The UK's implementation of the 4th Money Laundering Directive has extended the scope of the PSC regime to include UK companies whose shares are admitted to trading on AIM.
The PSC regime, introduced in the UK last year, previously included an exemption for those companies required to comply with Chapter 5 of the FCA's Disclosure and Transparency Rules. The UK's implementation of the 4th Money Laundering Directive has swept away the exemption, with the result that AIM companies, and UK companies listed on other secondary exchanges, are now required to identify and record their persons with significant control in the same way as private or unlisted public companies. The only companies which remain exempt from the regime are those whose voting shares are admitted to trading on a regulated market in an EEA state or on other specified markets in Israel, Japan, Switzerland and the USA. Accordingly, UK companies listed on the London Stock Exchange's Main Market (Premium and Standard list) continue to fall outside the regime.
The new regulations
The Information about People with Significant Control (Amendment) Regulations 2017 (the Regulations) came into force on 26 June. They require AIM companies to
- take reasonable steps to find out if there is anyone who is a registrable person or registrable relevant legal entity in relation to the company and, if so, to identify them (from 26 June 2017);
- keep and maintain a register of its people with significant control (PSC Register) (from 24 July 2017);
- supply information about its people with significant control to Companies House (from 24 July 2017).
The Regulations also introduce stricter time limits for updating the PSC Register and more frequent notifications to Companies House. Entries must be made or updated in the PSC register within 14 days of the company receiving the relevant information and must be notified to Companies House within a further 14 days. Previously, this information was only required to be submitted to Companies House on an annual basis.
In order to ensure compliance, AIM companies should be taking steps now to set up their PSC registers and identify those registrable persons and relevant legal entities who meet any of the five PSC conditions:
- Directly or indirectly holding more than 25% of the shares in the company
- Directly or indirectly holding more than 25% of the voting rights in the company
- Directly or indirectly holding the right to appoint or remove a majority of the board of directors of the company
- Having the right to exercise, or actually exercising, significant influence or control over the company
- Where a trust or firm would satisfy one or more of the first four conditions if it were an individual: holding the right to exercise, or actually exercising, significant influence or control over the activities of that trust or firm
Persons who meet any of the conditions should expect to be contacted by the company, seeking to confirm their registrable status and to confirm certain details which need to be included in the register. Individuals can, if at risk of intimidation or violence as a result of the activities of the company or from their association with the company, apply for their details to be excluded from the public register held at Companies House. Such applications can be made immediately.
Already subject to the Disclosure and Transparency Rules, AIM companies now face the added burden and cost of having to make further disclosures within the short time limits which the PSC regime imposes. Regular review of PSC registers will be necessary, and AIM companies should ensure that adequate procedures are in place (either internally or via their registrars) to flag when changes and filings are necessary.