The register of people with significant control (PSCs) was introduced last year in a step towards the government's much publicised aim of corporate transparency. Under the PSC regime, UK limited companies and limited liability partnerships must record information about their beneficial owners, and others with significant influence or control over them, in a register and also make it publicly available at Companies House. Currently, companies with shares listed on the LSE Main Market or trading on AIM are exempt from the regime.
What is changing?
Changes to the regime are necessary for the UK to comply with the beneficial ownership disclosure requirements of the EU Fourth Money Laundering Directive (the Directive) which is due to be implemented by 26 June 2017. Despite this imminent deadline, the government has not yet published final confirmation of all the changes which will apply, or the legislation to implement the changes. Based on the government's November 2016 discussion paper on the topic, and what it has announced to date, the key likely changes are:
Currently, PSC information is only provided to Companies House annually as part of a company's confirmation statement. From 26 June 2017, PSC registers will have to be updated within 14 days of any change occurring, with the updated information filed at Companies House within a further 14 days.
As the PSC regime currently stands, AIM companies (and NEX Exchange companies) are exempt from the obligations to maintain and disclose PSC information. When the regime was introduced, their significant shareholder reporting obligations under Chapter 5 of the Disclosure Rules and Transparency Rules (DTR5) were considered equivalent. Whilst the Directive exempts regulated markets, such as the LSE Main Market, from its beneficial ownership requirements, it does not exempt prescribed markets, such as AIM (and NEX Exchange).
In its discussion paper the government gave a strong indication that AIM companies would probably need to be brought within the PSC regime. In April, it announced (via Companies House) that the DTR5 exemption will change from 26 June 2017. Whilst the announcement does not expressly state that AIM companies will lose their exemption, it suggests that to be the case. The wording of the announcement is fairly vague; advising that companies traded on an EEA market will still be exempt. It is assumed that the reference to EEA market means an EEA regulated market, and not a prescribed market such as AIM.
Further clarification is expected when the legislative changes are published but AIM companies should be prepared to comply with the PSC regime from 26 June 2017.
Scottish limited and general partnerships
From 24 July 2017, active Scottish limited partnerships, and Scottish general partnerships where all partners are corporates, will be brought within the PSC regime, requiring them to disclose PSC information to Companies House for the public record.
Open-ended investment companies and others
In its discussion paper the government considered various other entities which are currently outside of the PSC regime but may fall within the scope of the beneficial ownership requirements of the Directive. These included Scottish limited partnerships, open-ended investment companies, and investment companies with variable capital. While it has confirmed that Scottish limited partnerships will be brought within the PSC regime, it has failed to confirm the position for open-ended investment companies or other entities being considered. Clarification is expected shortly.
Companies and other entities being brought within the PSC regime for the first time should:
- ensure that the relevant people within the organisation are familiar with the comprehensive guidance published by the government
- review corporate structures to identify potential PSCs
- consider whether notices must be sent to potential PSCs (or others who may have information about PSCs) requesting their details for the register
- make practical preparations – put in place appropriate housekeeping and administrative arrangements to create, maintain and update a PSC register
- be ready to file PSC information at Companies House promptly.
Beneficial ownership – the wider picture
The drive for corporate transparency, as a means of tackling crime and corruption, does not stop with the PSC register. Other steps being taken in the UK include:
- the introduction of a trust beneficial ownership register requiring trustees to maintain information on the beneficial ownership of trusts
- the establishment of a public register giving details of the beneficial ownership of foreign companies who own or buy property in the UK, or who bid on central government contracts.