1.  Summary.  The Small Business, Enterprise and Employment Act 2015 ("SBEE") has introduced a new regime requiring all UK-incorporated companies and LLPs (other than, broadly, listed PLCs) to create and maintain a register of persons with significant control (the "PSC Register") by 6 April 2016. 
 
2.  Action to be taken now.  In advance of 6 April 2016, each company and LLP should now:

  • take reasonable steps to ascertain whether there are any persons who control or exercise significant influence over the company (see below);
  • where necessary, contact those people, or others who may know them, to confirm whether or not they do indeed meet one or more of those conditions, and obtain from them the information required to be included in the company's new PSC Register; and
  • create the new PSC Register and populate it with the required information.

3.  What is a PSC?  A person with significant control over a company ("PSC") is an individual who meets any one of the following five conditions:

  • direct or indirect ownership of more than 25% of the company's issued share capital calculated by reference to the nominal value of the shares;
  • direct or indirect control of more than 25% of the rights to vote at general meetings on all or substantially all matters;
  • direct or indirect right to appoint or remove directors holding a majority of the voting rights at board meetings on all or substantially all matters;
  • exercises, or has the right to exercise, significant influence or control over a company.  (This condition is relevant only if the person does not meet one of the three conditions above); or
  • exercises or has the right to exercise significant influence or control over activities of a trust or firm which itself meets one or more of the first four conditions.

Different provisions apply when one or more of the shareholders of the company is a legal entity (wherever incorporated).  A wholly-owned subsidiary may be able to identify and record its parent as a "relevant legal entity" ("RLE") and will not be required to investigate and record any PSC of the parent.  It can record the parent as an RLE if, broadly, the parent is required to maintain its own PSC Register or it is listed in an EEA state or in certain other specified jurisdictions.

If the subsidiary is not wholly-owned, it will have to investigate any PSCs and/or RLEs.

In addition to the company's duty to investigate, any person who is a PSC or RLE must identify themselves to the company concerned.  Failure to do so within the statutory time limits will be a criminal offence and may result in the company imposing restrictions on the ability to exercise rights attaching to shares owned or controlled by that person.

4.  Guidance.  Statutory Guidance on the meaning of the term"significant influence or control" ("Statutory Guidance") for the purposes of the fourth and fifth conditions listed above has now been published, together some very helpful additional non-statutory guidance that explains the requirements of the new rules and how to comply with them: a "Summary Guide for Companies", "Guidance for Companies and LLPs" and "Guidance for PSCs" (not yet available).

5.  More information.  The purpose of this alert is to raise awareness of these new obligations.  We have prepared a longer form of alert that gives more information on the new regime.  Please ask your usual B&M contact if you would like a copy of that alert.
 
Please click here for a link to an "at-a-glance" flowchart to assist in determining whether a company is caught by the new regime and, if so, how to identify persons who must be recorded in the PSC Register.