Significant changes to company law mean that, from 30 June 2016, companies will be required to create and keep up to date a register of ‘persons with significant control’ (PSC). Here we provide a summary of the key points.
UK companies are now required to produce a ‘persons with significant control’ (PSC) register, containing details of the ultimate beneficial owners of the company.
This information must be filed with Companies House, where it will be held in a public register, with the stated aim of improving the level of transparency of UK companies.
The requirement for companies to keep a PSC register came into effect on 6 April 2016, and under the regulations companies must:
- Identify the people with significant control over the company and confirm their information
- Record the details on the company’s own PSC register
- Provide this information to Companies House as part of the annual Confirmation Statement (formerly the Annual Return) from 30 June 2016, and update the register on an ongoing basis.
Companies must look beyond the individuals who immediately own their shares, in order to identify those individuals or entities which ultimately have significant control of the company.
A PSC is defined as an individual to whom one or more of the following applies:
- either directly or indirectly holds more than 25% of the shares in a company
- either directly or indirectly holds more than 25% of the voting rights in a company
- has the right to appoint or remove a majority of a company’s board of directors
- exercises, or has the right to exercise, significant influence or control over the company
- exercises, or has the right to exercise, significant influence or control over the activities of a trust or firm which is not a legal entity, and which itself meets one of the above conditions.
Notice must be given by the company to any people or entities that it believes are registrable for the PSC, allowing one month for the recipient to provide confirmation of their position. Any individual who knows, or ought reasonably to know, that they should be registered is also required to notify the company of their interest.
Information on the company’s own PSC register must be updated on an ongoing basis. Under the new ‘check and confirm’ process, which replaces the Annual Return, companies will supply a confirmation statement affirming whether the information remains up-to-date. Failure to comply with the new rules could potentially result in significant financial penalties and a criminal conviction.
Changes to PSC details will be reported when we submit our clients annual confirmation statement. If there are no changes to these details since incorporation or the previously filed confirmation statement, we simply have to check and confirm the details on your next confirmation statement.