On 6 April 2016, the Government introduced new provisions into the Companies Act compelling almost every company and LLP to produce, keep and maintain a register of any people or relevant legal entities that have significant control over that company or LLP (the "PSC Register"). This was a step towards the Government's aim of corporate transparency to prevent fraud, money laundering and terrorism. Every PSC Register must be available for public inspection and updated details of all PSCs published annually at Companies House. Until now, the only exemptions to the requirement to hold a PSC Register were DTR 5 issuers (i.e. LSE Main Market or AIM-listed companies or companies otherwise subject to the Disclosure Rules and Transparency Rules) due to the obligations under DTR 5 for such issuers to publish substantial information about their major shareholders. Please click here for further information on the original PSC regime.
On 23 June 2017, the Government published the Information about People with Significant Control (Amendment) Regulations 2017 ("Regulations") which stated that changes to the PSC regime were required in order for the UK to comply with the beneficial ownership disclosure requirements of the EU Fourth Money Laundering Directive. The intention is to tighten and extend the PSC regime and the following key changes which affect UK companies came into force on 26 June 2017:
1. Companies House filings
Rather than an annual filing at Companies House by way of its confirmation statement, a UK company will not only be required to update its PSC Register within 14 days of any change occurring but must also notify Companies House of such changes within a further 14 days by filing Forms PSC01 to PSC09 (as applicable). This does raise some concerns in respect of possible disconnects in the information available at Companies House given that confirmation statements confirming shareholder details remain an annual obligation although confirmation of PSCs' details is an ongoing obligation throughout each year.
2. AIM companies
Historically, AIM companies, as DTR 5 issuers, were exempt from the PSC regime. The Regulations state that, whilst the EU Directive does exempt companies listed on regulated markets, it does not extend to companies listed on prescribed markets and consequently AIM-listed companies are now required to adhere to the PSC regime. The Regulations allow such AIM companies a grace period until 24 July 2017 to generate a PSC Register and comply with these new requirements. The same is true for NEX-listed companies.
UK companies, particularly AIM companies, should now (if not already) be making all necessary changes in order to comply with the Regulations and the revised PSC regime. The changes affecting private companies in the UK should not prove too burdensome. Best practice for AIM companies would be to start preparing their PSC Registers (if only to record that they are taking the necessary steps to ascertain whether or not they have any PSCs) and commence the identification of any individuals or relevant legal entities needing to be entered on their PSC Registers. AIM companies should also ensure that all relevant people within the organisation are made familiar with the PSC regime.
As a matter of course, all UK companies should consider the internal processes needing to be implemented in order to update and maintain their PSC Registers and make all necessary filings at Companies House in order to ensure that the timelines for updating and filing are adhered to going forwards.