74.9% & 75%+)

The above information must be kept up to date as any changes occur.

Protection Regime

A protection regime exists whereby those individuals, who can demonstrate they are at serious risk of physical harm as a result of being on the PSC register, can apply to Companies House to have their information protected.

Safe harbours

Draft Guidance identifies “safe harbours” (roles and relationships which usually mean a person will not exercise significant influence or control). This will typically include directors and employees who act within their official capacity, any usual third party, statutory, regulatory and advisory parties (e.g. suppliers, lenders, regulators, liquidators, accountants, lawyers), as well as others who make recommendations to shareholders on a one-off issue that is voted on.

A person may still be regarded as exercising significant influence or control if the ‘safe harbour’ role or relationship differs in material respects or is actually different from how the role or relationship is generally understood, or if it forms one of several opportunities which that person has to exercise significant influence or control. This appears intended to capture people who use their apparent relationship with a company to mask their actual influence or control over the company – e.g. a director who also owns important assets or has key relationships important to the running of the business and uses this additional power to influence the outcome of decisions related to the running of the business of the company.

What will happen if you do not comply?

PSCs who know, or ought to reasonably know, that they have the right to or actually exercise significant control over a company personally have an obligation to notify the company of their interest within one month of becoming a PSC where the company has not already requested that information. They will be committing an offence if they fail to notify or respond to a notice from the company, who must take reasonable steps to identify and notify registrable people. In addition, the company may apply sanctions in relation to shares held by the PSC and the rights attached to those shares.

Should you wish to discuss any aspect of the new legislation or review your current position both from a corporate or an individual perspective, please do not hesitate to contact us.

The protection of our clients’ privacy is central to our organisation and services.

When must your PSC register be ready?

Your PSC register, which cannot be blank, must be ready and available from 6 April 2016. If there are no PSC’s or investigations are continuing they will be required to be completed with a pr0-forma wording stating this is the case. From 30 June 2016 the PSC information will need to be sent annually to Companies House with your confirmation statement which replaces the annual return. Your company will have an ongoing obligation to maintain the register and investigate when you believe there may have been a change in PSC.

Companies will be obliged to provide copies of their PSC register to those with a legitimate purpose request it and have paid a fee of £12.00. When providing a copy on this basis the PSC’s usual residential will not be included.