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From 6 April 2016, with a few exceptions, all UK companies will require to keep a register of persons of significant control (PSC Register). 

The Small Business, Enterprise and Employment Act 2015 came into force in March, amending the Companies Act 2006, to create this requirement which aims to increase the transparency of UK corporate structures.  The requirement extends to companies with charitable status and unlimited companies, but most publically traded companies will be exempt.  LLPs will be subject to substantially similar requirements under separate regulations.

Individuals as well as companies will have obligations to ingather and provide information for this purpose, with criminal sanctions for non-compliance.

Companies will need to keep PSC Registers up to date and from 30 June 2016 submit information to Companies House annually by means of a Confirmation Statement, which will replace the Annual Return from June 2016.

Persons with significant control (PSCs) of applicable companies will have an obligation to make themselves known to those companies within 1 month of the date of becoming a PSC (which will be deemed to be 6 April 2016 where they already have this status).

Public bodies, non-company charities and Scottish partnerships do not require to maintain a PSC Register but may have obligations if they hold an interest in a company.

Persons with Significant Control

PSCs are defined in the Act. They include individuals (or a public bodies) having (either solely or jointly, directly or indirectly) more than 25% of the shares or voting rights in a company or the right to appoint or remove a majority of its board, as well as persons who have the right to exercise or do in fact exercise significant influence or control over that company.

Statutory guidance to the legislation clarifies that lenders, directors, employees, receivers, liquidators, customers and suppliers, as well as lawyers, accountants, financial advisors and management consultants who are acting in their normal professional capacity, would not normally be considered PSCs, despite any apparent significant influence or control over companies.

Group structures and Relevant Legal Entities

In the context of group structures, where a UK company is a parent and would be a PSC if it were an individual, then it is noted on the PSC Register of its subsidiary as a Relevant Legal Entity (RLE). A subsidiary which has identified an RLE does not then need to record the RLEs or PSCs of its parent companies or ultimate parent company (as they will generally have their own registers). A company may have both PSCs and RLEs or no PSCs or RLEs at all, in which case this fact must be noted.

In the case of foreign companies (that are not subject to relevant disclosure requirements), non-company charities and Scottish partnerships having significant control of a company, these are not noted on that company’s PSC Register but rather the person(s) with majority control or dominant influence over those controlling entities would be.

Details to be recorded

The Act specifies the details of PSCs and RLEs which require to be recorded and these include various personal details of individuals. With the exception of dates of birth and residential addresses, the information on the PSC Register will be available online via Companies House but in limited circumstances it is possible to be removed from the publically available version.

Gathering and Providing information

Companies have an obligation to take reasonable steps to identify PSCs and RLEs and to confirm their identity and their details. Companies are obliged to serve notice upon PSCs to obtain the required information and if necessary contact others who might reasonably know this information, such as banks or family members. A failure to respond to such a notice within 1 month is a criminal offence.

Separately, anyone becoming a PSC or RLE (assuming they reasonably ought to know this) has an obligation to inform the relevant company within a month of becoming one, with failure to do so once again a criminal offence.

Ongoing compliance

Whether the PSC Register is kept at the registered office of the company concerned or at Companies House it must be kept up to date at all times and made available for inspection upon request. As noted above Companies House requires to be updated annually.

Many companies will be able to routinely comply with these requirements using information which is already being held and regularly submitted to Companies House, but in the case of complex group structures (perhaps involving partnerships or foreign entities) a greater level of due diligence may be required.

Stronachs LLP would be pleased to assist companies or individuals to comply with the requirements relating to PSC Registers, whether by providing more detailed advice on the legislation, reviewing and advising on specific group structures, conducting or responding to information requests or indeed by providing ongoing company registrar services for your company.

This note is provided for topical interest and information purposes only and is not intended to be and should not be regarded as legal advice either generally or in relation to any specific circumstances.  Neither Stronachs LLP nor any of its members, employees, consultants or other personnel accepts any liability for loss arising from reliance on the contents of this note.

If you have any queries in relation to the above please get in touch with a member of the Stronachs Corporate Team.

Graham Chandler, Trainee Solicitor

Chambers Leading Firm 2019

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