With effect from 26 June 2017, changes have been made to the UK's 'People with Significant Control' regime (PSC regime) to comply with the European Fourth Money Laundering Directive ((EU) 2015/849) (MLD4). In particular:
- more UK entities (including AIM traded companies) have been brought within the scope of the regime (with a transitional four week period for compliance); and
- all entities subject to the regime will have to provide updates to Companies House differently and far more frequently.
Why are these changes being made?
There is a requirement under Article 30 of MLD4 for companies to obtain and hold information on their 'beneficial ownership' and for such information to be included on a central register. In the UK, BEIS has adapted the PSC regime to comply with the requirements under MLD4. Member States had until 26 June to implement the relevant measures.
The Information about People with Significant Control (Amendment) Regulations 2017 make the changes to both the relevant sections of the Companies Act and the current PSC regulations, as well as other legislation to cover the various entities affected by the changes (a separate instrument deals with changes to Scottish partnerships). The Regulations were made on 22 June 2017, laid before Parliament on 23 June 2017 and came into force on 26 June 2017.
For more background to the changes, please see our previous update:
For more background on the PSC regime itself, please see our dedicated PSC page, which includes links to updated guidance and Q&A:
Which entities are now within the scope of the regime?
In addition to those already subject to the regime, the following entities are now within scope and will have to comply with the obligations to maintain and file information from 24 July 2017 (following an initial four week transitional period):
These were previously exempt, but the relevant exemption has now been restricted to 'regulated markets' such as London's Main Market; so, for example, both Premium and Standard List companies still benefit from the exemption. Those companies exempt because they are traded on one of the non-EU markets previously specified in the PSC regulations such as the NYSE, NASDAQ, BATS, BX Berne, SIX Swiss, Tokyo and TASE also continue to benefit from the exemption.
- UK unregistered companies
- Scottish limited partnerships and certain qualifying Scottish general partnerships
What does this mean for UK AIM traded companies and other entities now within scope?
Immediate action is needed. From 26 June 2017 those entities have been within the PSC regime, and from 24 July 2017 they will have to maintain a PSC Register and make the necessary filings at Companies House so that PSC information is publicly available through the Companies House website.
The Government has confirmed that it expects companies to use the four week transitional period to investigate their ownership to be ready for 24 July. PSCs who might be eligible under the protection regime to restrict information being made public can apply for protection during the transitional period (more information on both the process and requirements for obtaining information and the protection regime can be found via our dedicated PSC page).
There are also other changes to how the PSC Regime operates, which will affect all companies under the regime.
What other changes are being made to the PSC Regime?
In addition to the increase in the scope of entities that will fall within the regime, the other key change is to the way and frequency with which companies have to update the public register through filings with Companies House.
Frequency of updates – new 14 day deadlines
From 26 June 2017 (or 24 July 2017 for entities newly within the scope of the regime), entities within the regime are obliged to:
- update their PSC register within 14 days of either confirming (for individual PSCs) or obtaining (for 'RLEs' – see "What is a Relevant Legal Entity?") the relevant particulars of the PSC or RLE – both for new PSCs and RLEs and for any relevant changes to those already on the register; and
- notify Companies House of the changes to its register within 14 days of the change being made.
It is important to note that the initial 14 day deadline to update the PSC register starts from when the relevant particulars have been obtained by the company and, in the case of individuals, 'confirmed' (see "What do I do next if I am affected" in our Q&A for further discussion on 'confirming' particulars).
The subsequent 14 day deadline to update Companies House then runs from the date the register is updated.
In addition, a 14 day deadline has been introduced for entities to give notice to any person or entity on their PSC register to seek confirmation where the entity knows or has reasonable cause to believe that a change has occurred which would mean either (i) the person is no longer registrable (i.e. is no longer a PSC or RLE eligible to be included in its PSC register) or (ii) that the register would otherwise need to be updated. The deadline runs from when it learns, or has reasonable cause to believe, that the change has occurred; previously the requirement was to send out such notices as soon as reasonably practicable, but it remains the case that notices are only required where the entity does not already have the necessary particulars and confirmation.
Companies House filings
PSC information is no longer notified to Companies House through the confirmation statements, but the (far more frequent) updates of the public register are instead now made via new PSC forms.