The regulations extending the persons with significant control (PSC) regime, namely The Information about People with Significant Control (Amendment) Regulations 2017 (the Regulations) were laid before Parliament on Friday 23 June and come into force on Monday 26 June.
Due to the truncated timetable (including a failure to publish draft regulations), there is a welcomed four week transitional period for those entities which fall within scope of the PSC regime for the first time. However, there are some obligations where the time periods for compliance start to run from Monday 26 June 2017.
We will shortly be updating our detailed briefing on the PSC regime (which set out, amongst other things, how to identify your PSCs). In the meantime, we have set out below an overview of the main changes:
The three main areas where the PSC regime is changing are:
- the requirements relating to updating an entity's own PSC register and the central PSC register at Companies House;
- the extension of the PSC Regime to certain AIM and NEX Exchange Growth Market (formerly ISDX Growth) companies by the removal of their previous exemption; and
- the extension of the PSC Regime to other entities including active Scottish limited partnerships and general Scottish partnerships where all the partners are corporate bodies and to unregistered companies.
Updating of Central PSC Register at Companies House
- With effect from 26 June 2017, entities subject to the regime will have 14 days to update their PSC register followed by 14 days to notify Companies House of any change, where a relevant change to PSC information occurs after that date. Failure to do so within the specified time limits is an offence.
- Where a change to PSC information prior to 26 June has not yet been notified to Companies House (e.g. by submitting a further CS01 confirmation statement), a relevant entity must notify Companies House of that change within 14 days of 26 June 2017. Their own PSC register should, of course, already have been updated.
- From 26 June 2017 onwards, all notifications to Companies House regarding PSC information (including changes to such information) must be submitted via the relevant Companies House Forms PSC01 to PSC09 (which we believe are in the process of being updated for this purpose). There are equivalent forms for use by LLPs. This replaces the requirement to provide this information annually, via the CS01 confirmation statement.
- The move to this event driven notification of PSC information within 14 days has been made to ensure compliance with the Fourth Money Laundering Directive (4AMLD) requirement that the central register of beneficial owners is 'adequate, accurate and current'. Thus, it removes the possibility of an entity's central / Companies House PSC register being different to its own PSC register.
- Companies and LLPs yet to file their first confirmation statement (i.e. where it is due between 26 and 29 June 2017), will need to submit both a CS01 and a new updated relevant Form PSC01 to PSC09 (or the LLP equivalent), the latter being used to notify Companies House of their PSC information. The relevant PSC01 to PSC09 will need to be filed within 14 days of 26 June 2017.
- Entities subject to the PSC regime before 26 June which have already notified Companies House of all PSC changes that may have occurred before 26 June need take no further action.
- The requirements that a relevant entity must give notice as soon as reasonably practicable to its PSC when it knows or has reasonable cause to believe there has been a change to the PSC information, has been amended - such notice must now be given within 14 days of becoming aware or suspecting that a change has occurred. Consequently, where a company is currently under such an obligation to take this action, it will now need to do so within 14 days of 26 June 2017.
Extension of the PSC Regime to companies on AIM and NEX Exchange Growth Markets
- The Regulations amend Part 21A of the Companies Act 2006 so as to apply the PSC regime to UK incorporated AIM and NEX Exchange Growth Market companies. The previous exemption (by virtue of being a DTR5 issuer and subject to the FCA's Disclosure Guidance and Transparency Rules (DTRs)), falls away as from 24 July 2017. The change has been driven due to those markets not being 'regulated markets', which takes them outside of the 4AMLD exemption.
- There is a four week transitional period for relevant AIM and NEX Exchange companies such that the PSC regime will apply to them from 24 July 2017.
- As such entities are already subject to a material level of disclosure as a consequence of the DTR 5 requirements, they should have already much of the information required to be able to comply with the PSC regime.
- During the period to 24 July 2017, such companies should identify their PSCs and, within 14 days of that date, create their own PSC register. They will then have a further 14 days to notify such PSC information to Companies House.
- Companies traded on an EEA regulated market or other market specified in Schedule 1 to the Register of People with Significant Control Regulations 2016 will be unaffected and will remain exempt from the PSC regime.
- The changes will not bring non-UK incorporated companies traded on AIM within scope of the UK's PSC regime. However, there are proposals afoot to put in place a register in the UK that shows who owns and controls overseas legal entities that also own UK property or participate in UK government procurement. The Government's consultation on this that has now closed, and we expect to hear details on this proposed new register over the next few months. For further details see our client briefing.
Extension of the PSC Regime to other entities
- With effect from 24 July 2017, the PSC regime will be extended to active Scottish limited partnerships and general Scottish partnerships where all the partners are corporate bodies. Whilst they will not be required to maintain their own PSC register, they will need to notify Companies House of their PSC information within 14 days of 24 July 2017. They should start work now in identifying their PSCs. Any changes to such PSC information will also need to be notified to Companies House within 14 days.
- With effect from 24 July 2017, the PSC regime will also extend to unregistered companies.
- Companies House intends to communicate these new requirements to those affected entities as it is conscious of not having had any prior dealings with them.
For companies/LLPs that are already subject to the PSC regime before 26 June 2017 - how do the changes affect them?
- If an entity's own PSC register is already up to date and any changes to PSC information have already been notified to Companies House (using a Form CS01 or LLP equivalent, being the method of such notification pre 26 June 2017) then no further action is required.
- Changes to PSC information from 26 June 2017 will need to be recorded in that entity's own PSC register within 14 days of the change and notified to Companies House using a new relevant Form (PSC01to PSC09 or LLP equivalent) within a further period of 14 days. Continuous monitoring under the revised regime is vital.
- Changes to an entity's PSC information before 26 June 2017 which have not been notified to Companies House must be notified within 14 days of that date using the relevant updated Forms PSC01 to PSC09 or LLP equivalent.
Is there any guidance from the Government on how to determine who is a PSC and what I need to do?
Yes, the Government has updated its statutory guidance for companies on the meaning of 'significant influence or control' together with its non-statutory guidance. It has also published PSC guidance for eligible Scottish partnerships on the meaning of 'significant influence or control'. The updates to the non-statutory guidance includes a new Annex 5 which specifically covers identification of a PSC in relation to an eligible Scottish partnership. You can access links to all of this guidance here.