On 26th March 2015 the Small Business Enterprise and Employment Act 2015 received Royal Consent. One of the more important provisions is the requirement for all UK companies to create a Register of Persons of Significant Control (PSC Register). One of the reasons behind this change is to improve transparency around who owns and controls UK businesses. This is also a measure to improve the UK’s reputation as a fair place to do business.

The definitions of a Person of Significant Control have been under discussion and The Register of People with Significant Control Regulations 2016 are only now before parliament. Those Regulations, once passed, will give every UK company a very short window to create a PSC Register. The PSC Register must be in place for all companies by 6th April 2016. The law will impose penalties on companies that do not comply.

The PSC Register must then be sent to Companies House when the next Compliance Statement (a document to replace the Annual Return) is filed when due between 1 July 2016 and 30 June 2017. It will show on public file. It must be kept updated and filed annually thereafter.

The PCS Register must contain details of all persons who:-

  • own more than 25% of the company’s shares, directly or indirectly
  • hold more than 25% of the company’s voting rights, directly or indirectly
  • hold the right to appoint or remove the majority of directors
  • otherwise have the right to exercise, or actually exercise significant influence or control
  • hold the right to exercise or actually exercise significant control over an arrangement that isn’t a legal entity (eg a trust), but would satisfy any of the first 4 conditions if it were an individual.

The full name, residential address, nationality and date of birth of all such persons must be supplied to Companies House, although a non-residential service address can also be provided and if it is, it will be the address viewable by the public. In addition, only the month and year of birth will show on public file.

Where a company is a more than 50% subsidiary of another company and that company is a UK company subject to the same act, then, if there is no other person controlling the activities of the Company, the subsidiary need only record the details of its parent organisation in its PSC register. If the holding company is an overseas corporation or otherwise not subject to the regulations, then the person or persons who ultimately control the parent organisation via the criteria above will need to be entered.

It is not possible for a company to do nothing and have no entry in its PSC Register. If there is no such person of significant control, there are specific words which must be entered into the Register. It will not be possible for a company to file an annual Compliance Statement without the PSC register completed.

It is the responsibility of any person who considers themselves a Person of Significant Control to contact any company where such control exists and to confirm that fact. It is the Company’s responsibility to create and hold the PSC Register and that would include communicating with every person who they consider may be a person of significant control.

As mentioned, it is not possible to have no register or to have such register blank. There are set phrases to be used in the register where a company has not yet completed its enquiries or where there is no person of significant control or where there is such a person but they have not yet provided sufficient details to record in the PSC Register.

If any company does believe that they have a person or persons of significant control then they should now request such person or persons to confirm that to them. The company concerned should also request such persons to confirm under which category the control exists and if it is via a direct or indirect shareholding, the level at which such shareholding exists. (More than 25% but not more than 50%; more than 50% but less than 75%; or 75% or more). On receipt of the information, the company must update their PSC register.

It is a legal requirement for any person who is a person of significant control to confirm this to the company affected. For any such person, it would be a criminal offence to not confirm this to each such company affected. If no response is made by someone who a company believes is a person of significant control, then the law suggests that it may be appropriate for such company to suspend the shares concerned from voting and dividends.