As part of the government’s bid to increase transparency of company ownership and control, most companies and LLPs in the UK are now required to maintain a PSC (‘persons with significant control’) Register. Despite a raft of statutory guidance and legislation on the subject, the new regime can prove tricky to get to grips with. In this article, we highlight our top tips for completing the PSC Register.

As of 6 April 2016, most UK companies and limited liability partnerships (LLPs)1 are required to maintain a register of people with significant control (a PSC Register). The annual return has also been abolished to make way for the new ‘confirmation statement’, which requires entities to deliver information concerning their PSCs to Companies House.

The new PSC requirements should not be taken lightly. Companies and LLPs may be criminally liable and fined if they fail to maintain a PSC Register. Similarly, officers of companies and designated members of LLPs could be criminally liable, and fined and/or imprisoned for failure to keep a PSC Register.

The Department for Business Innovation and Skills (now the Department for Business, Energy and Industrial Strategy) (BIS) has issued guidance to help entities identify and register PSCs but, at 87 pages long, many entities are struggling to get to grips with the new PSC requirements.

In this article, we provide our tips for identifying and registering PSCs.

1. DON’T dismiss foreign entities

Clients often fall into the trap of thinking that foreign entities can never be entered into the PSC Register as a relevant legal entity (RLE). This is not the case. A foreign entity will be an RLE if it has voting shares listed on certain regulated markets including:

  • on a regulated market in the UK or European Economic Area; or
  • on specified markets in Switzerland, the United States, Japan or Israel

For a full list of the specified markets, see Schedule 1 of the Register of People with Significant Control Regulations 2016.

2. DON’T ignore indirect interests

If the immediate shareholder of an entity is not an RLE, you must continue up the chain of ownership until you identify an individual or entity that has a majority stake in that legal entity. That individual or entity must be entered into the PSC Register if:

  1. they hold over 50 per cent of the shares or voting rights in the legal entity;
  2. they have a right to appoint or remove a majority of the board of directors of that legal entity;
  3. they control a majority of the voting rights in that legal entity by agreement with other shareholders or members; and/or
  4. they have the right to exercise, or actually exercise, dominant influence or control over that legal entity.

3. DON’T overlook condition 4

Under condition four of the PSC requirements, an individual will be a PSC if they have the right to exercise, or actually exercise, significant influence or control over the entity in question. It is only necessary to consider condition four if the first three conditions have not been satisfied by the individual or entity in question.

In the context of a company, a person may hold a right to exercise significant influence or control as a result of a variety of circumstances including the provisions of a company’s constitution, the rights attached to the shares or securities which a person holds, a shareholders’ agreement, some other agreement or otherwise.

BIS has produced a helpful 14-page guidance note which provides specific examples of how condition four may be satisfied.

4. DO get PSCs’ consent

If you determine that there are individuals who are PSCs of your company, you must obtain their consent before you enter their details in your PSC Register. PSCs are sometimes concerned that their residential address and date of birth will be made publicly available at Companies House. This is not the case. The residential addresses and the day of the date of birth of PSCs are never made public on a company’s own PSC Register or on the central public register at Companies House (unless a residential address has been provided as a service address). However, Companies House can share this information with credit reference agencies.

If you consider that exceptional circumstances apply to your company or your company’s PSCs resulting in a serious risk of violence or intimidation, then you can apply for their PSC information to be protected. This means that their PSC information would not be made public or shared with credit reference agencies.

5. DO not leave your PSC Register blank

The PSC Register cannot be blank. If you have identified that your entity has no PSCs or RLEs, this fact must be entered into the PSC Register. Similarly, if you are in the process of determining whether your entities have any PSCs or RLEs, an appropriate holding statement should be entered into the PSC Register.

The PSC Register must be properly maintained (like all other statutory registers).

  1. The PSC requirements apply to all UK incorporated companies (including dormant companies) that are: (i) limited by shares; (ii) limited by guarantee; (iii) unlimited; (iv) Societates Europaeae; or (v) LLPs. The PSC requirements do not apply to: (i) limited partnerships; (ii) charitable incorporated organisations; (iii) companies subject to Chapter 5 of the UK Listing Authority’s Disclosure and Transparency Rules; and (iv) companies with voting shares listed on certain specified markets (for a full list of the specified markets, see Schedule 1 of the Register of People with Significant Control Regulations 2016).