​What is the PSC regime?

From 6 April 2016, the main provisions of Part 21A of the Companies Act 2006 take effect and most companies registered in the UK must keep a register of all persons who have significant control over them (their "PSCs"). The purpose of the PSC register is to allow the public to check who ultimately owns or controls a company. This note deals with companies. LLPs will also be subject to the regime, but it will apply slightly differently to them.

The PSC register is different from a company's register of members, which shows only the registered shareholders. Unlike a register of members, the PSC register will show who controls the company, even if that person does not directly hold shares. This includes if the person holds control through a trust, partnership, nominee arrangement or holding/offshore company.

The regime will not apply to UK companies that are subject to the requirements of Chapter 5 of the Disclosure and Transparency Rules (i.e. whose shares are admitted to trading on a regulated market in the UK or other UK markets, such as AIM) or whose voting securities are admitted to trading on a regulated market in another EEA state or certain other specified markets (including the NYSE and NASDAQ).

What information will be disclosed?

If a person is a PSC, the following of his/her details will need to be disclosed: name, service address, residential address, country of usual residence, nationality, date of birth, and when he/she became a PSC.

The register will also need to state the nature of the PSC's control.

In some cases, the register will contain the details of another controlling company, not the PSC. However, this will typically happen where the PSC's details are available under an equivalent regime or the controlling company's shares are admitted to trading on one of the exchanges described in the section above.

Where will this information be available?

Anyone may obtain a copy of a company's PSC register for a fee of £12. The company may apply to court if it feels the application is not being made for a "proper purpose".

In addition, the company will be required to file the information once a year at Companies House (the UK's public central registry for companies).

A PSC's residential address will not be publicly available, except to public authorities and credit reference agencies. PSCs will be able to apply to prevent their other details from being publicly disclosed if they might be at serious risk of violence or intimidation.

What makes someone a PSC?

Broadly, a person will be a PSC if he/she satisfies at least one of four conditions:

  • Holding more than 25% of the nominal value of the company's share capital
  • Holding more than 25% of the company's voting rights
  • Holding the right to appoint and remove directors with a majority of board votes
  • Exercising, or having the right to exercise, significant influence or control It is possible to satisfy these conditions indirectly, such as by holding through a nominee, trust, partnership or holding company, or through a shareholders' or voting agreement.

The last condition is open-ended and will be harder to determine. However, it is likely to catch people who have certain veto rights over a company's affairs, or who otherwise influence the company's business. It might even extend to organisations that appoint observers to a company's board.

What will companies need to do?

Every company (other than companies which are excluded from the PSC regime) must keep a PSC register from 6 April 2016. The register can never be blank. If the company is still investigating who controls it, the register must say so.

From 6 April 2016, companies must also take reasonable steps to identify their PSCs. This includes serving information requests on suspected PSCs and possibly on third parties, such as lawyers, accountants and trustees.

What will PSCs need to do?

If a person suspects he/she is a PSC of a company, he/she is under an active obligation to provide his/her information to that company.

How will the regime be enforced?

If a company does not take reasonable steps to identify its PSCs, or fails to send the required notices, it and every officer in default will commit a criminal offence.

A person who receives an information request from a company will have one month to comply.

If a person does not comply with an information request within a month, the company may inform the relevant person that it is considering imposing restrictions on the person’s interest in the company. If the person does not comply within a further month of this warning notice, the company may in certain circumstances impose restrictions on the person's interest in the company. These include suspending voting and dividend rights and blocking transfers.

Ultimately, the company will be able to apply to court for an order for the sale of the person's interest.

In addition, it will be a criminal offence if a person fails to respond to an information request, or if a person knows that his or her details need to be recorded in the company’s PSC register but fails to supply those details to the company.