The New PSC Register - Are you Compliant?

Partner Debbie Brett, in our Corporate and Commercial team, explains the new register of people with significant control (PSC) requirements.

The PSC Register

From 6 April 2016 UK companies (including dormant companies, companies limited by shares, companies limited by guarantee and community interest companies) and LLPs must keep and maintain a register of all people who have significant control over it (persons of significant control are known as PSCs). The PSC register must be made available for inspection by the public. From 30 June 2016 the information contained in the PSC should be filed at Companies House.

What companies does this apply to?

All UK companies and LLPs will need to keep a PSC register, except those which are already subject to the disclosure requirements under chapter 5 of the Financial Conduct Authority’s Disclosure and Transparency rules, and certain other companies already required to make similar disclosures.

What is a PSC?

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

1. The individual holds, directly or indirectly, more than 25% of the shares in the company;
2. The individual holds, directly or indirectly, more than 25% of the voting rights in the company;
3. The individual holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
4. The individual has the right to exercise, or actually exercises, significant influence or control over the company; or
5. They have the right to exercise, or actually exercise significant influence or control over the activities of a trust or firm and the trustees of the trust or members of the firm meet one of the first four conditions.

What about corporate shareholders?

If a UK company (or a listed overseas company) meets one or more of the conditions for individuals above and is a shareholder in a company, then it should be included in the PSC Register. A corporate shareholder in this situation is referred to as a Relevant Legal Entity (RLE). Any PSCs involved in the RLE will be discovered in the PSC Register of the RLE.
An unlisted overseas company which meets one or more of the above conditions and is a shareholder will not need to be included in the PSC Register.

What needs to be included in the PSC Register?

The following details need to be included in the company’s PSC Register:-

Identifying PSCs

There is a statutory duty imposed on a company to take “reasonable steps” to investigate and obtain information about its PSCs and registrable RLEs. This duty obliges a company to serve notice seeking information and confirmation on those believed to be a PSC or registrable RLE. Notice may also be served on others who may know the identity of such persons.
For companies that have a straightforward shareholder structure identifying the PSCs and registrable RLEs is achieved by simply referring to the register of members. Where the shareholder structure is more complex, the obligation is to do what a reasonable person would do with the knowledge that they have. For example, all documents and information available including the articles of association and any shareholder agreements should be looked at. To assist companies in identifying PSCs and RLEs falling within the fourth or fifth conditions set out above, the government has published draft statutory guidance on the meaning of “significant influence or control”, which can be accessed here.

Failure to obtain information for the PSC Register

Failing to take reasonable steps to investigate or obtain information for the PSC Register is a criminal offence and the company and every officer in default may be subject to a fine and/or up to two years’ imprisonment.

Accurate information in respect of PSCs and registrable RLEs

A company is under a duty to serve notice on anyone who the company knows or has reasonable cause to believe is a PSC or a registrable RLE requesting confirmation or amendment to the information obtained about them. The PSC or RLE is required to reply within one month from the notice being received. Failure to do so is a criminal offence.

This notice may also be served on others who the company knows or has reasonable cause to believe may know the identity of a PSC or registrable RLE or could know a third party with that knowledge such as family members, business partners, lawyers and accountants and ask these persons to confirm the PSC information.

What if a company’s PSC does not want their information to be publicly available?

A PSC’s information can only be made unavailable to the public where there is evidence that disclosure of such information would prejudice the PSC, for example, there is the risk that disclosure would put a PSC or someone they live with at serious risk of violence or intimidation as a result of the activities of the company. An application to have such information withheld from the Register must be made directly to Companies House.

The information on the PSC Register must be made available within five working days to any person or organisation with a proper purpose for requesting it. The company may charge a fee of up to £12 for a copy.

A PSC’s residential address will never be made available to the public.

What if a company does not have any PSCs?

Where a company does not have any PSCs or registrable RLEs the PSC Register should include a statement to that effect. The PSC Register must never be left empty.

In circumstances where a company believes that there is a PSC but the details are yet to be confirmed, the draft Register of People with Significant Control Regulations 2015 at draft Regulation 8 sets out official wording to be included within the Register and can be read here.

How often should the PSC Register be updated?

If it is known that a change has occurred to any of the information, or there is reason to believe that a change has occurred, notice must be given to the PSC or registrable RLE requesting that they confirm that the change has occurred and requesting they give accurate up to date information. Such a notice must be served as soon as practicable. A response must be given within one month, and the Register then updated accordingly.

As part of the new annual confirmation statement which will replace the annual return from 30 June 2016, the PSC information at Companies House must be checked for accuracy and updated at least once a year. There will be a fee to pay with the confirmation statement. The register can be updated as many times as necessary but there will be only one fee charged once a year.

Blandy & Blandy LLP provides a Company Secretarial service to maintain the PSC Register and submit the relevant information on an annual basis via the confirmation statement.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.