Kuits briefing note for companies and LLPs regarding the introduction of the new PSC Register13 Jul 2016
New PSC requirements
From 6 April 2016 there has been a new requirement for companies and LLPs to keep a register of Persons with Significant Control (PSC). From 30 June 2016 companies and LLPs are also required to send information on the PSC register to Companies House with their Confirmation Statement (previously the Annual Return).
Who is required to keep a PSC register?
The new rules apply to all UK companies (except listed companies) and to LLPs.
What is a PSC?
While principally aimed at recording the details of individual PSCs, companies/LLPs are required to record the required particulars of relevant legal entities (RLEs) that would hold significant control if they were individuals.
In simple terms a PSC is someone who owns or controls more than 25% of the shares or voting rights in a company or has the right to exercise significant influence or control over the company/LLP.
An individual with significant control will meet at least one of the following five conditions:
1. directly or indirectly hold more than 25% of the nominal share capital (for LLPs the test is whether the individual directly or indirectly, holds the right to share in more than 25% of the LLP’s surplus assets on a winding up); or
2. directly or indirectly control more than 25% of the votes at general meetings (for LLPs the test is whether the individual directly or indirectly holds more than 25% of the rights to vote on matters to be decided by a vote of members of the LLP (including rights only exercisable in certain circumstances)); or
3. directly or indirectly be able to control the appointment or removal of a majority of the board (or in the case of an LLP the majority of the persons entitled to take part in the LLP’s management); or
4. actually exercise, or have the right to exercise, significant influence or control over the company/LLP; or
5. actually exercise or have the right to exercise significant influence or control over any trust or firm which has significant control (under one of the four conditions above) over the company/LLP.
Detailed guidance as to what constitutes significant influence or control is available on the Government’s website (see link below).
Practical Steps – what to do
The necessary practical steps are as follows:-
1. Identify the PSC/RLE – each company/LLP is required to take reasonable steps to contact registerable persons/legal entities by way of a notice requesting that the PSC/RLE confirm:
a. that they are a registerable person/legal entity; and
b. that the information in the register is correct.
Each PSC/RLE must check and confirm the information as being ‘complete and accurate’. Pro forma notices can be found in Annex 3 (companies) and 5 (LLPs) of the Government’s non-statutory guidance here.
2. The information can then be recorded in the PSC register. A holding statement can be inserted where the company/LLP is investigating the position. There is official wording which must be inserted in the PSC register (see Annex 2 of the above guidance).
3. The PSC register must be provided to Companies House as part of the new annual confirmation statement (which replaces the annual return from 30 June 2016).
4. Information in the PSC register must be updated as it changes and updated at Companies House when the next confirmation statement is made.
Penalties for non-compliance
Where a company has not sent the necessary notices requesting PSC information then the registerable individuals or relevant legal entities concerned have an obligation proactively to inform the company of their interest (or any changes to it).
There are criminal penalties for non-compliance with these duties for companies and their officers and the individuals or relevant legal entities concerned, as well as the possibility of disenfranchisement (not being entitled to vote).
New option to keep statutory registers (in part) at Companies House
From June 2016 private companies can (with shareholder approval) stop maintaining, in part, their own sets of statutory registers. Companies may choose to elect to keep their registers of members, directors, secretaries and PSCs at Companies House. The obligation to maintain and update the information will remain but the company will no longer keep the records, instead the information will be sent to Companies House which will maintain the records. Companies will still have to safely retain the hard copy registers covering the period before they elected to keep their records at Companies House.
If you would like any assistance with complying with these new requirements then please do not hesitate to contact us. For further information and assistance, please contact Anne-Marie Coles in the Corporate team on 0161 838 3434.