Under the new Small Business, Enterprise and Employment Act, January 2016 will see a change in company law with the aim of increasing accountability through transparency of corporate ownership, structure and control.
Companies will be required to maintain a register from that date containing specified particulars of any person with ‘significant control’ over the company, together with details of the nature of that control (“Person with Significant Control Register”) where most of the details will be publicly accessible. The new law introduces significant changes which will directly affect companies, shareholders and ultimate beneficial owners.
From 6 April 2016, companies will need to submit information about their PSC Registers to Companies House as part of their annual confirmation statement, which will be replacing the Annual Return. By 7 April 2017, therefore, Companies House should hold a PSC Register for all UK companies affected by the new legislation.
Who is a person with significant control?
The definition is deliberately broad and includes any person who:
- directly or indirectly holds 25% or more of the shares in the company
- directly or indirectly holds 25% or more of the voting rights in the company
- directly or indirectly has the power to appoint or remove the majority of the board of directors of the company
- otherwise has the right to exercise or actually exercises significant influence or control over the company
- has the right to exercise or actually exercises significant influence or control over a trust or firm that is not a legal entity, which in turn satisfies any of the first four conditions over the company.
In group structures, the new legislation includes detailed provisions to determine who is a ‘registerable’ person with significant control in respect of a particular company within the group.
What information must be included on PSC Registers?
The particulars of registerable persons on the PSC Register held by the company must include their:
- residential address
- service address
- date of birth
- particulars of significant control over the company
Not all of this information will be made publicly available.
An application may be made to Companies House to omit material from the public register or to prevent disclosure of PSC Register information. However, this will be limited to circumstances where there is a serious risk of violence or intimidation towards a registerable person or someone who lives with them. There will be no protection afforded for cases of commercial sensitivity or confidentiality.
The new legislation will impose proactive obligations both on companies and on persons with significant control. Companies must take reasonable steps to identify those persons and legal entities which should be included on its PSC Register and must keep it up to date. If companies do not comply with their duties in relation to the PSC Register, they, and their directors, face criminal liability.
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