As a result of the implementation of the Small Business, Enterprise and Employment Act 2015 (which comes into force this year) important changes have been made the information which companies registered in the UK (and certain other corporate entities), must file at Companies House, the information made available on the public record, and what information must be held by the company and made available for public inspection.
Should you have specific queries as to the new rules, advice should be sought from Legal Clarity or another firm of solicitors. We would be pleased to assist you with this if required.
What has changed?
From 6 April 2016 all companies and LLPs registered in the UK will be required to maintain a register of people with significant control ("PSC"), which sets out the details of those individuals (or corporate bodies) who are able to exercise significant control over the company or LLP (in very simple terms, the true owners of the business).
The PSC register must be kept with the other statutory records of the company or LLP, be regularly maintained and kept up to date, and made available for public inspection upon request.
From 30 June 2016 onwards companies will also be required to disclose abbreviated PSC information to the Registrar of Companies at Companies House via a Confirmation Statement, which must be filed annually (this statement will replace the current Annual Return regime).
The information disclosed will be made available for public inspection on the electronic record maintained by Companies House, and must also be made available for inspection by the relevant company where the company continues to maintain its own PSC register after 30 June 2016 (it shall otherwise be possible for a company to keep its statutory records at Companies House, from this date).
New companies or LLPs incorporated after 30 June 2016 will be required to submit abbreviated PSC information to Companies House on incorporation.
What is the purpose of these new rules?
The PSC rules have been introduced in order to procure that the ‘true' owners of Companies are identified as a matter of public record. This will help to disrupt organised crime, tax evasion and terrorist financing activities, among other things.
However, this does mean that it will now be considerably more difficult to protect the identity of shareholders who wish to remain anonymous, but who also meet any of the criteria set out below.
Save in exceptional circumstances (such as there being an established risk of violence or intimidation towards an individual were their details disclosed), non-disclosure of details of people with significant control in a company will be a criminal offence.
What is a PSC?
A PSC is any individual who meets one or more of the following conditions:
- directly or indirectly holds more than 25% of the issued share capital in a company;
- directly or indirectly holds more than 25% of the voting rights in a company;
- directly or indirectly holds the right to appoint or remove a majority of directors;
- has the right to exercise, or actually exercise, significant control in a company; or
- has the right to exercise, or actually exercise, significant control over the activities of a trust or firm holding shares in a company, which is not itself a legal entity but which would meet any of the first four conditions if it were an individual.
These conditions will apply in all cases where shares are held by an individual in their own name and for their own benefit or on trust for or by a third party.
As a result, where shares are held under trust (for example through our Nominee Shareholder Service), both the trustee(s) and the beneficial owner(s) of those shares may need to be identified on the PSC register if the above conditions are met.
When might this be relevant to my company?
The following are non-exhaustive examples which may require the details of a person (together with those shareholders who already appear on the company's register of members and satisfy the relevant PSC criteria) to appear on the PSC register. Where shares in a company are held on behalf of any person by:
- a trustee;
- a nominee;
- a foreign company that is not otherwise required to keep its own PSC register;
- a UK company which is required to keep its own PSC register; or
- a company subject to the Financial Conduct Authority's Disclosure and Transparency Rules, or a company with shares listed on certain regulated markets (stock exchanges),
then consideration should be given to the conditions outlined above, in determining whether details must be disclosed.