News flash – People with Significant Control

With effect from 6 April 2016, UK private companies (including companies limited by guarantee and limited liability partnerships) must create and maintain a register of People with Significant Control (PSC). The aim of introducing the register is to create greater transparency in ownership and control of UK companies.

In addition, as of 30 June 2016, the PSC information has to be included in the new Confirmation Statement, which replaces the Annual Return that is filed at Companies House.

It is necessary to establish if:
  • There are people within the company who have significant control or influence over the company (PCSs); and
  • if any of those meet one or more of the relevant conditions.
An individual or legal entity (another UK registered company) will be a PCS if it:
  1. Holds, directly or indirectly, more than 25% of the shares in the company;
  2. holds, directly or indirectly, more than 25% of the voting rights in the company;
  3. holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company;
  4. has the right to exercise, or actually exercises, significant influence or control over the company; or
  5. exercises significant influence or control over the trustees of a trust or partners of a firm, where that trust or firm is not a separate legal entity, but where those trustees or partners would otherwise meet the conditions above.
Companies with PSCs
  • Must create its own PSC register;
  • from June 2016, file the information at Companies House with the next Confirmation Statement (replacing the current annual return) which will be publicly available on the register; and
  • maintain the PSC register.
Companies without PSCs

If all reasonable steps have been taken and the company is satisfied that there are no individuals or legal entities with significant control, a statement to this effect must be entered on the register. Accordingly, the register must state that: “The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant entity in relation to the company.”

The register must never be left blank and should pending the outcome of the process of taking reasonable steps state that: “The company has not yet completed taking reasonable steps to establish whether  there is anyone who qualifies as a registrable person or a registrable relevant legal entity in relation to the company.”

Sanctions for non-compliance

There are potential criminal sanctions for individuals, companies, directors, PSCs in the form of fines or, potentially, imprisonment for failure to comply with PSC obligations. Additionally the company has the power to place restrictions on shares held by someone who fails to respond to its request for information.

Can we help? If you are an existing Company Secretary client we shall hold and maintain the PSC register for you.

If you are not an existing Company Secretary client and need help creating your register of PSCs or other advice, please do not hesitate to contact us.

The material contained in this note is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© Miller Rosenfalck LLP April 2016

 

Please contact:

Steen Rosenfalck - Partner

DD +44 (0)20 7553 9931

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