The Small Business, Enterprise and Employment Act 2015 (the Act) contains provisions to increase the accountability of companies, including the setting up of a central public register of people with significant control (PSC Register). From April 2016, companies will be required to keep their own PSC Register and, from June 2016, a company will need to deliver its PSC Register to Companies House at the same time as its confirmation statement (which will replace the annual return).   

The Department of Business, Innovation and Skills (BIS) has published a consultation paper seeking views on the draft Register of People with Significant Control Regulations 2015 (the Draft Regulations). The main elements of the consultation which the BIS are seeking views on are summarised below:

Scope

Companies that are required to comply with Chapter 5 of the Disclosure Rules and Transparency Rules (which includes AIM companies) will be exempt from the requirement to keep a PSC Register (section 790B of the Companies Act 2006). The Draft Regulations also exempt companies with voting shares admitted to trading on a regulated market in any EEA state (which does not include AIM). The rationale is that these companies already provide substantial information about their major owners.

Recording control

A person with significant control (PSC) is defined as an individual who meets one or more of the following criteria:

  • direct or indirect ownership of more than 25 per cent of a company's shares
  • direct or indirect control of more than 25 per cent of a company's voting rights
  • direct or indirect right to appoint or remove a majority of the board of company directors
  • exercises or has the right to exercise significant influence or control over a company
  • exercises or has the right to exercise influence or control over the activities of a trust or firm which itself meets one or more of the first four conditions.

The PSC Register must record which of the conditions the PSC satisfies. The Draft Regulations also require an indication of the extent of the control and the BIS has proposed a banding system to indicate the level of the PSC's ownership of the relevant company.

Fees

Although the PSC Register will be available at no charge, a fixed fee of £12 has been proposed which will apply to all requests for copies of entries.

Protection regime

PSCs will be able to apply to have their information on the company's PSC register withheld from the public register or from being shared with credit reference agencies if they believe that they are at risk of violence. There will also be controls on the ability of organisations to obtain the residential addresses of PSCs.

Warning and restriction notices

If a company has knowledge of a person it believes should be on its PSC Register, they may be required to contact them under the Regulations in order to obtain the relevant details for the PSC Register. It is proposed that if the person fails to respond to an initial notice within one month, the company may issue them with a warning notice and, if they fail to comply with the warning notice within one month, subsequently, a restriction notice. The restriction notice will freeze the person's interest in the company until the information is obtained for the PSC Register.

Points to consider

The Government left the detail out of the Act and has now set itself a tight timescale for finalising regulations, which will undoubtedly add to the burden on those companies that are not exempt from the new PSC requirements. We expect a number of concerns to have been aired during the consultation process as to the workability of the new arrangements and further developments in this area are very possible over the next few months.