Summary: As part of the UK’s implementation of the Fourth Anti-Money Laundering Directive (AMLD4), ‘eligible Scottish partnerships’ are subject to new transparency disclosure requirements. Action is required: ‘eligible Scottish partnerships’ should begin preparing their ‘people with significant control’ (PSC) particulars ready to notify Companies House from the 24 July 2017 deadline.
Qualifying Scottish general partnerships need to prepare to register at Companies House for the first time; and UK companies and LLPs that already keep a PSC register will have to make any necessary changes to their PSC registers to include any ‘eligible Scottish partnerships’ that are now registrable, and also note the new 14 day reporting timelines.
Who is caught (and new registration requirements)?
The term ‘eligible Scottish partnerships’ is a collective definition of two groups of Scottish partnerships:
- Limited partnerships registered in Scotland. For registration applications from 24 July 2017, PSC information is to be included in the new versions of the Companies House registration forms LP5 and (for those which are to be designated as a ‘private fund limited partnership’) LP7.
- Scottish general partnerships which, broadly, have all corporate partners, being ‘qualifying partnerships’ under the Partnership (Accounts) Regulations 2008. In order that they can then provide their PSC information, there is a new requirement for these ‘Scottish qualifying partnerships’ to provide Companies House with various registration details within 14 days of 24 July 2017 (or within 14 days of becoming a ‘Scottish qualifying partnership’) as well as to notify Companies House on ceasing to qualify.
Three key new provisions in respect of ‘eligible Scottish partnerships’
- ‘Eligible Scottish partnerships’ have to identify any individuals or ‘relevant legal entities’ that have significant control over them (and are registrable as PSCs) and deliver the relevant information to Companies House. They have to do this within 14 days of 24 July 2017 (or, if later, within 14 days of the relevant PSC details being confirmed). There is prescribed wording where, for instance, the partnership has no registrable PSCs or has an unidentified PSC or unconfirmed details. The 14 day reporting timelines also apply to any changes.
- ‘Eligible Scottish partnerships’ will also have to consider if they are registrable on the PSC register of another reporting entity. This is now relevant, as these partnerships have become ‘subject to their own disclosure requirements’ and ‘relevant legal entities’ for PSC purposes. If so, the ‘eligible Scottish partnership’ must make itself known to the company, LLP or other ‘eligible Scottish partnership’ in question, and provide the required details. It must also respond within a month to any notices requesting PSC information.
- UK companies and LLPs that now have ‘eligible Scottish partnerships’ as PSCs (as explained above) have 14 days from 26 June 2017 to update their PSC registers, and a further 14 days to notify Companies House.
In addition to the registration and reporting requirements set out above, these partnerships have to file annual confirmation statements. The PSC rules are in general applied to ‘eligible Scottish partnerships’ as they are for other reporting entities, for instance protection of secured information and criminal sanctions for failure to comply. However, unlike other reporting entities, ‘eligible Scottish partnerships’ do not have to keep their own PSC registers, and are only subject to the filing requirements described above.
Who is a PSC of an ‘eligible Scottish partnership’?
A PSC of an ‘eligible Scottish partnership’ is an individual or ‘relevant legal entity’ who meets one or more of the following five conditions:
- Holding rights over more than 25% of the surplus assets on a winding up (and if there is no express provision on this, these are to be treated as being divided equally between the partners);
- Holding more than 25% of the voting rights;
- Holding the right to appoint or remove the majority of those involved in management;
- Having any other significant influence or control; or
- Having significant influence or control over a trust or firm that satisfies any of the other four conditions in relation to the eligible Scottish partnership.
For the first three conditions, interests held directly or indirectly are caught, as are joint interests and arrangements. There is statutory guidance as to the meaning of significant influence or control (for instance, a person is also likely to be a PSC of an ‘eligible Scottish partnership’ if he or she has the right to receive more than 25% of its profits).
Background and other AMLD4 amendments
Although most UK companies and all UK LLPs have had to keep a PSC register since 6 April 2016, which has been on the public record at Companies House since 30 June 2016, implementation of the AMLD4 has brought in various changes to the PSC regime in addition to those described above, broadly to extend the entities within scope and to require the information held centrally to be up to date – see our alert PSC changes published – AIM companies caught and new 14 day reporting for further details.
Scottish partnerships were identified in HM Treasury’s November 2016 consultation paper as being within scope of AMLD4, along with various other entities (eg open-ended investment companies (OEICs), investment companies with variable capital (ICVCs) and building and friendly societies), although it’s only ‘eligible Scottish partnerships’ that have been caught so far.
Although the government had hinted at the detail in advance, the regulations (The Scottish Partnerships (Register of People with Significant Control) Regulations 2017) were only published on 26 June 2017, giving those affected limited time to prepare. The rules and guidance are lengthy and complex: we are here to help.