As of 6 April 2016, UK companies and LLPs will be required by law to keep a “persons with significant control” register, or from here on out, a PSC register. The register will be open for public inspection and will be searchable at Companies House from 30 June 2016.
On the 26th March 2015, a new law came into effect: The Small Business, Enterprise and Employment Act. This new piece of legislation required all UK companies (UK listed companies are broadly exempt) and UK LLPs to maintain a register of all the individuals that have significant control over the company. The new register, called the “persons with significant control” register is part of a series of measures to increase the level of transparency around the people who ultimately control the UK’s companies and LLPs.
This may pose a problem for some companies and LLPs, particularly those with complex ownership structures. The task of identifying who exercises control over such companies will be challenging and most likely constitute a significant burden on administrative teams.
All UK companies and LLPs will be required to maintain a PSC register, including subsidiary and dormant companies. The only exceptions are for certain publicly traded companies. The register will include personal details about all the people who have control over a company, including name, service address, nationality, date of birth and country of residence. The PSC register will also include the date on which they become registrable on the PSC register, together with confirmation of which of the conditions for being a PSC the individual meets.
Companies and LLPs will be required to investigate, obtain and update information about relevant individuals and legal entities. There will also be obligations on a person who has significant control over a company or LLP. The onus is on them to inform the company or LLP of that fact, and provide the relevant information for the PSC register. A company or LLP can impose voting, transfer or other restrictions on the person who fails to comply.
Who needs to be included on the PSC register?
An individual will be a person who exercises significant control (a PSC) over a company if the individual meets any one of the following five conditions:
- holds, directly or indirectly, more than 25% by nominal value of the company’s shares
- is entitled, directly or indirectly, to exercise more than 25% of the voting rights of the company
- may, directly or indirectly, appoint or remove a majority of the board of directors of the company
- has the right to exercise or actually exercises “significant influence or control” over the company
- has the right to exercise or actually exercises “significant influence or control” over a trust or firm which is not a legal entity but which itself satisfies one of the above conditions.
An individual will be a PSC over an LLP if the individual meets any one of the following five conditions:
- holds, directly or indirectly, rights over more than 25% of the surplus assets of the LLP on a winding up
- holds, directly or indirectly, more than 25% of the voting rights in the LLP
- holds the right, directly or indirectly, to appoint or remove a majority of those involved in the management of the LLP
- has the right to exercise or actually exercises “significant influence or control” over the LLP
- has the right to exercise or actually exercises “significant influence or control” over a trust or firm which is not a legal entity but which itself satisfies one of the above conditions.
This is just a very brief overview of the new law. Government guidance to help you better understand this can be found here.
