In April 2016, the government introduced a requirement for companies to hold a register of people with significant control (PSCs). It’s part of the government’s commitment to increase transparency about who owns and controls UK companies.

How does this impact charities?

The PSC regime applies to nearly all UK companies. It applies to charities which are incorporated as companies in the UK. It also applies to any UK trading subsidiaries of a charity.

The PSC regime does not currently apply to charities with other legal forms such as Scottish Charitable Incorporated Organisations (SCIOs) or trusts. However, this is likely to change next year when the UK implements an EU law requiring transparency of beneficial ownership of other types of entity.

What are the new requirements in a nutshell?

A company must:

  • take reasonable steps to investigate whether it has any PSCs and identify who they are;
  • confirm certain prescribed information about them;
  • during the investigation, and once it’s complete, write up the “PSC register” using the prescribed wording for each stage of the process;
  • provide PSC information to Companies House on its confirmation statement (this document has replaced the annual return); and
  • update the information on the PSC register if and when it changes, and provide the updated information to Companies House when it files its next confirmation statement.

A company’s PSC register can be inspected by the public. Companies House keeps the PSC information it receives in a central publicly accessible register.

There are criminal sanctions for failure to comply with the PSC regime, therefore doing nothing is not an option.

How do I work out if my charity has any PSCs?

A PSC is an individual who meets one or more of the following conditions in relation to a company:

  1. directly or indirectly owns more than 25% of the shares;
  2. directly or indirectly holds more than 25% of the voting rights;
  3. directly or indirectly holds the right to appoint or remove directors holding the majority of voting rights at board level;
  4. otherwise has the right to exercise, or actually exercising, significant influence or control;
  5. holds the right to exercise, or actually exercises, significant influence or control over the activities of a trust or firm (which doesn’t have legal personality) where the trustees/firm members would satisfy any of the above four conditions if they were individuals. There is detailed government guidance – some of it very lengthy – about how to interpret these conditions.
  6. Special rules apply if an entity other than a natural person (e.g. a company, a trust, or an overseas entity) meets any of the conditions.

If I identify an individual PSC, what information do I need to get?

If your PSC is an individual, you need them to confirm the following details which will go on the PSC register:

  • Name
  • Date of birth
  • Nationality
  • Country, state or part of the UK where the PSC usually lives
  • Service address
  • Usual residential address
  • The date when the individual became a PSC in relation to the company
  • Which of the five conditions for being a PSC the individual meets, with quantification of the interest where relevant

What do I do in the meantime?

Since 6 April 2016, at a minimum, a charity which is a company must be taking reasonable steps to identify its PSCs and must have a PSC register which reflects the stage that it’s reached in its investigation.

If that’s the situation that your charity is in, the PSC register should contain the following statement:

6th April 2016: The company has not yet completed taking 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.

As investigations progress, the company should be serving notices on “suspected” PSCs asking them to confirm their status and particulars.

If PSCs are identified, there are rules about how to record the nature and level of their control.

There are prescribed forms of wording which must be used for each stage of the process – including if the end result is that there are no PSCs.