Effective immediately, most UK companies, Societates Europaeae and UK Limited Liability Partnerships (LLPs) are required to maintain a register of People with Significant Control (“PSC Register”). Set out below is a brief summary of some of the requirements. The rules are complex, and you should take immediate steps to seek appropriate advice and put in place the PSC Register. Those who fail to comply with this legal requirement could be committing a criminal offence, with officers of companies and designated members of LLPs who are in default could be fined and/or imprisoned.

Under the new Part 21A and Schedules 1A and 1B of the UK’s Companies Act 2006 (the “Companies Act”), companies and LLPs are required to take reasonable steps to determine if there is anyone who is a registrable person or a registrable relevant legal entity (RLE) in relation to that company and, if so, identify such persons in a register of people with significant control over the company, referred to as a “PSC Register”.

Filing PSC Register

From 30 June 2016, companies and LLPs will be required to file a confirmation statement instead of an annual return at Companies House. This will require companies to confirm certain information in relation to their PSCs and RLEs on an annual basis.

Who are the “people with significant control”?

“People with significant control” can include both individuals and relevant legal entities, such as corporate bodies and firms that hold legal personality under the law by which they are governed.

What is “significant control”?

Individuals and legal entities are said to have “significant control” over a company if they fulfil certain “Specified Conditions” set out in the Companies Act.

In summary, these conditions are that the party:

  1. holds, directly or indirectly, more than 25 percent of the shares in the company; or
  2. holds, directly or indirectly, more than 25 percent of the voting rights in the company; or
  3. holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the company; or
  4. has the right to exercise, or actually exercises, significant influence over the company; or
  5. has the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm.

Is the PSC or RLE registrable?

There is a rebuttable presumption that all PSCs and RLEs are registrable. However, this presumption can be rebutted if the PSC or RLE holds an indirect interest in the company or LLP through an RLE. In other words, companies and LLPs need not register any PSC or RLE in a chain of ownership above the first RLE in its ownership chain, unless a person holding an indirect holding through an RLE also holds a direct interest in the company or the LLP.

This is because a person seeking to establish the ultimate controllers of the company will be able to review the PSC register of the RLE and of any RLE above it.

What do the relevant companies and LLPs need to do?

  1. Identify and notify

Companies and LLPs must take reasonable steps to find out if there is anyone who is a registrable person or a registrable relevant legal entity in relation to the company and then identify that person. The company/LLP must give notice to anyone who it knows or has reasonable cause to believe is a registrable person or relevant legal entity. Once confirmation has been received of the required particulars of the registrable individual or relevant legal entity then the company must enter these details into the register.

  1. Register

The company/LLP must keep a register of people with significant control over the company/LLP available for inspection at its registered office or at a place specified in regulations. The register should be open to inspection by any person free of charge and copies may be requested on payment of such a fee as may be prescribed.

  1. File

As of 30 June 2016, information from the PSC Register will be required as part of the company’s/LLP’s confirmation statement at Companies House.

What must companies and LLPs do to comply if they do not yet have a PSC Register?

On and from 6 April 2016, a company’s/LLP’s PSC Register should never be blank. If a company/LLP is not in a position to complete its register on that date, it must include certain official wording in the register to reflect the progress of the company’s/LLP’s investigation. See below for suggested wording that provides for certain situations:

What are the consequences for failure to comply with the new PSC Register requirements?

If the company/LLP fails to keep a register of people with significant control over the company/LLP, or fails to keep the register open to inspection, then an offence is committed by the company/LLP and by every officer/LLP member in the company who is in default.