From April 2016, most UK companies and LLPs will be required to maintain a new statutory register; the register of “persons with significant control” (or the PSC Register). This will reveal all individuals who have ultimate beneficial control of the company. From June 2016, the information included in the PSC Register will need to be filed at Companies House and be searchable by the public. The framework rules are contained in the Small Business Enterprise and Employment Act 2015 (SBEEB) with further detail to be provided in secondary legislation, more of which is expected.
Broadly, the definition of a PSC is a person who directly or indirectly holds 25% or more of the share capital or is directly or indirectly able to control the appointment / removal of a majority of the directors. It also includes persons who otherwise exercise significant influence or control over the company or any trust / partnership (i.e. not a legal entity) which has significant control of the company in accordance with the above principles.
In respect of groups, so long as a parent company maintains its own PSC Register, its subsidiary can include only the parent on its PSC Register without tracing ownership any further back. This will not apply to a company to which the rules are not applicable (e.g. offshore companies) and, in these circumstances, the PSC Register must trace back to a registrable person.
Companies will have a duty to take reasonable steps to identify registrable persons and failure to respond to a company’s investigations will entitle the company to impose restrictions on such person’s shares. Non-compliance also carries criminal penalties. Where ultimate control has not been finally determined the PSC Register will include information as to the steps taken to identify the person and any restrictions in place.
The PSC Register will need to be kept at its registered office and be available for public inspection. From June 2016, the information will also need to be provided to Companies House annually and this will held on a publicly searchable database.
These new rules mean that companies will need to put new compliance processes in place to obtain and record information on who exercises significant influence or control. Detail relating to LLPs is awaited, as the rules relating to LLP membership structures are yet to be published.
For more information contact Greg Vincent, Associate Solicitor Corporate & Commercial Team at Morrisons in Wimbledon on 020 8971 1033 or email [email protected].